This "Workhorse" Metal Is Ready for a Breakout

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It's not surprising that precious metals get the most attention.

They're considered "precious" thanks to their scarcity, beauty, and history as a store of value.

That's all true. But industrial metals do the really hard work.

There's one base metal used worldwide to produce rustproof steel, in a variety of alloys, and even as a health supplement. It's not often spoken of as a great addition to your investment portfolio.

Here's the thing: It's poised to break out of a low multi-year price range and challenge the better-known metals in producing profits.

In fact, a stunning rally is in the works… and a great opportunity to seize an upside that others will miss, blinded by focusing on this metal's shinier counterparts…

The Double-Digit Returns Are Already Starting

Since the 2008 financial crisis, zinc prices had remained relatively quiet. Meanwhile, copper and gold have since managed to set new highs.

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Then last fall things started to change, with zinc prices seeing some impressive action. Zinc shot up from $0.84/lb. to $0.96/lb. from mid-November to early December.

That was a 14.3% gain in just three short weeks. That move led the metal out of a tight trading range between $0.81 and $0.89 that lasted for most of 2013.

We've seen a small pullback and bounce since then, but there are increasing signs that this trend is just getting started.

Bullish Economic Signs

According to a recent report from Bloomberg, "Mitsui Mining & Smelting Co., Japan's top zinc producer, raised annual charges to overseas buyers by as much as 70% amid rising Chinese consumption, up from a 15 percent gain last year." Asian demand appears to be garnering momentum on supply constraints.

Morgan Stanley is forecasting a wider global deficit this year.

What could be stimulating zinc prices like this? In two words: supply and demand… simultaneously.

On the supply side, a number of significant mine closures are going to limit zinc resources for the next several years. Head of zinc trading at Glencore Xstrata, Daniel Maté, told investors recently,"There is likely to be a structural deficit in the zinc market in the short to medium-term future."

Xstrata's own Canadian mine, Brunswick and Perseverance, was shut down in 2013. Later this year, Vedanta's Lisheen mine in Ireland is also expected to close. Even the world's third-largest zinc mine, Century in Australia, is likely to see its last production by mid-2105 as it runs out of ore.

Other base metals like iron ore and copper have enjoyed sustained high prices, and that's led to replacement and expansion of depleted supplies. Miners have invested in the exploration for new resources, the expansion of existing projects, and the building of new mines, all justified by profits.

By contrast, there's a dearth of new zinc projects coming on-stream to replace all that lost production. It seems the last several years of subdued zinc prices have discouraged miners from developing new projects.

Rubbing salt in the proverbial wound, some of the larger planned zinc mines are facing serious delays.

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About the Author

Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.

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  1. Kimberly Taylor | February 18, 2014

    Need to know more how 500.00 add up to 500,000

  2. Edouard D'Orange | February 18, 2014

    Great, I'm saving my pennies produced in the late 60's and on. (they're mostly zinc, with just a thin copper layer). Oh, yeah, you can't melt U.S. Mint coins, under penalty of law, ha, ha.

  3. SL | February 18, 2014

    Do I miss a recommendation of how to play zinc's expected rally?

  4. Gilbert Madrid | February 18, 2014

    How dp I invest in Bitcoins?

  5. DAVIDGANZ33@GMAIL.COM | February 19, 2014

    How do we trade in Zinc??

    • Mary Ann Reich | February 19, 2014

      I am a new member and have not really examined the workings of your service. In fact just yesterday I received the Bitcoin infor – slept a little less last night but worth it.
      Question, what areas are available for investing in zinc, please? How, if not a stock, what is available. Since it is not a "popular" metal don't imagine and have not seen an ETF.
      Thanks for your help.
      Mary Ann
      P.S. What is meant by "Website" above with "compelling information" inside box?

  6. Rob B. | February 19, 2014

    I have the same questions – how do I go about investing in Zn? Pl advise via return email.

    Thank You!

  7. Tom Flynn | February 19, 2014

    SL/DAVIDGANZ33/Mary Ann Reich –

    Thanks for reading.
    We will be posting a follow-up here with feedback from Peter directly on opportunities for taking advantage of Zinc's upward price indicators. Thanks – Tom Flynn

  8. Tom Flynn | February 19, 2014

    Followed up with Peter on stocks that would benefit from an increase in zinc prices. There are limited 'pure play' options on zinc, each of the below are diversified plays:

    The largest public zinc miners include GlencoreXstrata (OTC:GLNCY) with an over-the-counter listing, and Teck Resources (NYSE:TCK) which is Canada’s largest diversified miner, but only 15% of profits come from zinc.

    Additionally, Horsehead Holding Company (Nasdaq: ZINC) is a US-based, diversified holding corp that along with its subsidiaries produces and sells, in the US and Canada, zinc and nickel-based products. – Tom Flynn

  9. Liam | February 19, 2014

    Where is the recommendation?

  10. Tom Flynn | February 20, 2014

    Thanks again for reading.

    This particular article does not have a specific recommendation, it is informational to keep you ahead of what Peter sees as the emerging direction of zinc based on positive coalescing market conditions.

    The companies listed to varying degrees have operations that will benefit from rising zinc prices, so while not specific recommendations, they are candidates for consideration given the projected price trending.

    Thanks – Tom Flynn

  11. 000059713761 | February 22, 2014

    how do I go about investing in Zn? Pl advise via return email.what do you expect price of zinc in 3 to six month

  12. Carla | February 22, 2014

    Hi:

    Speaking of metals that aren't gold or silver or platinum that are needed for industrial purposes, what is happening with Tungsten? A couple of years ago, I heard about a company called Malaga INC which mines Tungsten. China was closing down their mines for some reason (maybe they were running out of Tungsten deposits?) which made this company one of the very few companies still mining Tungsten. I bought a lot of shares, close to 100,000 expecting this to eventually rise and make a profit. Instead, the company went off the board and as far as I know, it isn't trading anymore. This is why I signed up for some of the services here at Money Map Press. I obviously need expert advice. Can anyone comment on Tungsten or what happened to or will happen with Malaga INC? Thank you.

  13. robin | March 18, 2014

    I have read elsewhere that a mining co is one that has deep hole with a liar at top. your went down that hole. been there hence joining this crowd too.

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