3 Types of Materials Like Gold Expected To Soar in Value By the End of 2025

The interesting thing about investing in raw materials is that there is a finite supply, which, according to Economics 101, should result in increasing prices. But other factors are at work, such as the process involved in refining that material to make it useful and the demand for the products that can be made from it.

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Commodities, or raw materials that can be bought or sold, often fluctuate more in price than equities do, making them riskier for most investors. But here are three commodities that are expected to spike in price by the end of 2025.

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Copper

Copper is a key material in many clean energy projects, including electric vehicles, energy storage systems, and energy infrastructure. In addition, 5G networks and Internet of Things (IoT) devices require copper for connectivity.

The increased demand for copper will inevitably result in an increase in prices. As of July 26, 2024, the spot price of copper is $4.07 per pound, up from $3.86 per pound on January 1, 2024. Its high for the year was $5.22 per pound on May 21, 2024. According to Techopedia , the price of copper is expected to reach $4.30 to $4.80 per pound by the end of 2025.

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Gold

Gold is the standard by which all other precious metals are measured, and its price can be tied to the overall economy and supply and demand.

Gold has hit several all-time highs this year and sees little likelihood of slowing down. The spot price for gold on July 26, 2024, was $2,387.04 per ounce as compared to $2,043.05 on January 1, 2024. JPMorgan predicts the price of gold will reach $2,500 per ounce by the end of 2024 and $2,600 per ounce by the end of 2025.

Silver

The price of Silver is influenced by supply and demand, but it is also closely tied to the strength (or weakness) of the U.S. Dollar. When the dollar is strong, the price of silver rises. Silver prices are also dictated by supply and demand, particularly in the industrial market, which accounts for 65% of silver purchases.

Silver prices have also enjoyed record-high prices this year but have backed off their highest point in the last couple of months. The price of an ounce of silver was $23.02 on January 1, 2024, and by May 26, 2024, had risen to $32.06 per ounce. As of July 26, 2024, however, the price of silver had fallen to $27.93 per ounce. Coin Price Forecast estimates silver prices will rise to
$45.28 per ounce by the end of 2025.

How To Invest in Commodities

There are several ways to invest in commodities like copper, gold, and silver. One method is to purchase a physical asset, like a gold bar. This method can be challenging, as you have to store the physical asset, and when it comes time to sell, you need to move the asset to the purchaser while securing the cash for the transaction.

You can also purchase futures contracts. Commodities futures contracts are similar to stock options in that you are buying the ability to buy or sell a specific amount of a commodity by a specific date at a specific price. Futures trading often involves borrowing against securities you own and is, therefore, quite risky. Be sure you understand exactly what you are getting into if you decide to trade commodities futures.

Stocks of companies that discover, mine, and develop commodities are another way to invest in these materials. When commodity prices rise, the companies that discover and develop these materials so businesses or consumers can use them will often also rise. Thus, you can take advantage of an increase in commodity prices by investing in the companies that will benefit from such an increase.

You can also invest in mutual funds that invest in commodities. Mutual funds may invest in commodities futures, physical assets, or in the stocks of commodity-producing or developing companies. This method has the advantage of diversifying your commodity investment somewhat, but it is still important to understand how the fund is investing.

Regardless of how you invest in commodities, understand that such an investment almost always carries more risk than an investment in mutual funds, bonds, or even individual equities. Understand what you are buying and make sure it fits into the asset allocation of your broader portfolio.

This article originally appeared on GOBankingRates.com : 3 Types of Materials Like Gold Expected To Soar in Value By the End of 2025