Lithium

That’s a Drug, Right?


Yes, But It’s Also the Next Investment Idea

Everybody has probably heard of Lithium as a drug. It helps those who suffer from bipolar disorder. But not everyone has heard about Lithium as the next big thing for investors.

Up 26% in Five Days

Take Lithium Americas (LAC) as just one example of the next big thing. In the past five days, its stock has jumped 26.75%.[1] Over the past year, it’s up 143.83%.[2]

And what accounts for this rocket-like performance?

Lithium. It’s the lightest metal and lightest solid element in the universe.[3] It’s also scarce. And in very high demand. So LAC soared when the company announced that it was making progress toward production at its Lithium-mining project in Argentina, which is “on track to achieve first production by mid-2022.”[4]

That project “has an annual production capacity of 40,000 tons lithium carbonate equivalent over a projected mine life of 40 years.[5]

So Who Wants Lithium?

Elon Musk, among many others.

Lithium, after all, is used in high-storage batteries, the kind used in EVs—electric vehicles like Tesla, Ford, Chevy, VW, Mercedes …. Virtually every car company has introduced some form of EV. We counted 45 models of electric cars, SUVs, and trucks in Motor Trend’s latest review.[6]

And almost all of them run on batteries containing Lithium.

Lithium Research Begins

The oil crisis in the 1970s prompted scientists around the world to begin the search for “a new battery—one that could recharge on its own in a short amount of time and perhaps lead to fossil-free energy one day.”[7] In three different labs, M. Stanley Whittingham, John B. Goodenough, and Akira Yoshino began to use Lithium as electrodes in batteries.

In England, Whittingham—working for Exxon—used titanium disulfide and lithium metal as the electrodes. Short circuiting and the danger of fires, however, caused him to stop the experiment.[8] But the word was out: Lithium has properties needed in high-storage batteries.

In the 1980s, Goodenough shifted the research and used “lithium cobalt oxide as the cathode instead of titanium disulfide, which paid off—the battery doubled its energy potential.”[9]

Then, five years later,  Yoshino dropped the use of Lithium metal and used Lithium ions instead. His research “led to a revolutionary finding: not only was the new battery significantly safer without lithium metal, the battery performance was more stable, thus producing the first prototype of the lithium-ion battery.”[10]

Lithium and the Nobel Prize

In 2019, the Nobel Committee recognized these trail-blazing research efforts and awarded the Nobel Prize in Chemistry to the three scientists. When presenting the award, the Nobel Committee said:

“[T]his lightweight, rechargeable and powerful battery is now used in everything from mobile phones to laptops and electric vehicles. It can also store significant amounts of energy from solar and wind power, making possible a fossil fuel-free society.”[11]

Demand Heats Up

​Anyone capable of reading or watching TV can conclude that the demand for Lithium will spiral. President Joe Biden, on August 5 of this year, issued an Executive Order “aimed at making half of all new vehicles sold in 2030 electric.”[12]

According to the Institute of Electrical and Electronics Engineers, the world’s largest technical professional organization:

A carbon-free future will require many millions of batteries, both to drive electric vehicles and to store wind and solar power on the grid. Today’s battery chemistries mostly rely on lithium—a metal that could soon face a global supply crunch. Some analysts warn that as EV production soars, lithium producers won’t be able to keep up with demand.[13]

Our Lithium Position

We won’t be left behind.

When the financial pages light up with the latest hot stock, we don’t race to our computers and hit the buy button. Instead, we subject all of our positions to rigorous technical analysis that involves comparing “moving averages,” studying “relative strength,” and perusing a host of charts.

We pulled up some charts of the top Lithium companies and saw extremely solid “technicals.” Because we don’t invest in individual stocks, we then sought out the top Exchange Traded Funds investing in Lithium companies.

Our search and technical analysis landed on LIT, a fund investing in 37 companies in the Lithium industry. So on July 14, we took our initial position in LIT for our Aggressive Growth Model. On July 22, we took a second position. These positions are already up nearly 8%.

According to GlobalX, the fund manager:

The Global X Lithium & Battery Tech ETF (LIT) invests in the full lithium cycle, from mining and refining the metal, through battery production.[14]

Remember Lithium Americas? The stock that soared 143% over the past year? It appears as one of the holdings in LIT.

For our Aggressive Growth Plus Model (which can hold individual stocks), our research turned up Standard Lithium (SLI). This company has a patent-pending process that extracts Lithium from brine, copiously found in Arkansas, where SLI has a new processing facility.

After studying the technicals of SLI, we added it to our Aggressive Growth Plus Model.

We Aren’t Chemists

The technology of ion-Lithium batteries gets quite complex. So we can’t pretend to understand what makes them work. But we can understand the exploding demand for them, and when you see more EVs on the road, you’ll know that the demand for Lithium continues to rise.

You’ve got your position to go along for the ride.

Call Us

We are always happy to answer any questions you have. If they involve the chemical ins and outs of Lithium batteries, perhaps we can locate a knowledgeable professor.

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