What are Green Metals?
When I was in the US Navy, one of my jobs was to clean the ship’s bell. This was a big brass bell located on the signal bridge. On many ships, the cooks are the ones who clean and polish the bell. If you don’t clean it, the metal oxidizes to a dirty green. But that isn’t what is meant by green metals in the 21st century. Green metals can include copper, aluminum, lithium, and other metals used in the manufacture of green energy solutions. The following definition is helpful.
“The metals used in cleaner-energy applications have become known as ‘green’ metals. Copper is used extensively across wind, solar, hydro, nuclear, and geothermal energy, as well as electric-vehicle and battery technologies.” LINK
Believing Some Lies
Some people are quick to tell and believe lies if their claims fit their financial, economic, or political agendas. To call any metal “green” because it is more earth-friendly is quite a stretch. The mining, refining, shipping, recycling, manufacturing, and disposal of metals is hardly green. Of course, the argument can be made that coal and oil are less green. There are, however, many unanswered questions. It is easier to just say we are moving to greener transportation because more vehicles won’t have tail pipes.
VanEck ETF Trust – VanEck Green Metals ETF
GMET is a relatively new ETF with 60 holdings with an inception date of 11/09/2021. Some of the GMET holdings are mining companies I own or have owned in the past. GMET’s expense ratio is a bit high at 0.59%. This is a passively managed fund that seeks to follow the natural resources index. One warning: GMET has only $15.7M in net assets and you should care about a fund’s size.
This might cause the fund to have less demand and less trading activity. In addition, if it doesn’t take off and grow, VanEck could shut it down and give you cash for your shares at a time when you don’t want to sell.
ETFs sometimes close because they do not attract enough investors and dollars. As a result, investors may pay income taxes on any capital gains when the fund is liquidated. You might also take a loss. Fund size does matter.
An Alternative to GMET
A better approach, in my opinion, is to buy one-or-two mining stocks that pay a dividend or that focus on a specific in-demand metal. The metals you might want to consider are copper, gold, platinum, lithium, aluminum, and iron. Yes, I said iron. Some of the stocks we hold in the materials sector are CC, CLF, DOW, LTHM, LYB, RIO, SBSW, SON, SVM, X, and VALE. If you dig into these, you will find that they vary in size and focus.
Picking Good Stocks Using ETF Top-Ten Lists
Always look at the top ten investments in any mutual fund or ETF. Sometimes it is better to buy 2-3 of the top ten stocks instead of having a watered-down ETF with a bunch of junk. Here is a helpful image from Fidelity.
Full Disclosure
I own 200 shares of LTHM (Livent Corporation) as a speculative investment. I prefer RIO as a long-term investment. RIO is Rio Tinto Group and Cindie and I own 500 shares of this company.
Know Your Flocks & Herds 