Precious metals have always held a vital place in the global economy. Silver, gold, platinum, and palladium are highly valued for their rarity, use in industry, and historic role as a store of value. This value propels the global industry of precious metals mining. This is part of our series on metals and mining. See our Comprehensive Guide to Metals and Mining for further information.
But where are precious metals mined, and how does this industry structure itself? Let's dive in to better understand this fascinating sector.
Where Are Precious Metals Mined?
Precious metals are mined worldwide, with significant concentrations in certain geographic regions. For gold, the leading producers are China, Australia, and Russia. Latin America, specifically Peru, and Mexico, are leading sources of silver. The "Platinum Group Metals," which include platinum, palladium, rhodium, ruthenium, iridium, and osmium, are predominantly mined in South Africa, Russia, and North America.
The geopolitical distribution of precious metals mining has significant implications for the global economy. Countries with rich precious metals resources often leverage these for economic growth and development. However, these resources can also be a source of conflict and environmental concerns.
Precious Metals & Mining Trust
To manage the financial aspects of precious metals mining, numerous organizations and institutions play crucial roles. A precious metals & mining trust is a type of investment vehicle that includes a portfolio of mining companies. These trusts offer a way for investors to gain exposure to the sector without the need for direct ownership of mining companies or physical metals.
The Precious Metals & Mining Trust, listed under the ticker symbol MMP.UN on the Toronto Stock Exchange, is an example of a closed-end fund focused on the metals and mining sector. Closed-end funds are a type of investment vehicle that raises a fixed amount of capital through an initial public offering (IPO), then list on an exchange where investors can buy and sell shares.
The MMP.UN is an investment trust established in Canada. Its investment strategy typically involves investing in a diversified portfolio of precious metals mining and related companies. The Trust seeks to provide long-term capital appreciation and to pay monthly cash distributions. The Trust will invest in an actively managed portfolio consisting primarily of equity securities of metals and minerals mining and exploration issuers that are listed on a North American stock exchange.
Precious Metals Mining Stocks
Investors looking to tap into the profitability of the precious metals sector often consider precious metals mining stocks. These represent shares in companies involved in the exploration, extraction, and processing of precious metals. They provide a more direct investment route than trusts and can offer significant returns, especially during periods of high metal prices. However, like all stocks, they also come with their own set of risks, including market volatility and operational risks associated with mining.
Freeport-McMoRan Inc (NYSE: FCX) is a leading international mining company with significant production of copper, gold, and molybdenum.
Barrick Gold Corporation (NYSE: GOLD) is a mining company that produces gold and copper with 16 operating sites in 13 countries.
First Majestic Silver Corp (NYSE: AG) (TSX: FR) is a mining company focused on silver production in Mexico. The Company presently owns and operates several producing silver mines.
Newmont Corp (NYSE: NEM) is one of the world's largest gold mining companies and also produces copper, silver, and other minerals.
Precious Metals Mining Funds
Apart from individual stocks, another popular investment route is precious metals mining funds. These are pooled investment vehicles that invest in a diversified portfolio of mining stocks. These funds can either be actively managed, where a fund manager makes specific investment decisions, or passively managed, such as an exchange-traded fund (ETF). Examples include the Allspring Precious Metals Fund (EKWAX) or The Fidelity Select Gold Portfolio Fund (FSAGX).
Precious Metals Mining ETF
A precious metals mining ETF is a type of fund that tracks an index of mining stocks. It offers diversification, as it includes a range of companies within the sector. This reduces the risk compared to investing in individual stocks. The SPDR S&P Metals and Mining ETF (XME) and the Global X Silver Miners ETF (SIL) are examples of such funds.
Precious Metals Mining Jobs
The precious metals mining industry is a significant job creator, employing millions of people worldwide. Job roles in this sector are diverse, ranging from on-site positions like miners, geologists, and engineers to off-site roles in finance, human resources, and management. However, as with any resource mining operation, it's crucial that these jobs adhere to high standards of safety and environmental responsibility.
Powering the Global Economy
The precious metals mining industry is complex, involving multiple stages from extraction to market and encompassing a wide range of economic activities. Whether it's through direct employment in mining jobs, investment in mining stocks, trusts, or ETFs, this sector plays a significant role in the global economy. Understanding the industry dynamics can help investors make informed decisions and job seekers identify potential opportunities.
However, it's also essential to consider the environmental and social impacts of mining, as these precious metals should be extracted in a way that respects both the planet and its inhabitants.
Mining has evolved through history, read our comprehensive guide to metals and mining for more insights into investing in the sector.