...and banging on the same narrative that Chinese EV demand growth is all well so there should be large demand for lithium.
...Right, they have had 5 consecutive months of growth with no discerning effect on Spod prices and lithium chemical prices actually fell about the inventory replenishment.
...PLS today hit and closed 52 week low, PEx for 2025 & 2026 incredible steep for an unsustainable $7B valuation. The only reason it didn't fall more quickly is because some instos esp super funds still think positively on our lithium sector, failing to read the obvious tea leaves.
...Our lithium companies are unlikely to be competitive and geopolitics would make things even harder for them.
...LTR valuation is to an extent pegged to PLS, if PLS drops, LTR would follow suit. Because PLS commands a very high valuation premium and so does LTR. Holders on each side are looking at each other, plus many hodlers who hold both.
...IMO I don't think PLS is worth more than $3.5B for next year, so we could be looking at $1 and LTR at $1B valuation circa 40c.
Earlier this year, this thread opined that risk reward probably would favour Gold over lithium stocks, and I wasn't wrong.
YTD, this is how they have performed
GOLD Gold +13.33% XGD +6.45%
Lithium PLS -3.80% MIN +0.29% LTR -32.12% LTM -23.14% IGO -21.44% CXO -42.0%
I suggested that the tables have been turned - that Gold was coming out of winter hibernation and Lithium was going into one (winter hibernation).
It took Gold stocks almost a year to get out of it, and lithium stocks would have to endure a similar period or likely longer. The reason for that is that lithium being beholden to EV would be susceptible to a recession while Gold benefits from it.
And while the market narrative holds out for a soft landing, we can only deduce that the market is in denial that a recession can be avoided in the very short term but not likely with a timeframe of a year from now. Lithium stocks would run out of time to recover before the onset of the coming recession/stagflation.
So believe what you want but I reckon lithium stocks won't recover and will likely have to endure a more painful bear market ahead.
If my thesis is correct, exiting the lithium space to enter Gold (physical/digital/ETF) would avert a protracted lithium winter to embrace a golden summer (punt intended).
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so lets update now and see how Gold fared against Lithium since 28 April 2024
GOLD Gold +6.85% XGD +2.30%
Lithium PLS -32.10% MIN -54.63% LTR -44.19% LTM -40.13% IGO -25.88% CXO -41.38%
Gold and gold stocks have not exactly gone gangbusters but they delivered positive returns since then (28/4/24) while ASX lithium majors had a disastrous outcome.
See what Denial has cost you in just over 4 months?
Sorry about crowing that I have been right in my assessment but I tried my DARNEST to WARN you!
And I am saying the CARNAGE is not Over yet. I strong believe my X-tree theory will play out to the very end:
PLS - at least $2.10 first stop
LTR - 43c first stop, and could get to the 30s
When you do not want to listen to the MACRO, you will continue to make the big mistake.
My track record speaks for itself- they have been true, except that I've often been Ahead of the Curve before it happens.
