The light alkali metal, lithium, used in lithium ion batteries has had its moment of being a sexy player in the natural commodities market, according to the influential opining of investment forecaster and data-watcher Matt Badiali, writer of the Banyan Hill Publishing newsletter, “Real Wealth Strategist.”
Though the need for the ion batteries seemed to blossom overnight, with everything from cars to cell phones requiring the metal, Matt Badiali predicts the sexiness is now fading fast and investors should probably start looking elsewhere.
To be fair the arc that took the lightest of metals to the top of the natural resource commodity heap was impressive. It began with car companies making battery-operated cars. Between 2016 to 2018 lithium soared from 8000 a ton to more than twice that amount. One company that extracts lithium from brine saw its stock explode more than 300%.
However, Matt Badiali has a well-earned reputation as a man who doesn’t merely crunch numbers, but rather hies himself over to where the numbers hail from to see for himself why they say what they say. In short, Matt Badiali is a man who ferrets out the chinks even in seemingly solid looking armor. And, in the case of lithium, Badiali is seeing chinks.
Even the most effective lithium battery can only hold two times as much electricity as a regular battery. This power cap, according to Badiali, will eventually limit the demand for the metal. Companies that use batteries for their products will wish to move forward and inevitably start experimenting with other metals.
Although lithium prices will probably remain attractive for a while, they are expected to start an ongoing dwindling process late in 2018 that should continue to peter downward through 2019. By 2019 there should be a surplus that will only escalate the downward spiral of lithium.
Matt Badiali’s: Facebook Page