- Created on Thursday, 28 October 2010 15:23
- Written by Sara Nunnally, Editor, Smart Investing Daily
- Hits: 8195
We've been spot-on about the price of gold over the past three weeks. Take a look at this Kitco.com chart showing the top, and the subsequent drop back into the uptrend.
We're getting closer and closer to that Fed meeting in early November, so we can expect a lot more fluctuation in gold prices at this level. I told you a while ago about two bearish chart patterns to be wary of: the Bump and Run Reversal, and the Head and Shoulders Top.
Gold's run-up could be exhibiting signs of both, but would need to see prices break down below that bottom green line... which it nearly did a couple days ago.
Whether this movement is a consolidation of gains before the Fed meeting, or something more bearish that could take gold prices down into the $1,260 an ounce range, any predictions about the price of gold now would be pure speculation. So let's take a look at another commodity. One that I'm calling the next "precious" metal.
Back in late September, the Taipan Publishing Group invited subscribers to our Annual Summit. This time, we met in Las Vegas.
During a panel discussion on the last day of the conference, there was a lot of talk about metals. Of course, folks asked about gold, but we also fielded questions about rare earth metals and lithium.
In my opinion, lithium is the next "precious" metal.
Here's some background. Lithium is the lightest metal known, and is never found on its own. It's always paired in some kind of compound. That's because lithium is not a strong, stable metal in and of itself. It can, however, be used in alloys to make lightweight, stronger metals, such as those used for aircrafts.
It also has the highest specific heat of any solid element on the periodic table... That means that lithium can withstand a high amount of heat without breaking down.
Sorry for the science lesson, but all these characteristics I've listed are reasons why lithium is the next precious metal.
Right now, lithium is used in about 60% of all cell phones, and lithium ion batteries are expected to take the market by storm, with lithium ion batteries for the transportation industry jumping from $878 million this year to $8 billion in 2015.
Lithium only represents about 0.0007% of the Earth's crust, and current production weighs in at just under 19,000 tons, or about 100,000 tons of lithium carbonate.
(Investing doesn't have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the market for you with our easy-to-understand articles.)
In the meantime, according to Roskill Information Services' "The Economics of Lithium," demand between 2010 and 2020 is expected to grow at an annual rate of 6.4% just from existing applications alone... Throw in a huge bump from the transportation sector and lithium demand could see annual growth rates as high as 9.5%!
That means prices could increase drastically, too. Most pricing for lithium is done in long-term contracts for specific lithium compound -- of which a multitude abounds. Earlier this year, lithium carbonate (one of the most popular compounds) imports to the U.S. averaged $4,500 per metric ton.
That's up from $1,500 in 1999.
Currently, lithium represents about 3% of a hybrid or electric car battery's cost. According to Roskill, hybrid batteries use between 0.5 kg and 2 kg of lithium. Plug-in hybrid batteries use between 1.8 kg and 4.2 kg, and fully electric vehicles use between 10 kg and 20 kg of lithium.
With interest in hybrid and electric vehicles growing so sharply, a 10% market penetration would mean demand for lithium would more than double current production. Just look at this chart:
Of course, that won't happen all at once. Rather, lithium demand is expected to grow 11% this year and 13.4% in 2011. Then demand from hybrid and electric vehicles will start to kick in.
Now, there are a number of ways to take advantage of this trend, both in lithium demand and in hybrid vehicle growth.
Last Friday, we launched our latest free webinar titled "Green Power Metals: How to Cash In on the Clean Energy Future," and in that video I outline three different investment solutions -- battery makers, auto-efficiency management, and "Green Power Metals" mining companies... including this next "precious" metal, lithium.
You can sign up for this free video now, and get my free special report about Green Power Metals detailing one of the biggest lithium producers in the world.
The next "precious" metal is the start of a massive trend that will sweep through a number of industries, like personal electronics, auto-manufacturing, and mineral mining. We're just seeing the tip of this trend with new electric vehicles coming to market. More are coming down the pipe...
And profits with them.
P.S. We're also providing a chance to "retro-tend" our conference in Las Vegas in September. If you weren't able to make it out to see us, we have a way for you to still "attend." We've compiled a CD of every editor's presentation and the two exclusive panel discussions from our three-day Global Opportunities Summit.
In all, you get more than 10 hours of investment insight, including my comments on lithium during the second panel discussion.
Find out how to get your copy of our Las Vegas investment conference.
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