The periodic table represents the earth's known chemical elements, including 94 naturally occurring elements and 24 synthetic elements artificially produced in extreme conditions such as in particle accelerators. The periodic table is divided into nine families of elements with similar properties: alkali metals, alkaline metals, transition metals, other metals, metalloids, non-metals, halogens, noble gases and rare-earth metals. These rare-earth metals, along with a selection of elements known as base and precious metals, provide today's investors and active traders with a variety of trading opportunities. (For background reading, see A Beginner's Guide To Precious Metals.)

TUTORIAL: Commodity Investing 101

Base Metals
In chemistry, metals that oxidize or corrode easily are referred to as "base metals." These industrial metals include copper (Cu on the periodic table), nickel (Ni), aluminum (Al), zinc (Zn), lead (Pb), tin (Sn) and iron (Fe)/steel (an alloy of iron and carbon). Base metals are generally plentiful, and are used in a variety of commercial and industrial applications, such as copper plumbing, aluminum cans and the steel used in automobile production. Because of their abundance, prices for base metals are far below those of both precious and rare-earth metals, and prices respond to changes in demand for the products for which the metals are used.

Investors and traders can participate in the base metals market in a number of ways. Investments can be made in individual companies specializing in particular base metals production, including steel company U.S. Steel (NYSE:X) or aluminum company Alcoa (NYSE:AA). Futures and options contracts of individual metals can be traded, such as copper futures (product symbol: HG) and options (product symbol: HX) on CME Globex. In addition, a wide variety of base metal exchange-traded funds (ETFs) exist, such as PowerShares DB Base Metal Fund (NYSE:DBB), which is composed of futures contracts on aluminum, zinc and copper; SPDR Metals & Mining ETF (NYSE:XME), which is made up of companies involved in the metals and mining industries; and iShares Dow Jones U.S. Basic Materials (NYSE:IYM), which consists of companies involved in the production of basic materials. (Base metals may not glitter like gold, but they can still guide an investor to a conclusion about overall economic health, check out Using Base Metals As An Economic Indicator.)

Precious Metals
Precious metals are naturally occurring metallic chemical elements that have a high luster and melting point, are softer and more ductile than other metals, and are less reactive than most elements. Precious metal include silver (Ag), gold (Au), platinum (Pt) and palladium (Pd). Because of their scarcity, precious metals are valuable – much more so than the base metals. Precious metals are used for jewelry, art, coins, dental work, medical devices, electronics and for investment/holding purposes. (Add some sparkle to your portfolio by getting in on this classic commodity; check out Getting Into The Gold Market.)

Like base metals, a wide range of investment vehicles are available to those interested in the precious metals markets. Gold has long been considered a solid investment and is often physically held in the form of jewelry, coins or gold bars. Particularly during times of economic uncertainty, gold gains popularity as an investor's security blanket. Aside from physical possession of precious metals, investors can trade stocks, futures, options, mutual funds and exchange-traded funds based on precious metal holdings. (To learn more about how gold offers shelter during a recession, check out Gold: The Other Currency.)

Examples of stocks include Eldorado Gold Corporation (NYSE:EGO), and Agnico-Eagle Mines Limited (NYSE:AEM), both Canadian-based gold producers. CME Group offers investors a choice of gold futures and options contracts: The full-sized contract is based on 100 troy ounces (GC), while the "miNY" gold contract is 50 troy ounces (QO), and the e-micro gold contract is 10 troy ounces (MGC). Gold options are also available in a contract size of 100 troy ounces (OG). Futures and options contracts are also available for silver, platinum and palladium.

Precious metal ETFs include the physically backed and heavily traded SPDR Gold Trust ETF (NYSE:GLD), Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), iShares Silver Trust ETF (NYSE:SLV), PowerShares DB Precious Metals ETF (NYSE:DBP) and PowerShares Global Gold & Precious Metals (Nasdaq: PSAU).

Rare-Earth Metals
Rare earth metals are becoming increasingly important to the electronics industry and technological advancements. Elements such a lanthanum (La), Cerium (Ce), praseodymium (Pr) and neodymium (Nd) are used in the manufacturing of electronics like cell phones, computer memory chips, cameras and e-readers. Rare-earths are also a critical component in several military and defense applications, such as night vision goggles, precision-guided weapons and stealth technology. Although none of the rare-earth metals is especially rare, extracting and processing them is challenging due to their widespread geographic distribution, and the environmental concerns with processing (including the release of toxins such as cadmium and radioactive waste). Despite their abundance, rare-earth metals are valuable because they are hard to get, and they are in high demand. (To learn more, read Understanding Rare Earth Metals.)

Investors can gain exposure to rare-earth metals through exploration and processing companies such as Molycorp (NYSE:MCP), Freeport-McMoRan (NYSE:FCX) and Thompson Creek Metals Company (NYSE:TC). Market Vectors Rare Earth Strategic Metals (NYSE:REMX) is a popular exchange-traded fund with holdings in rare-earth metal companies.

The Bottom Line
The earth's 118 known elements appear on the periodic table. Among these elements are base metals, precious metals and rare-earth metals, which provide a variety of opportunities for investors and traders. While gold has been revered for thousands of years and is likely to remain a popular investment, other elements like palladium and neodymium are attracting attention through a variety of trading vehicles including stocks, futures, options and exchange-traded funds. Every investor is unique, so this article should be used for educational and illustrative purposes only. You also need to take your investment horizon, risk aversion and many other investment criteria into account before making any decisions. Seek qualified investment advice before making any decisions you are unsure about. (Find out which futures, options or funds will be your perfect commodity portfolio fit, check out How To Invest In Commodities.)

Related Articles
  1. Economics

    4 Countries Pleading for Higher Commodity Prices

    Discover what countries are struggling the most from the price collapse in commodities and what these countries require to return to economic growth.
  2. Stock Analysis

    The Top 5 Gold Penny Stocks for 2016

    Discover five penny stock gold miners that are well-positioned to profit in 2016, providing opportunities for investors to make significant gains.
  3. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  4. Stock Analysis

    Glencore Vs. Noble Group

    Read about the differences between Glencore and Noble Group, two companies in the commodities business. Learn about accounting accusations facing Noble Group.
  5. Mutual Funds & ETFs

    Pimco’s Top Funds for Retirement Income

    Once you're living off the money you've saved for retirement, is it invested in the right assets? Here are some from PIMCO that may be good options.
  6. Retirement

    Roth IRAs Tutorial

    This comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
  7. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  8. Mutual Funds & ETFs

    ETFs Can Be Safe Investments, If Used Correctly

    Learn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
  9. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  10. Investing Basics

    The Importance of Commodity Pricing in Understanding Inflation

    Commodity prices are believed to be a leading indicator of inflation, but does it always hold?
  1. What techniques can be used for hedging exposure to the electronics sector?

    Hedging exposure to the electronics sector offers an investor a way to insulate his portfolio from losses during periods ... Read Full Answer >>
  2. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  3. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  4. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  5. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  6. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center