Is The Zinc Run Over With?

It seems that most people who are interested and follow the metals tend to follow gold and silver the most. So when we are following these two commodities we tend to loose track or maybe even ignore the other metals. When it comes to keeping an eye on base metals however most tend to focus or track the price of copper. The reasoning for copper being tracked and followed so close is that copper is like a barometer for the global economy. However by staying focused on just a few metals, traders or investors can really miss out on what is really happening out there.

Of all the base metals out there zinc is one of the most common and of course seems to be in abundance everywhere. Zinc itself as a commodity is used in almost all manufacturing to some degree. It is used a lot in galvanizing of metals to protect these metals from rusting and corrosion. Zinc is not really a glamour commodity and doesn't dazzel people like gold and silver. Drilling campaigns by different miners don't seem to get the same investor attention as say gold. However, while everyone has been following the precious metal price over the last year or so, zinc has been on a real tear. I stumbled onto an article taking about a zinc shortage and then took a look at the zinc price and was quite shocked at how zinc has performed this year.

Taking a look at a five year chart of zinc we can see that in January of 2016 the price was roughly 70 cents per pound. Today that price is close to $1.30 cents a pound which is almost a doubling of the zinc price in almost a year. This got me to wondering if this price increase was just a speculation on zinc or if the price has risen due to an actual shortage of the commodity. After taking a look at a five year warehouse storage amount on hand like the chart below shows, you can see that there actually is a real shortage of zinc on the world markets.

After seeing these charts and how the zinc has risen in price almost 100% this year I started to wonder if any of the zinc juniors has followed the same route. The first one that comes to my mind always is Canadian Zinc CZN. Canadain Zinc owns the Prairie Creek mine in the NWT of Canada. There stock price has gone from 8 cents in January to a high of 40 cents in July. The stock has a price today of around 25 cents. Still a very nice run up.

The second junior with a large focus on zinc is Tinka Resources TK. Tinka has a large zinc and silver project it is exploring in Peru. The deposit they are looking to define more indepth has an inferred mineral resources estimated to be around 18.8 million tonnes grading 8.2% Zinc equivalent. Tinka has a 9 cent low and about a 25 cent high and sits close to high today.

Of course if you want to invest in a zinc major you can always buy stock in Hudbay Minerals HBM. Hudbay has several mining operations throughout North America and Peru. Of course they are not just zinc specific as zinc is a very common mineral found in almost any VMS deposits and anywhere copper-gold-silver is found also. Hudbay stock has run from around $2.50 to almost $10 today giving investors a nice 400% return so far this year.

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