In today’s environment, when everybody and their 18-year-old nephew are leaping into the financial markets, traders are getting involved in every nook and cranny of the stock exchange. Plus, with many metal commodities enjoying their best prices in several years, investors are examining the entire metal class, from the safe-haven asset gold to the industrial metal copper.
Is nickel the most exciting metal to invest in? When you have everyone pouring into gold and silver, it can be hard to get excited over a nickel mining stock or a nickel ETF. All the action is at one or tables in the casino, while everyone is yawning at this table. But when you are counting your pennies (or nickels?) and seeing a better-than-expected bottom line, who is the one laughing? Hint: You.
But there is another metal that has been attracting some attention as of late: Nickel.
Nickel stocks are trading at their best levels in about a year, driven mostly on expectations of robust demand. As the Chinese economy recovers in the aftermath of the COVID-19 public health crisis, market observers are forecasting greater consumption from one of the world’s biggest markets for the industrial metal. The consensus on Wall Street is that the broad-based metals market is likely to surge in the coming years, whether it is because of higher inflation or greater industrial demand.
Interested in going long on nickel? Bullish on nickel? Here are six things to know about nickel investing:
1. What is Nickel Used For?
Before we discuss nickel investing, let’s talk about what is nickel good for anyway? Well, nickel possesses a wide variety of uses and functions, from consumer goods to industrial products. Here are just some of the things nickel is consumed for:
- Medical equipment
- Jet engines
- Eyeglass frames
- Industrial facilities (power generation, petroleum refinery, and chemical plants)
And, yes, that nickel in your pocket does contain nickel!
2. Who Produces Nickel?
A lot of countries do produce nickel, and some nations are larger manufacturers than others. It may not be the sexiest of metals, like gold, silver, and copper, but nickel remains a crucial metal that contributes billions of dollars to economies worldwide. So, who are the power players?
The Philippines is the top manufacturer of nickel, but there are other significant producers:
- New Caledonia
3. Nickel Prevents Corrosion
Did you know that pure nickel prevents corrosion?
Nickel is ductile and durable because it maintains a cube crystal structure up to its melting post. In a normal environment, freshwaters, and deaerated non-oxidising acids – nickel can defeat corrosion. This is why so many products contain nickel-base alloys.
4. The Metal is Integral to the EV Market
Palladium and platinum are important metals in the automobile industry because they can limit a vehicle’s emissions as per mandated by governments all over the world. Although demand has subsided in 2020 due to the coronavirus, prices have skyrocketed in recent years due to skyrocketing consumption by automakers.
Nickel is just as imperative to the electric vehicle market. Why? It is critical to lithium-ion battery cathodes. When there is higher energy density, there is an increase of nickel in the battery cathode, allowing EVs to travel longer.
But is it the main driver of the rally this year? Tesla Motors’ Elon Musk has fueled investor interest in the last couple of years because of the company’s batteries for electric cars. He has even urged miners to produce more nickel for electrification.
Is this the reason for nickel’s rally? Mining.com reports: “However, the reality is that the recent rally is much more about that most traditional of price drivers, namely the supply of nickel ore to China’s giant stainless-steel sector. Such old-school dynamics are going to push the global market into a period of over-supply this year and next, according to the latest forecasts from the International Nickel Study Group (INSG).”
5. How to Trade Nickel
It may seem like a specialised metal that requires tremendous investment acumen, but you can trade it like every other asset in the broader financial market. Here are just some of the ways you can buy and sell nickel in the open market:
- Buy nickel stocks (Glencore, Vale, BHP, Karora Resources, and Anglo American).
- Invest in nickel exchange-traded fund (ETFs), such as the iPath Series B Bloomberg Nickel Subindex Total Return ETN.
- Purchase nickel futures (this is more for seasoned investors).
6. Nickel Prices
For every investor, it is all about data. Before you hit the buy or sell button on your brokerage platform, you are basing your decision on what information you read and what expectations you have based on the numbers. When you are investing in nickel, these are the numbers you are looking at:
- Settlement (Oct. 30): $1,165
- 52-week range: $805.80 to $1,205.40
- One-year change: -4.11%
- Contract size: 1,500 Kg
- Record high: $2,253.96
How else will nickel perform by year’s end and in 2021? Look to the numbers, dear investor. Look to the numbers.