Zinc is the third most important metal in the world, behind gold and silver. Its price has been going up since January 2016, but Matt Badiali says the bull market in zinc will keep rising for years because there’s a growing gap between supply and demand.
— ConcentricBS (@ConcentricBS) February 26, 2018
During the bear market in zinc from 2011 to 2016, many zinc mines has to close down because they could not make a profit with the prevailing low market price. Just in 2016, mines representing 1 million tons of zinc production shut down. And some zinc mines are nearing the end of their useful life at any price. And when mining companies must close producing mines because world metal prices are low, they have no incentive to go looking for new mines. Therefore, even when the price goes back up, as it is now doing, it takes a long time for miners to locate new sources of zinc and dig it out. Read more articles by Matt Badiali at Banyan Hill.
Yet the demand for zinc continues to grow an average of 2.8% per year. Half of that goes to galvanize materials. Unlike iron and steel, zinc does not rust. Therefore, adding a layer of it onto steel or iron parts prevents them from rusting out, Matt Badiali points out. The construction industry uses zinc nails. On average, cars contains 38 pounds of zinc. Much of it prevents rust, and the rest is used in such die-cast parts as door locks and handles.
In 2015, the world produced 13.4 million tons of zinc. But production is going down to just 12 million tons, less than the world will consume, a gap of over 500,000 tons. That’s bound to keep driving the price higher as companies that need the metal compete for a limited supply. Nobody has found a new supply of zinc since 1990. The United States Geological Survey found there’s only enough left to last for 15 more years. After that, humanity will run out of it. Visit dailyreckoning.com to know more about Matt Badiali.
Matt Badiali learned of the impending shortage of zinc in November 2016. As a result of his deep research, he choose to recommend a prominent zinc mining company as the first stock for the Real Wealth Strategist investing newsletter and service he edits for Banyan Hill Publishing. It’s why he describes zinc as a “magic metal” to prospective subscribers to Real Wealth Strategist.
Matt Badiali has studied investments in hard assets for several decades. He is an expert in energy, metals, mining and agricultural commodities.