Lithium, page-1437

Below, some interesting/provocative comments on the lithium story from an interview with INN and Rick Rule.

INN: 2016 was many things, but I would think it would be hard to dispute it was the year of the lithium junior. Any specific resource that you think will heat up like that? I mean, cobalt seems to be coming on strong, so the energy metals seem to be getting a lot of interest, I think, from millennials. What are your thoughts?

RR: You know, these boomlets that you see from time to time sort of remind me of the old small town circuses, lots of flash and dazzle and no substance. As an example the lithium ion battery which has spawned all this interest in lithium is about three and a half percent lithium. If you believe that there’s going to be billions and billions and billions and billions of lithium ion batteries that makes you a nickel and copper investor because that’s what the lithium ion battery is for, it’s full of nickel and copper. You might look to cobalt, the problem is that you wouldn’t look to Canadian cobalt which makes you feel warm and fuzzy because Canada doesn’t have much cobalt. If you want to be in the cobalt business, if you like that sexy story, the pretty girl in the booth with the electric car, you have to go to Congo and Uganda where the cobalt is.

The truth is that one of the things that works in the market is not arithmetic, but rather, a narrative, and there’s always a sexy narrative. There was rare earths, the problem was, that they weren’t rare. We hadn’t found them in North America because there were too cheap in China to bother looking for them. When we went out to find them, we found them in abundance. Now, we found out in terms of the stock market, that the three most evident rare earths in the world were fraudium, storium and scamium and now we’ve moved on from there to lithium.

The problem with lithium is that the world has too much lithium, demand for lithium increased faster than the four big lithium producers could increase their production. But the truth is that we believe, in terms of resources and reserves, the four big lithium producers have about a hundred years reserves at current rates of consumption.

Shortage? No. An interesting story? Yes. If you are talented enough to trade the impact of a narrative on a market, these miner boomlets can always work for you, provided that you’re mature enough to understand that your trading a story, not reality.