Good News & Bad News, page-20375

Reading into GS's reported commodities supercycle thesis, they maintain a negative view on battery metals for the medium term. Their thesis is based on capital flows rotating out of large tech growth sector (i.e. NASDAQ) into commodities, but into old economy commodities such as, oil, due to underinvestment mainly caused by ESG constraints.

They state, with 81% of global energy coming from fossil fuels still, the world still needs investment in these fuels, as green energy is not in a position yet to accommodate global growth alone and investment in green metals is critical to sustaining the growth in green energy investment. TBH, there is some merit in that analysis, however, they go on to say, the battery metals whose producers have not been through the prior supercycle have investors’ confidence and so do not face such investor restrictions on production, underpinning our bearish medium-term view. Yes, you read that correctly, and additionally, they state because battery metal producers have been printing money, they have sufficient available capital to expand production, thus balancing the market, followed by softening battery metal prices, expect for copper, aluminium, for which the later, they are also bullish.

Have you ever heard of the term "One Eyed Referee". Old economy commodities have been printing money for most of this calendar year, doing pretty well by all reports (see high energy prices, inflation, higher interest rates), which from my perspective and wearing my best tin foil hat, that is an indiscrete warning that they are building substantial short positions in old economy commodity plays, because IMO their bearish view wrt battery metals space couldn't be further from the truth.

Yes, battery metal producers/near term producers can take advantage of high prices and expand production, but the risks associated with crazy high lithium prices (the irreplaceable battery metal) is already a roadblock for developers and explorers to a lessor extent, in that and specifically for lithium, volumes traded on futures contracts are essentially non-existent, thus lenders cannot hedge to manage financing risks. Still wearing my tin foil hat, right now, they want to destroy sentiment in the battery metals space, while they accumulate, encouraging investors to take profits and rotate capital into old economy commodities so they can fleece investors again via shorting.

Sorry, am I over thinking it, but I find it so hard to believe their thesis is based on the premise that the battery metal miners are will supported and financed, and big oil is not, because of ESG constraints.

Anyways, that the basis of their thesis from a 20 page report.