Lithium: The Best Opportunity of the Century?

This is my OPINION only and not investment advice.  

Throughout 2013-2015 I started to grow more and more disenchanted with the extremely rigged and manipulated financial “markets” denominated in Federal Reserve notes.  Consequently I started to look for opportunities outside of what I thought was the best opportunity I could identify: Bitcoin.  This is not to avoid Bitcoin in fact it is the opposite.  It is to locate and identify something in addition to Bitcoin.  In doing so I wanted to avoid anything that I felt was primarily and perhaps could ONLY be successful based on FOMO (fear of missing out) and POMO (Permanent Open Market Operations: i.e. the Federal Reserve prints new debt notes and hands them to its banker buddies so they can inflate asset prices).  In other words, I don’t want to rely on every hedge fund and institution piling into Netflix and Facebook because, well, um, everyone else is and it’s going to $1,000 baby! 

Along came Lithium.  Part of my search and transition was heavily oriented on real assets.  Though I don’t completely shun precious metals I am not a big fan of “stacking” physical gold (can discuss this in future posts). I do see potential with silver however.  More importantly, Lithium is a real asset if there ever was one that physically exists within the planet and has tremendous intrinsic value.  The success of Lithium being extracted, optimized, distributed, and sold as part of a final product has absolutely nothing to do with clicks, likes, page views, feelings, pontificating gibberish, manipulated bullshit accounting, or any other nonsense providing some of the so called “economic” foundation for various industries and companies.  Either the world demands and uses Lithium or it does not.  Simple enough.  

Why Lithium?  There are plenty of research reports floating around out there for anyone determined to find them that display sexy looking graphs showing how the demand for Lithium is starting to rise substantially above the supply of Lithium.  Prices for Lithium in China are above $20,000/MT which is up very sharply from the $5,000/MT level of a year and a half ago.  The bottom line is this: demand for Lithium is growing sharply and in the NEAR TERM there simply is NOT enough Lithium available to meet that demand.  Yes, electric cars are part of the “problem” in terms of the supply of Lithium.  However, it is the burgeoning demand for off the grid storage of energy that is the real home run opportunity.  No other substance on earth can both provide energy AND store energy.  Lithium is the new oil or new gold or both even.  There is a huge gap that needs to be filled and it simply is not possible to magically create this Lithium out of thin air (which the Federal Reserve would gladly attempt to do while handing the new lithium straight to the banks that own the Fed if possible) between now and say 2018 when more Lithium supply can come on line.  To this point a small group of companies have controlled and continue to control the supply.  

My next step was to answer the following question: how can I capitalize on Lithium and how do I do so using instruments denominated in Bitcoin?  Well, I can’t find a way to go long Lithium futures or take a stake in anything lithium related denominated in BTC so if anybody can please let me know.  There is a Lithium ETF that is an option but not as potentially explosive as perhaps other options.  There are some larger companies that have exposure to Lithium but not in a manner that can rock the boat to the point where life changing gains are possible.  Based on my analysis and efforts I’m left with gulp, fumbling through the treacherous investing climate of the small and very speculative junior miners.  

During this search it started to really sink in that most of the companies involved were essentially public relations operations that were hyping their stock prices based on announcements and plans to find and extract Lithium.  I am not saying many of these companies won’t ultimately be successful and I hope they are, but I find their current promotional activity to be misleading.  Many of these “announcements” are about taking some type of joint interest in a piece of land that could have Lithium inside of it.  They are still a long ways off from all of the testing required to prove what you have is economically viable not to mention the funds needed to do this and then extract the Lithium. 

Enter Pure Energy Minerals.  Here is what I wrote in early July of 2016 about the company: 

http://www.seatsforeveryone.com/blog/lithium-bull-market-pure-energy-minerals-substance-hype/  

This company has a signed supply agreement with Tesla and is located right next to the highest producing Lithium mine in Nevada.  Why did Tesla sign this agreement so early before they are even producing anything? 

In a future post we will dive into the price/volume action in the stock and get caught up on recent events.  The company does intend to release its PEA (Preliminary Economic Assessment) in the third quarter meaning before the end of September.