The most powerful economic trend since the advent of the Internet.
People Love or hate Elon Musk and Tesla. There’s so much noise on the subject of the new energy paradigm, it would take a book to sort it all out. Ignore the hype. Here’s the simple, powerful fact that will make fortunes for those bold enough to act accordingly:
The accelerating adoption of the new energy paradigm is the most powerful economic trend since the advent of the Internet.
Absent WWIII, it’s now unstoppable. And there’s money to be made.
Here are the key facts to keep in mind about the minerals:
- The game-changing lithium-ion battery also typically contains nickel, manganese, cobalt, and graphite.
- Lower-cost, higher-efficiency solar panels are another game-changer. Current commercial models contain substantial amounts of silver.
- Long-lived, vanadium batteries big enough to power cities are a game-changer in the making.
- Connecting power sources and power storage, as well as putting electricity to work in motors and gadgets takes a lot of copper.
Also remember that markets fluctuate. Metals markets do so with gusto. It’s par for the course. Lower prices along the way do not mean there’s anything wrong with the trend. They help us to buy low so we can later sell high.
That said, the current trade war has all commodities on sale, including the ones that power the new energy paradigm. Until it’s over, I expect these to remain under pressure. And when it’s over, I expect that pressure to release—explosively—to the upside. Whether one wishes to buy before or after that release depends on one’s tolerance for risk, and patience.
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How To Profit
This is straightforward: we invest in the new energy minerals that are both necessary and in short supply. I’ve built a model to help us do just this, with a range of projections based on the #1 variable, the rate at which electric vehicles take over the car market.
As you can see, lithium is still in a market surplus and will be for years to come. Lithium is not rare. I’ve been right in calling for a substantial correction in lithium prices. The profitable producers will still make money and aren’t bad stocks to own, but that’s not where I want to put my speculative cash.
Cobalt remains one of my favorite energy minerals. It’s easy to see why: it’s already in deficit. This is true even under the most conservative assumptions. I’m looking for great speculations in this space now.
My model shows copper going into a modest supply deficit now. That only gets worse (or better, depending on your perspective) as far as can be reasonably projected into the future.
As with lithium, this chart tells you all you need to know about why I’m not a graphite bull.
Nickel is facing serious supply deficits. I expect higher prices once the trade war is over, perhaps even before then, and for years to come.
Silver is used for many things, with its role in the new energy paradigm just a small, but rapidly part of the overall story. I do not have a chart like the above for silver because silver prices are not determined by physical supply and demand. In fact, silver has been in a supply deficit for most of the last 10 years, including every year since 2012, and that didn’t stop prices from plunging since then. Silver prices track gold, almost regardless of whether it’s in surplus or deficit.
Fortunately, while it doesn’t matter what impact the new energy paradigm might have on silver demand, I’m bullish on silver because I’m bullish on gold. (Why I am is a subject for another day.)
Unfortunately, vanadium is a much smaller market with less data than major metals like copper and gold. That makes it harder to get good data for making reliable projections. Third-party numbers, however, indicate that there is indeed a current supply deficit, justifying the higher prices. However, the recent price surge due to a change in Chinese regulations requiring more vanadium to strengthen steel products like rebar has nothing to do with the new energy paradigm, and, as you can see in the chart above, was priced in advance. I’m waiting for a new, sustainable price range to form before I start speculating on pure vanadium plays.
In sum, the world’s accelerating adoption of the new energy paradigm makes me strongly bullish on only certain energy minerals. I’m also watching for solid progress in resolving the trade war as a clear signal that it’s time to buy.
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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>