The Metal Leading the Next Rally

Energy metals were on a wild tear until September. Then they flattened out. But now they’re perking up again, and cobalt is leading the way.

Heck, cobalt just broke out to a five-year high!

Looking at this chart, you can see that cobalt is up a stunning 190% since January 2016. That’s head and shoulders above the 114% gain in lithium, the next closest contender.

This latest catapult higher is triggered by events. Events deep in the murky jungles of the Democratic Republic of Congo. That nation has a state-run mining company called Gecamines. It partners in all sorts of mining projects. And the people running that company are more back-stabby than a high school production of Julius Caesar.

Gecamines blocked another company, its partner, GTL, from having access to a cobalt site in the southeastern Congolese town of Lubumbashi in March. GTL has processed cobalt-rich mine waste at the Lubumbashi site since 2001. The reasons are for lawyers to sort out. Word on the street is Gecamines wants more money.

So now GTL is suing Gecamines in international court. The project has been thrown off the rails. It is, or was, a producing cobalt project. Now, it will probably be offline until 2020.

This puts a squeeze on a supply/demand situation in cobalt that was already screaming for mercy.

I’ll let this chart from Palisade Global and Cobalt Power Group show you what I mean …

Source

The coming gap in supply-demand is starting to look like the Grand Canyon.

So yeah, that news out of Africa lit a fire under cobalt prices.

But that’s not all cobalt has going for it. Indeed, the entire energy metals group is bubbling like a pot with too tight a lid.

Why? It’s due to the electric vehicle (EV) megatrend that I’ve told you about.

Month after month, new estimates on the EV megatrend come out. Month after month, the old estimates are shown to be too conservative. No matter how “optimistic” they were!

According to a UBS global autos survey released Tuesday, one in six cars sold in the world by 2025 will be electric. That’s 16% of the total.

Let’s see, 92 million cars hit the road last year. That would mean 14.72 million electric cars by 2025. That’s up from just 2 million last year.

But wait! That’s not the only forecast. Goldman Sachs says that EVs will be 25% of new cars by 2025.

But wait again! Total vehicle sales are climbing. In fact, by 2025, total new vehicle sales are projected to rise to 120 million per year.

So 25% of that would be … 30 million EVs. That would be a 15-fold increase from last year’s production. Wow! No wonder energy metals are heating up again.

So will we see 14.72 million EVs in 2025 … or 30 million? In my view, even the best experts are making educated guesses.

But – and I can’t emphasize this enough – every single EV forecast so far has been too conservative.

And that’s why cobalt prices soared to a new five-year high. That’s why cobalt miners, explorers and developers are revving their engines.

Some experts say the world needs to bring two cobalt mines online per year to keep up with demand. The mines aren’t there. They. Just. Aren’t. There! Not for years down the road.

So how do you think the world resolves this problem? Price, that’s how. Zoom-zoom!

My Supercycle Investor subscribers already owned two cobalt stocks before the latest news. It wasn’t enough. I just gave them a brand, spankin’ new pick this week.

Meanwhile, lithium is in another boiling pot. Copper is in another. Nickel is in another. And the stocks that are leveraged to them are ready to shift into higher gear.

Is there more to this story? Yeah, a lot more. But how much do you need to know before you start buying?

So how can you invest in this? There is no tradeable cobalt fund … yet. But there is a fund that holds stocks leveraged to the price of lithium. It’s called the Global X Lithium & Battery Tech ETF (NYSE: LIT).

At the end of August. I wrote about Lithium and LIT. If you followed my recommendation and bought LIT, you would have gained about 19% by now. And that’s with LIT going sideways all through September, October and November.

LIT spent those months coiling up like a spring. The same goes for the miners, explorers and developers tracked by LIT. The next breakout is coming. Cobalt is leading the way. And lithium will follow, and put the pedal to the metal.

Get onboard. The sign up ahead is written in cobalt blue. And it says, “Profit Town.”

All the best,

Sean

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Comments 4

  1. Ruthann Saenger November 30, 2017

    How much is recommended to put into LIT as a secure investment?

    Reply

  2. Paul McNally November 30, 2017

    So how does a person invest in Cobalt??

    Reply

    • Will November 30, 2017

      Paul: In the past sufficient cobalt was produced as a byproduct from mining other metals (primarily from the Congo), leaving few pure cobalt plays to expand production at this time. This means that exploration companies are where I would be looking. Presently, after the Congo, the largest known cobalt reserves are in Australia (double the next largest reserves – in Cuba). Although small, there are several exploration companies for cobalt in various stages listed on the ASX to consider. The other possibility for exploration is Canada, with listings on the Toronto & Venture exchanges. Getting familiar with these and checking them out is one way to start. Another way would be to contact Sprott.

      Reply

      • Will November 30, 2017

        Further to my above comment: Disclaimer – I do not have any connection or financial interest with Sprott.

        Reply