There is a reason commodities have price cycles, demand is for more elastic than supply. Demand will ramp quickly and push prices higher, investors will then pile in to develop supply. All that new supply will come online at a (relatively) similar time, with a lot of sunk costs, and prices will drop to the cost of production as marginal producers end up going straight to care and maintenance. Investment stops, demand catches up then overtakes supply, marginal producers come back online and eventually new development is required.
Anyone who thinks that this time will be different, I would challenge them to explain why.
That said there will come a time when the scarcity of minerals will physically prevent new development, however recyclers will be playing a much bigger role by then so I do not expect we are there yet.
All IMO, please DYOR amd GLTAH.
BRB Price at posting:
23.0¢ Sentiment: None Disclosure: Held
