How to Invest in Lead
Lead, which carries the symbol Pb, is a soft and malleable metal that has a gray color once exposed to air and silver color when melted into a liquid. In certain forms and quantities, lead can lead to blood disorders or poisoning, especially in animals.Unlike most metals, lead has a poor electrical conductivity rating despite being ductile although the product is malleable. Additionally, lead is probably best known for being the resistant to radiation thanks to its heavy density which prevents gamma rays from getting through.
Lead is extremely resistant to corrosion, a physical property that makes the metal ideal for handling corrosive liquids and multiple applications in construction. In addition to its uses in roof shingles and other aspects of construction (such as lead pipes), lead is used in batteries, ammunition, and weights. Because of its high density and atomic number lead can also be an effective shield against radiation, which accounts for its use in medical vests.
Investors seeking greater exposure to lead have limited options. Investors can obtain exposure by buying futures contracts on the LME and while physical exposure is theoretically possible, the low value/density ratio of lead makes it impractical. In terms of equities, the field is also limited since a number of companies extract the metal but do so in conjunction with a variety of other products, making pure-play exposure difficult to achieve. However, there are a number of ETPs that investors can use to achieve exposure to the metal including broad industrial metal basket funds and a lead ETN that only targets lead futures for investment, giving investors targeted exposure to the metal.
Ways to Invest in Lead
There are 2 ways to invest in Lead: ETFs and Futures. Click on the tabs below to learn more about each alternative.
What are Lead ETFs?
Lead exposure is included in a number of broad-based industrial metals ETPs, such as the PowerShares DB Base Metals (DBB) and iPath Dow Jones-UBS Industrial Metals ETN (JJM). There is also a pure play ETP option available for those seeking targeted exposure to lead; the iPath Dow Jones-UBS Lead ETN (LD) is linked to an index that consists of lead futures contracts.
LD will not necessarily move in lock step with spot lead prices, as the underlying assets are futures contracts and not the physical metal. In addition, investors should be aware of the structure and potential ramifications; because LD is an ETN, investors are exposed to the credit risk of the issuing institution.
What are Lead Futures?
Lead futures are traded on the London Metal Exchange (LME), where prices are quoted in U.S. dollars and cents per metric ton. LME lead futures are traded in lot sizes of 25 tonnes, which is the equivalent of approximately 55,000 pounds.
Lead must be ingots of 99.97% purity (minimum) conforming to BS EN 12659:1999. The contract code for LME lead futures is PB. Clearable currencies include U.S. dollar, yen, sterling, and euro.
Additional lead futures resources:
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