The following is a guest editorial courtesy of Andrew Saks, Head of Research and Analysis at ETX Capital.

In this post e-commerce world, we can see the hipster generation go around with chins in the air, subconsciously self-satisfied that the entire developed world has banished the analog and physical world to the history books, an air of achievement abundant as internet-orientated information, subscription-based products and touch-of-a-button deliveries now dominate.

In the minds of many, gone is the heavy manufacturing legacy of the Victorian era, and well and truly here is a world in which everything operates via the ether.

Why, in that case, are groups of ne’er-do-wells going about their days removing cast iron from buildings leaving gaping holes in rooves and walkways, stealing catalytic converters from cars and causing bicycles to vanish from secure storage areas?

In the last two months alone, I have personally had two bicycles stolen, my motorcycle stolen, and noticed that the walkway above the parking lot where I live has been relieved of several cast iron panels.

Far from the social media-driven coffee shop utopia that the Apple MacIntosh-wielding Generation Z digital whizz kids are certain we have finally achieved, the analog world, which is still huge, is grabbing as much metal as is available.

The aforementioned disappearing objects are perhaps testimony to the demand, and the rising value.

Rising value is an understatement. Metals are rocketing.

Just over one year ago, copper was worth around $4,500 (£3,200) per ton and there was very little movement. Over the past few days, the price has topped $10,000 on the COMEX market in New York and forecasters expect it to keep rising through the summer.

Other metals tell a similar story. Aluminium, zinc and nickel have shot up since last spring, while iron ore prices have more than doubled from around $85 a ton to around $190 a ton.

Most of this demand stems from the return to infrastructure project construction and specifically, very large engineering endeavors such as the building of roads and railways, hospitals and schools, broadband cables and electricity pipes.

Even the huge move toward electric cars has created a demand for such metals for battery production and also the copper in Type 2 charging cables, which are also a target for thieves to the extent that vehicle manufacturers have built in a system which locks them in place once connected in order to put a stop to light fingered opportunists removing them and selling them for scrap metal.

As a result of this huge increase in the value of metals, a little known idea in the UK but a very popular one in North America, mining royalty finance, is now getting more traction as royalty firms lend money to miners and receive a percentage of their revenues in return.

Once revenues start to flow however, the agreements provide royalty firms with a steady source of income over many years.

One particular firm which provides this service and is a relatively newly founded entity is already conducting deals of this nature to the tune of between $500,000 to $28 million, often beneath the radar of more established royalty firms, whose deals can run into hundreds of millions of dollars.

In terms of the impact of metal value increases on the OTC markets, it has been a quietly ignored dynamic to a large extent.

Volatility in precious metals is an absolute opportunity, especially in these times of reversion to large development projects in global infrastructure, but it has been largely ignored by the trading industry as a whole.

We now live in a world in which digital execution of all trades is refined and mature. The London Metal Exchange famously closed down the last remaining open outcry pit recently.

However, it is clear that the digital method we use to execute trades must not be a barrier to connecting to good, old fashioned physical commodities – especially when they double in value in just a year!

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.42% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.

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