The List: Five Commodities to Hoard

Potash
Used for: fertilizer
Top producers: Canada, Russia, Belarus, Germany
Current price: $800 to $1,000 per ton
Why you should hoard it: A key ingredient in fertilizers, potash is used on crops from bananas to barley, making it a staple for home gardeners and agribusiness alike. Shortages and a growing demand for grain forced its price up dramatically in the last 12 months, tripling the shares of megaproducer PotashCorp from $85 to about $235 and attracting plenty of competitors to the potash playing field. This March, the Russian government netted $2.4 billion—nearly 20 times its asking price—from the auction of the world’s second-largest potash deposit. Buried potash supplies were recently uncovered in Canada, but they are costly to reach. No mines have been built in Saskatchewan in the past 40 years due to previously stagnant potash prices. Now, the Canadian province is fielding more potash exploration claims than it can handle.

Silver
Used for: batteries, bearings, coins, electronics, jewelry, silverware, photography, solar energy, water purification
Top producers: Peru, Mexico, China, Australia
Current price: $16.81 per ounce

Why you should hoard it: Gold gets all the headlines, but many investors are swooning for silver these days. One reason is its price, which has more than tripled during the past five years, yet remains far below its peak in 1980 of $44 an ounce. Gold has also soared during that period, but its price continues to fluctuate, while that of silver keeps climbing. This trend may be due to silver’s wide variety of applications—in everything from solar-panel cells to cutting-edge batteries—which make it indispensible to future technological developments. As with gold, silver is also seen as a safe harbor in times of rising inflation, a weak dollar, and a worldwide credit crunch. Yet the declining supply of above-ground silver supplies is making the metal increasingly hard to obtain. Also, investors expect silver prices to rise in the fall—that’s wedding season in India, where silver is often included in dowries.

Uranium
Used for: nuclear fuel
Top producers: Canada, Australia, Kazakhstan
Current price: $59 per pound (as a traded commodity)




The List: Five Commodities to Hoard
Page 1 of 1
Posted June 2008
Looking to amass a supply of valuable minerals and metals? Here are five hot commodities you may want to consider stocking up on.

David Silverman/Getty Images
Potash
Used for: fertilizer
Top producers: Canada, Russia, Belarus, Germany
Current price: $800 to $1,000 per ton
Why you should hoard it: A key ingredient in fertilizers, potash is used on crops from bananas to barley, making it a staple for home gardeners and agribusiness alike. Shortages and a growing demand for grain forced its price up dramatically in the last 12 months, tripling the shares of megaproducer PotashCorp from $85 to about $235 and attracting plenty of competitors to the potash playing field. This March, the Russian government netted $2.4 billion—nearly 20 times its asking price—from the auction of the world’s second-largest potash deposit. Buried potash supplies were recently uncovered in Canada, but they are costly to reach. No mines have been built in Saskatchewan in the past 40 years due to previously stagnant potash prices. Now, the Canadian province is fielding more potash exploration claims than it can handle.

PATRICK LIN/AFP/Getty Images
Silver
Used for: batteries, bearings, coins, electronics, jewelry, silverware, photography, solar energy, water purification
Top producers: Peru, Mexico, China, Australia
Current price: $16.81 per ounce
Why you should hoard it: Gold gets all the headlines, but many investors are swooning for silver these days. One reason is its price, which has more than tripled during the past five years, yet remains far below its peak in 1980 of $44 an ounce. Gold has also soared during that period, but its price continues to fluctuate, while that of silver keeps climbing. This trend may be due to silver’s wide variety of applications—in everything from solar-panel cells to cutting-edge batteries—which make it indispensible to future technological developments. As with gold, silver is also seen as a safe harbor in times of rising inflation, a weak dollar, and a worldwide credit crunch. Yet the declining supply of above-ground silver supplies is making the metal increasingly hard to obtain. Also, investors expect silver prices to rise in the fall—that’s wedding season in India, where silver is often included in dowries.

Krafft Angerer/Getty Images
Uranium
Used for: nuclear fuel
Top producers: Canada, Australia, Kazakhstan
Current price: $59 per pound (as a traded commodity)
Why you should hoard it: A newcomer on the commodities scene, uranium joined the New York Mercantile Exchange only last May. Although the buying and selling of uranium stock was legalized in 1968, only a few utility companies purchased it, ensuring that its shares ended up in the hands of a select few. But today, growing demand for electricity has caused nuclear reactors to operate near full capacity. Worldwide plans call for nearly 40 nuclear reactors to be finished within the next decade, with a corresponding rise in uranium demand of about 18 percent, or 33 million pounds. Nuclear power’s growing reputation as a “green,” carbon-free energy source will also likely raise uranium’s profile at a time when climate change is high on the international agenda. Although uranium prices continue to wobble, they remain 600 percent higher than a decade ago, peaking last summer at $136. Some investors see it as too volatile for long-term speculation, but others point to the coming expiration of the Highly Enriched Uranium Agreement between the United States and Russia—which for years has kept supplies abundant—as reason to invest. At least one thing is certain. It is legal to buy and sell only uranium stock—you can’t actually possess the stuff. Hoarding uranium would probably be a bad idea anyway, as it is toxic and can cause kidney problems.

Nickel
Used for: electroplating, stainless steel and other steel alloys, hybrid car batteries
Top producers: Russia, Canada, Australia, Indonesia
Current price: $10.21 per pound
Why you should hoard it: From stainless steel appliances to jet engines to, of course, U.S. currency, nickel is used in thousands of household and industrial items. Although it’s the world’s fifth most abundant mineral, there have been persistent nickel shortages during the past few years, due largely to dwindling stores and delays in new mine construction. The recent closure of a nickel smelter and refinery in Western Australia generated predictions of a 28,000-ton nickel shortage in coming months, and market prices for nickel rose nearly 6 percent as a consequence. Nickel’s use in batteries for hybrid cars such as the fashionable Toyota Prius also makes it a hot commodity. But those interested in nickel had better act fast: China keeps gobbling up the metal to make stainless steel goods, which it increased its export of by 45 percent last year.

Cobalt
Used for: cellphones, laptops, hybrid car batteries, paint-drying agents, super alloys for jet engines
Top producers: Democratic Republic of the Congo, Canada, Australia, Zambia, Russia
Current price: $45 per pound

Why you should hoard it: Used for centuries to beautify glass and ceramics, the mineral is also tough enough to be used in drill bits and steel-belted tires. Cobalt’s current popularity, however, stems from its use in fuel-efficient jet engines and rechargeable batteries. With jet fuel costs skyrocketing and personal electronics in high demand, the price of cobalt doubled in 2007 and climbed to a high of $52.50 per pound earlier this year. And because annual production rarely exceeds 65,000 tons, supplies are likely to be tight into the future, especially since half of all cobalt reserves are in the volatile Democratic Republic of the Congo. What’s more, tech-hungry China’s cobalt consumption is expected to climb at least 7 percent each year through 2009