Spring Coiled Tight Under New Energy Minerals
A spring is coiling tightly under the prices of the minerals essential to the new energy paradigm that are facing supply constraints. I’ve been saying this since mid-2018. Let me show you why.
Consider the price action in copper and nickel over the last year. The same trend toward lower prices is visible in most industrial metals, with uranium and vanadium being the most visible exceptions. But these are two of the most important energy metals facing supply constraints.
The negative trend is obvious. And it makes perfect sense with the trade war weighing on the global economy. But there’s something people forget—or fail to see the significance of:
This decline started before the trade war started having the visibly negative impact on economic figures in the China, the US, and around the world.
The harm the trade war is now just starting to have on the global economy. Lower demand for industrial minerals, was priced in advance. That’s the coiling of the spring.
Get our daily investorintel update
How can we tell? Over the same time, London Metal Exchange warehouse stocks of industrial metals have, as a group, dropped as well. Leading the pack are my favorites, copper and nickel.
As you can see, the draw-down is quite dramatic. Consumers didn’t slow their consumption of these metals until very recently—and the recent uptick in stocks may just be a random blip.
This makes perfect sense, given the world’s accelerating shift away from gas and diesel cars to electric vehicles.
That’s all fine, but what matters to me as a speculator is that the negative pricing in advance of actual declining demand remains a coiled spring under key metals’ prices.
When the trade war ends—something both sides very much want—that spring will be released.
Increasing demand at a time of depleted stocks could make for a spectacular rally. This could happen at any time this year—and stocks in the right companies will add high leverage to the upside in the metals themselves.
That’s why I’ve held on to my energy minerals stocks and am looking to buy more this year. You’re welcome to sign up for The Independent Speculator to find out where I’m deploying my own money in this space. Regardless, I do hope you prepare your own portfolio for the coming release of this tightly coiled spring.
Note from the Publisher: Lobo Tiggre has recently launched his own subscription-based program called The Independent Speculator, which advertises “Actionable Investment Ideas for Exceptional Results. Start benefitting from powerful, thoroughly researched, unbiased investment insights today.” that I personally love — to subscribe, click here
Lobo Tiggre is the founder and CEO of Louis James LLC, and the principal analyst and editor of IndependentSpeculator.com. He researched and recommended speculative opportunities ... <Read more about Lobo Tiggre>