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Alternative Investments

Iridium Prices Soar as Supply Shrinks

Bitcoin, other cryptocurrencies and “meme stocks” have been grabbing all the headlines.

But there’s another bull market underway that isn’t getting nearly as much press.

It’s key to what is sure to be one of the fastest-growing markets over the next couple of decades. In fact, this market is expected to be worth $11 trillion by 2050.

That’s a lot of upside for this scarce resource.

Bad Day for Dinosaurs… Good News for Apple

Sixty-six million years ago, it was just your typical day on Earth.

Well, until an 11-kilometer asteroid smashed into what would eventually be known as the Gulf of Mexico.

The Chicxulub crater, discovered in the 1990s, is a staggering 200 kilometers wide.

The impact from the asteroid sent vaporized rock into the atmosphere. The sun was blocked out. And a winter descended upon the world that lasted for decades. The result was a mass extinction that affected 75% of the species on Earth, including nonflying dinosaurs.

But it did pave the way for humans.

Now, the reason we know it was an asteroid that killed off the dinosaurs is the “iridium anomaly.” In the rock strata between the Cretaceous and Paleogene eras, there is a thin layer of clay that contains 100 times more iridium than any other layer.

Iridium is rare on Earth. That’s because it’s a siderophile – meaning it loves iron, like its platinum group metal kin. So it tends to sink to the planet’s core.

But in asteroids, iridium is much more abundant. (There’s definitely an opportunity for asteroid mining… someday.)

Back here on Earth, though, iridium is the ideal catalyst for electrolysis. This is the process used to produce hydrogen from water.

Hydrogen fuel cells and hydrogen-powered vehicles are poised to be the next wave in green energy. In turn, this is part of what’s triggering a meteoric rise in iridium prices.

Flying Higher Than Bitcoin

Many precious metals’ prices have sagged since August.

Gold is currently down more than 10% year to date while silver has fallen more than 9%. Palladium and platinum have squeezed out gains.

But that’s nothing compared with their noble friend iridium.

Price of Iridium

The price of iridium has rocketed 130% higher since the start of 2021 to $6,000 per ounce. And over the past four months, iridium prices have more than tripled!

This means, year to date, iridium’s gain is outpacing Bitcoin’s. Though it’s trading at almost one-tenth of the price of the cryptocurrency…

Iridium is one of the most corrosion-resistant metals on the planet. On top of that, its melting point is 4,435 degrees Fahrenheit. Because of this, the metal is very popular with industrial applications and is often combined with platinum or osmium to produce a wide variety of products.

But beyond industrial and green energy uses, iridium is a key component in backlit LED screens, like those of an iPhone or iPad. In fact, more than a decade ago, Apple‘s (Nasdaq: AAPL) use of iridium in the iPad is what spurred the metal to cross the threshold of $1,000 per ounce.

Over the past year, the ultra-rare metal has been grappling with supply disruptions.

There’s too long of a lead time to increase the supply of iridium. And because many producers have dragged their feet on producing more platinum and other platinum group metals, the market is facing supply constraints.

Four Companies to Watch

The current global production of iridium is a mere 3 to 4 tons per year. And most of it comes from South Africa, though Russia and Canada chip in as well.

Consequently, there is no exchange-traded fund or route for investors to snag a piece of iridium as there is with gold, silver, platinum or palladium.

But the world’s largest producers of iridium are Anglo American Platinum (OTC: ANGPY), Sibanye-Stillwater (NYSE: SBSW) (through its acquisition of Lonmin), Norilsk Nickel (OTC: NILSY) and Impala Platinum Holdings (OTC: IMPUY), which produces roughly 67,000 ounces of iridium each year.

Year to date, the share prices of both Anglo American Platinum and Impala Platinum have jumped more than 30%.

Iridium and platinum are projected to see additional demand, thanks to the rise of hydrogen power and other green energy uses.

So though their prices seem steep today, they could be poised to head even higher.

And that’s an impact every investor should welcome in their portfolio.

Here’s to high returns,

Matthew

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