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.
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.
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.