How to invest in cobalt in 2024
Lithium ion batteries used in electric vehicles have been driving the price of cobalt higher and demand for it is at record levels. Continue reading for a step-by-step guide on how to invest in it, the different ways to invest, and what the year ahead may have in store.
Where can I invest in cobalt online?Copy link to section
The best place to invest in cobalt is with an online broker. Not all brokers offer cobalt investing, but our commodity experts have found some of the top places around that do. Click any of the links below to register in just a few minutes.
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Why invest in cobalt?Copy link to section
There are a range of reasons why you should consider investing in cobalt. Its surging demand in recent years has resulted in impressive growth in its price. Its demand is likely to continue and could provide good investment opportunities. Commodity investing also provides a good hedge against inflation. Below, we’ve highlighted some of the top reasons to invest in cobalt.
- Bet on demand. From airbags to paint, its versatility has resulted in its widespread use in many applications. However, almost half of the world’s cobalt is used in batteries. As the world becomes increasingly reliant on technological devices that all require batteries, cobalts demand will likely rise too.
- Hedge against inflation. All investors have to deal with the risk of inflation and one way to protect, or hedge against it, is by investing in commodities such as cobalt. Inflation is when money loses its value over time. Precious commodities tend to rise when inflation rates rise, making them a good hedge against it.
- Electric vehicle market. As we’ve already mentioned, cobalt is key for batteries, more specifically lithium ion batteries, the types used in electric vehicles. As the EV market grows in the coming years, demand for cobalt will increase too. The past few years have already seen cobalt rise as an important metal in the EV industry.
- Diversification. Many investors stick to stocks and bonds with little exposure to commodities. Including cobalt into a portfolio provides an easy way to diversify. When the stock or bond market is down, it’s common for the commodity market to be up. Investing in cobalt can provide protection to a portfolio.
5 top tips for investing in cobaltCopy link to section
To invest in cobalt you can follow the steps we’ve highlighted below to get started.
- Decide on an investment strategy. Before you make your first investment you should decide if you want to invest passively or actively. It will also be helpful to decide how much risk you want to take on, as this will help guide you on how to invest.
- Do your research. You’ll need to conduct well balanced research into the cobalt market before you start investing. Understanding its different uses and analysing its fundamentals is a good place to start. Further down this page we’ve included some of the key factors that drive its price.
- Set a budget. You probably already have an idea of how much you want to risk, but setting a budget is a good idea. You could allocate a small portion of your portfolio to cobalt investing. It goes without saying to never risk more than you can comfortably afford to lose.
- Choose between the long term and short term. If you’ve researched the market you may have an idea of what you think its price will do over the long or short term. Choosing how long you want to invest for can help with choosing the right method of investing.
- Find an investment platform. To start investing in cobalt you’ll need to find a broker that offers it. At the top of this page we included some of the top brokers around that offer cobalt investing and if you click the blue button below, you can check them out.
Ways to invest in cobaltCopy link to section
THere are a number of different ways to invest in cobalt and the right approach depends on things like your budget, expertise, and timeframe. Below we have explained the different methods you can use to invest in cobalt.
Invest in cobalt stocksCopy link to section
Cobalt is mined around the world, although it’s mostly concentrated in Africa. There are a range of different mining stocks you could invest in. Companies that are involved in cobalt mining generally see their stock price rise and fall with the price of cobalt. You could also invest in companies involved in the wider commodity market.
Invest in cobalt ETFsCopy link to section
An exchange traded fund is often the easiest way to gain exposure to cobalt. ETFs are similar to stocks, and you can buy and sell shares in them. There are many ETFs that are involved in cobalt, or a range of metals. It’s a good idea to research what is available before making a decision.
Invest in cobalt mutual fundsCopy link to section
THere are no specific mutual funds that invest solely in cobalt. However, there are many that invest in the wider commodity space, or metals. Mutual funds are similar to ETFs, although they are managed by a professional fund manager who buys and sells assets according to their own expertise.
Invest in cobalt futuresCopy link to section
If you plan on speculating on short term price movements in the cobalt market, then futures are the best option. Futures contracts are an agreement to make a trade at a specific date in the future. It’s worth noting that futures trading is complicated and requires a lot of knowledge to be successful.
How does the cobalt market work?Copy link to section
Like all markets, supply and demand impact the price of cobalt. There are a lot of factors that drive cobalts demand or supply and in the section below we have explained a few of the top ones.
- Democratic Republic of Congo. Cobalt is found around the world, although no county comes close to the DRC in terms of production. Over half of the world’s cobalt is mined in the African nation and production outputs can drastically impact its underlying price.
- Political instability. The Democratic Republic of Congo is well known for war, corruption, and a difficult political environment. It’s common for mining companies to run into difficulties making it a far from ideal location to do business from. Any changes in the DRC’s political landscape can cause a knock on effect in cobalt.
- China. Much of the world’s cobalt comes from the DRC, however most of the world’s cobalt is refined in China. This means that one nation has control over the world’s cobalt output. As China has a lot of control over supply, it also has the ability to impact prices and almost has a monopoly on the metal.
- Electric vehicles. The biggest use for cobalt is in lithium ion batteries. These batteries are used in electric vehicles, a market that has been growing in recent years. As the EV market grows, so will the demand for cobalt. Speculating on cobalt is a way to indirectly bet on the wider EV market.
When should you invest in cobalt?Copy link to section
There is a wide range of times when cobalt investing would be a good idea. Keeping track of inflation rates and investing when they are on the rise can be helpful. It’s also a good idea to pay attention to the geopolitical outlook for the Democratic Republic of Congo. If tensions rise in the region, supply could go down, making it a good time to buy, as prices could rise.
You may also benefit from monitoring the wider electric vehicle market. In recent years this has been the driving force behind cobalts rise in price and any future growth, will most likely be good for the metal. Although the EV market is fast moving and technologies are always evolving; there is no guarantee that cobalt will always be required for batteries.
Is cobalt a good investment in 2024?Copy link to section
Yes it could be, although there is a lot to consider before investing. The electric vehicle market is growing, as is the usage of lithium ion batteries, both of which are good for cobalt. However, supply chain issues continue to dominate world wide supplies of technology using batteries. It is also unknown what the outcome of the Russian invasion of Ukraine will be, which could impact commodity prices around the world.
What should I do now?Copy link to section
If you are ready to start investing in cobalt, you’ll need to register with an online broker that offers it. Click the blue button below to check out our expertly selected list. If you do invest, it’s a good idea to keep up to date with the latest news and analysis, which you can do so by clicking on the links below.
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