Investing in molybdenum, a refractory metal used primarily in high-end specialty alloys, has earned the attention of savvy investors in the current trading environment. Molybdenum offers the potential for diversification and capital gains, and is often referred to as a “marathon” investment. This guide summarises the steps required to add molybdenum to your investment portfolio.
What is Molybdenum?
Molybdenum is an essential trace element in human nutrition and a component of a number of raw consumer materials such as stainless steel. It is used in high-end specialty alloys which offer higher performance in extreme heat and weathering conditions, making them essential in the aerospace, automotive, and military industries.
Where to Find Molybdenum
Molybdenum can be obtained either directly from specialized mining companies or via the global commodities exchanges and brokers. Mining companies are responsible for extracting molybdenum from the earth, while commodity traders/brokers provide access to the physical and futures markets.
Due to its relative rarity, most molybdenum trading is conducted in the form of spot contracts. Spot contracts are unique as they must be settled with cash on the same day they are placed. As such, they are considered to be the most liquid form of molybdenum trading as they can be used to access markets without needing to hold a physical position.
How to Invest in Molybdenum
1. Research – As with any investment, it is essential that you do your due diligence and research the current market conditions. This includes learning about the molybdenum industry, its price history and the various options available in terms of both physical and financial investment instruments.
2. Identify Your Goals – It is important to have a clear understanding of your financial goals when deciding whether to invest in molybdenum. Are you looking for a long-term investment, or are you simply interested in taking advantage of short-term price movements?
3. Know Your Risk Tolerance – Molybdenum may be subject to significant price movements, so it’s important to consider how much risk you are willing to take on. Review the various financial instruments available and decide which ones best meet your goals and risk tolerance.
4. Choose Your Instrument – Once you have identified a suitable option, you will need to decide whether to purchase the physical molybdenum or to trade derivatives such as futures and options. The choice will depend on the level of risk associated with each option and your individual investment strategy.
5. Place Your Order – With the instrument chosen, you can place your order through the relevant exchange or broker. This could be done online, in person or via telephone depending on the platform used.
In conclusion, investing in molybdenum is becoming increasingly attractive to investors looking for diversification and capital gains. The steps outlined in this guide should serve as a starting point for anyone looking at investing in molybdenum. Be sure to thoroughly research molybdenum’s price history, the instruments available, and your risk tolerance before you commit to investing.