As a long suffering gxy holder for around 4 years it’s a nice site to see such a jump but we are still long way below where we need to be for most investors to be back in the green.
no specific news but I guess strong China auto sales out today imply good EV growth YOY which was previously the key global lithium demand driver, so a resumption of the long term uptrend is a good lead indicator in the context of recent decision by Chinese govt to extend of EV industry stimulus/ subsidies.
in combination with the strong ev volume growth in europe this could be the first signs of a turning point, and the lithium stocks have been waiting for a trigger to run up for a couple of years so there will be a lot of insto’s and individuals poised with their finger over the buy button once they see confirmation of a definite uptrend in EV sales and then spot lithium prices.
having said that, my lithium stocks ie SQM, Liv, Ore and Gxy are all well off their lows already. My sqm holdings are already up around 30%.
yet the ore report a couple of day ago gave a fairly depressing short term forecast for August of contract prices for Li carb in the low to mid 3k range which is below cost even for ore as a lowest quartile cost curve producer and way below cost for the hard rocks.
im happy to ride out the lows and the volatility and wait a couple more years for the supply shortage to develop and prices to spike. I think the plentiful global supply of lithium and growing social acceptance means that the peak of the shortage and peak spot prices in the next cycle of lithium will be the idea time to sell out of all but the lowest cost producers eg sqm/ alb/ tanqui. I think there is a fair chance that if gxy can get sdv Commissioned and ramped up by then and james bay phase 1 nearing completion, we could get a sp well above $5 even despite the necessary equity dilution. That would be the time in exit in my opinion, and good resource investing is really all about timing your entry and exit across the cycle because as we saw in the last lithium cycle, when prices are high a lot of new investors will enter, big boys with lowest costs will expand their production massively and dozens of juniors will be trying to get into production. Cycles will be like oil now, with a cartel of ultra low cost producers always around and exerting some price control (sqm, alb and Tianqi etc being like the Saudi’s) and then the marginal producers who switch on And ramp up when prices go above their marginal cost, thus expanding supply and capping the rise in prices and driving the price back down.
so whilst it’s hard to say what I will do in 2-3 years from now, my provisional plan is to exit when it seems like the party is in full swing and seems like it will go on forever with high margins, ala 2 years ago...
GXY Price at posting:
$1.45 Sentiment: Hold Disclosure: Held
