Is Lithium the new gold? (Also discussing T-TIPS, platinum and other hedges.)
But... I do not agree with the "buy gold and hold" crowd. Two reasons.
1. The gold bugs and silver bugs always say, "be sure to buy REAL gold and silver..." But this is verboten for US citizens because of the double tax on direct ownership of gold, silver and platinum, including most ETFs.
2. Gold and silver tanked in 2008 along with everything else.
Gold and silver do not protect you from recession! Recession is the time to buy them! I would especially ignore people who promote palladium and rhodium. They are 60% dependant on catalytic converters and their long-term charts are bowl-shaped, for crying out loud.
I did buy some SLW silver processing at a bargain last week. I also bought some under-priced platinum last week. Platinum is somewhat dependant on the oil-burning industry, and also has more production problems than gold or silver. But Platinum is also money and jewelry. On balance, if gold were low and platinum were low, I would certainly buy gold. But last week, it was only platinum that was low. For gold: wait for the next recession.
PGM - up
PLG - up
CCJ - up
Please note that PGM is an ETN that becomes worthless if by chance Barclay's Bank collapses. So if your idea is to protect your money for Armageddon, an ETN won't work. My other platinum picks are mining stocks, not direct metal, which in addition to the market, have their political and productivity ups-and-downs. Non-US citizens might want to look at ZKB-family Swiss-regulated ETFs for serious long-term ownership of platinum, gold and silver.
I.e., with my value-priced silver and platinum, if the economy gets worse, I have bought half way down. If the economy gets better, I am sitting pretty. And if the US dollar suddenly dips 25% or so, I will be slightly less miserable than most people, I suppose.
So what might be even better to prepare for "stagflation"?
1. China. China is the coming supereconomy and wisely has a government policy of under-valuing its currency. I am not sure if it is easy to make conservative, stable returns in Chinese stocks, but I will be experimenting.
2. US Treasury T-TIPS. Running a 14-20 year ladder gives about 4.5% if inflation stays at the incredibly low average rate of 3%. Or around 10% if staglation returns. All equally guaranteed as FDIC. The only reported downside to T-TIPS is you pay taxes on unrealized appreciation. Is that so bad? Well I haven't done the math, but tend to assume I just as soon pay my taxes sooner as later.
3. Lithium. Long-term risk: something else might be invented for batteries.
Meanwhile however, Lithium is currently at a relative low-to-medium price over 1 year. Compared to silver and gold stocks which lately only vary from high to super-high. According to the documentary "World Without Oil," we don't have nearly enough lithium to power the coming demand for battery powered vehicles, laptops and cell phones. According to my Chinese in-laws, most Chinese already drive battery-powered motorbikes. Sure you can make batteries without lithium. Sure you can make jewelry without silver. But anyone who can afford it, will want the best.
I.e., whether the economy goes up or down, seems to me everyone will be swallowing lithium, one way or the other. Lithium might not be a super-long term investment like gold or silver. But it is attractively priced right now. Nothing but upside for the next five years.
Lithium-related stocks I bought last Monday, starting with most-undervalued in relation to price history.
New, super-cheap and speculative:
LHMAF - Mitsubishi-backed Canadian company with new brine process recently bought Argentina brine deposit, but not yet in production. No trade volume.
GALXF - Australian company that recently bought a Chinese mine. Just made the first shipment last week. Prices went up about 3% and then down about 1%.
WLCDF - New USA mine, recently bought "the largest lithium tantalum deposit in the world," but has no production yet. Price went down this week.
P.S. Saturday, March 26. The above are "penny stocks."
These will tend to go up and right back down.
Until, I believe, regular lithium output is established.
GALXF "seems" to be just starting such output.
I thought the price would take off like a rocket.
Instead, the price went up a bit, then more or less held in midair the entire week,
in spite of substantial trading volume. Then went down slightly.
I have NO IDEA what is going to happen next!
Well-established major lithium producers:
LIT - up
OROCF - up
CLQMF - up
SQM - up (Fellow forum member AlbertaSunwapta suspects, but is not sure, that SQM may have the lowest production costs.)
FMC - up
ROC - up