Lithium as an Investment Opportunity
Lithium has become one of the hottest new commodities in the marketplace. Even though Lithium is number 3 on the periodic table of chemical elements and has all the characteristics of a commodity, purchases of lithium do not occur on any exchange. Its pricing and trading are based totally on supply and demand.
What does that mean?
Here are a few values that can help us get a grip on the level of demand. Because lithium does not trade on an exchange, finding the the bid and ask is not readily available to the general public. What I did find was that the value of lithium has gone up almost 300% from 2015 to 2016. There are several reports that lithium was trading around US $7,000 per ton in 2015 with the price in 2016 reported to be above $20,000 per ton.
What exactly is lithium and why has its value increased so dramatically? Without getting bogged down with too much scientific jargon concerning electrons and molecules, lithium has properties that can maintain a charge in a small amount of space. It is predominantly being used to power smart phones, laptops, and electric cars.
The demand for lithium comes from a few sources. The sales target of 500,000 electric cars from Tesla by 2018 is one factor. The sales of Smart Phones worldwide is another, the new slim phones, tablets, and notebook batteries are all made with lithium now, because the element can hold a substantial charge using a relatively small amount of space.
What I discovered in my research is that there are four suppliers that provide approximately 85% of the global supply of lithium.
Sociedad Química y Minera de Chile S.A. (SQM) based in Chile,
America's Legal "Frontrunners" Are Helping Drive Up Shares...
Most of us wouldn't touch these stocks. But this group knows in advance, when they target a company, they have the power and influence to send the price soaring within a matter of days.
Sociedad Química y Minera de Chile S.A. (SQM)
FMC Corp. (FMC), Albemarle Corp. (ALB) based in the USA,
Albemarle Corporation (ALB)
and Chengdu Tianqi Industry Group Co Ltd., a privately held company based out of China, who recently acquired Talison Lithium of Australia the former second largest supplier of lithium in the world.
Now that we have identified the demand, the players, and the potential for more gains for lithium based products, how does the investor today get involved?
The four suppliers I mentioned earlier have shown tremendous gains in the last year, and this is clearly illustrated in the stock charts we have shared with you. Another option would be investing in an Exchange Traded Fund (ETF) that has high exposure to stocks involved with lithium.
Global X Lithium ETF (LIT)
The Global X lithium fund, has gained more than 30 percent over the past year with assets under management leaping from $41 million to $152 million over the last two years. Investing in companies that sell large amounts of products with lithium batteries, like Samsung, Tesla, and Apple definitely has merit. Overall there are some exciting things taking place with lithium and the investment potential for gains is present.
America's Legal "Frontrunners" Are Helping Drive Up Shares...
Most of us wouldn't touch these stocks. But this group knows in advance, when they target a company, they have the power and influence to send the price soaring within a matter of days.