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Germanium investment and trade
Germanium is a chemical element. It is a gray-white, hard, brittle metalloid element that is often found in coal, soil, and other minerals. Germanium is widely used in electronics, which we will cover later on in this article.
Germanium is not actively traded on exchanges, and therefore it is difficult to invest in directly. However, there are several ways to gain indirect exposure to the price of germanium, that we will tell you more about.
Whether you should trade and invest in germanium, depends on your trading strategy. We will give you an overview of the possibilities and the pros and cons.
The price of germanium varies depending on a variety of factors such as the availability and demand for the metal. It also varies widely depending on the grade, quantity and form.
The graph on this page will show you historical context, current prices and the trend that this raw material has undergone.
What to know before trading in germanium
It is important to have background information on the raw material of your choice, before you trade in them, because it gives traders important information about the market. This can include fundamental and technical analysis, supply and demand dynamics, geopolitical events, and market sentiment.
Knowing these details helps traders make better informed decisions, spot potential risks, and identify areas where they may be able to gain an advantage. Having this information can also help improve the trader’s positioning and timing when entering into a trade.
Supply and demand
When trading or investing in raw materials, such as germanium, supply and demand is the fundamental mechanism used to determine stock prices. Stock prices rise when demand is greater than supply as investors are willing to pay more for the stock.
Alternatively, stock prices fall when supply is greater than demand as investors are not willing to pay as much for the stock. Typically, demand for stocks increases when the raw material’s underlying fundamentals are strong or when investors believe the stock price will appreciate in the future.
As a result, savvy stock traders are always aware of factors influencing demand and supply to make educated trading decisions.
Use of germanium
It is important to know what germanium is used for, to understand where the supply and demand come from.
Germanium is a chemical used in a wide range of applications. It is used in mostly industrial setting like nuclear detectors, high-frequency electronics components, night-vision devices, radar systems, medical imaging techniques like PET scans and more.
On the consumer-grade side it is more common in smoke detectors, solar cells, alloys with copper and aluminum and semiconductor devices.
The future use of germanium looks bright, as scientists and engineers continue to explore the many uses for this element. Germanium is a critical component of optoelectronics, electronic components for communications, scientific research, and even cancer treatments.
Researchers are also exploring the use of germanium to develop spintronics, energy-efficient devices, and other advanced technologies. With its many uses and promising potential, germanium stands to remain a key component of the future.
Production of germanium
According to the World Nuclear Association, an estimated 13,000 tons of germanium was produced in the world in 2019. This could mean that it is scarce, but we also know that only small amounts of germanium are needed in its use.
This raw material is mainly produced by China, followed by Russia, Canada, Japan, and South Korea.
Germanium is primarily extracted from the mineral sphalerite and is also obtained as a by-product of the processing of other ores, such as lead and copper ores, as well as smelting zinc ores. The metal can also be synthesized in a laboratory, through the reduction of germanium dioxide using hydrogen or carbon.
Trading and investing in germanium
Germanium is traded in the open market among suppliers through the London Metal Exchange, usually in a small number of large contracts. This means that this way of trading and investing in this raw material is usually not for the average investor.
If you are looking to trade in these contracts, you are looking at a high risk, high investment deal.
The easy way of trading in germanium is through distributors. These parties will buy large volumes on your behalf, trading it and having you leverage from the profit.
This could be a very volatile way of trading, as different distributors handle different ways of buying and selling. It is important to do a lot of your own research before delving into this.
Over-the-counter (OTC) markets are off-exchange markets or decentralized trading networks where buyers and sellers trade directly with each other, typically using a broker as an intermediary.
OTC markets provide an opportunity to trade germanium without having to access the regulated exchanges. Instead, these markets are based on a network of dealers who provide liquidity to buyers and sellers.
OTC markets are decentralized, meaning they typically operate outside of standard measures of corporate governance and regulatory oversight. This means that you should always be extra careful using this method, as it is not backed or guaranteed by the larger institutes.
There are specialized germanium exchanges that even feed deep into the crypto-sphere. More commonly though are the platforms that have specialized germanium parts to their offering.
There are several specialized exchanges offering germanium products, including:
- Tradeblock: Tradeblock offers a variety of germanium products, including semi-conductor grade germanium, solar cell grade germanium, and metallurgical grade germanium.
- Umicore: This global leader in materials specialties sells several grades of germanium including optically pure germanium and ultra-pure germanium for use in the semiconductor, solar and LCD display industries.
- Germanium Exchange: This online platform provides a secure, reliable and convenient way to buy and sell germanium products. It also offers analytical, logistical and consulting services.
- Metal & Engineering Trade: These global metals trading platform and broker specializes in ferroalloys, metals and minerals, including germanium.
- Galmetall: This German supplier specializes in the trading of germanium, as well as other rare earth and specialty metals.
- Intercontinental Metals: This metals trader offers a wide selection of germanium including high-indium germanium, ultra-pure germanium and optically pure germanium.
Third-party system: Suppliers
It is possible to invest in stocks of germanium mining companies, mutual funds or ETFs. This way you are not directly investing into germanium, but yielding profit of the increasing demand for it at the suppliers or mining companies.
The right way of investing in germanium
Investing in germanium is hard, but with the right investments can yield a profit, because of its use in various applications. The third-party system is the safest bet when investing, but depends also more on other factors than just the germanium.
An average trader may invest in germanium because of its use in a lot of industrial grade applications. This use is suggested to only increase, which makes it a relatively safe long-term investment.
The amounts of investments can vary depending on the type of trading that is used. However, it seems that the highest yields come with the highest investments on germanium off the public trading system.
The average investor should see germanium as a long-term investment on the side, due to its high potential in use and its scarcity in the global market.
Germanium has been used in many applications since it was discovered in 1886, but its popularity has fluctuated over the years.
In the mid-1900s, germanium was used extensively in the electronics industry for transistors and other electronic components. It continued to be used for electronics through the 1970s as semiconductor technology advanced, but its popularity began to decline in the 1980s as other materials, such as silicon, became more prevalent.
The popularity of germanium dropped further in the 1990s as gallium arsenide and other exotic materials were developed that had better performance than germanium.
However, germanium made a resurgence in 2000s as the eco-friendly photovoltaic material was developed. Germanium was also used in sensor applications such as infrared sensors and X-ray imaging.
Past 2020, germanium is still widely used for photovoltaic applications, as well as optical communications and semiconductor fabrication. Germanium is also used in the medical industry for imaging.
In general, the wide range of industrial applications of germanium has helped to drive its price higher in recent years.
Is germanium a good investment for trading?
The average investor trading germanium is likely to have less success in trading it on their own as it is a rare and difficult mineral to acquire. Germanium is not publicly traded, but it is possible to purchase futures contracts or derivatives on the London Metal Exchange.
Investors would need to be knowledgeable about the market for germanium and may need to seek advice from a qualified professional before trading it.
Because germanium is a pretty hard to trade raw material, it is wise to have a strategy beforehand. Using a short-term strategy can be good when trading germanium on specialized exchanges or OTC markets.
However, when trading germanium in the big leagues, through large contracts, a long-term contract is a safe way to invest your money in germanium.