RE: RE: Massive Lithium oversupply by 2020Well, I'll only be 40 in 2020, so doesn't seem that far out to me. Besides that, I made an initial investment with Rodinia claiming production for 2015 which could easily be postponed to 2016. While it will probably be bought out, we can never assume that, so we've got to be prepared to hold until at least then. I'm not sure if I buy the overproduction scenario if electric cars and power storage for alternative energy takes off in any meaningful way, which I think they could.
Heres a portion of a piece from Forbes:
https://www.forbes.com/sites/benzingainsights/2011/10/31/whatever-happened-to-the-lithium-etf/
(Keep up with the ETF Professor’s ETF universe here.)
And for the first few months of LIT’s existence, the ETF delivered interms of performance as well. In early August 2010, LIT was just over$17. By January 2011, the ETF was flirting with $24. The party endedsoon there after as investors started passing on riskier assets. Ohyeah, part of the problem with LIT is that over 23% of the ETF’s countryweight goes to Chile making the fund an indirect emerging markets play.Not good, for the earlier stages of 2011.
Add to that the quintessential risk with commodities investing.Indeed, lithium is a commodity and demand is expected to remain robustover the next decade or so. The thing is that there’s no shortage oflithium. Supply is expected to keep pace with demand and someanalysts have even gone so far as to say supply will outpace demand.
All these factors and a poor macroeconomic environment sent LIT downto the $12 area earlier this month. In defense of LIT, it has surged toover $16 since then. LIT has almost $112 million in AUM, so it’s notgoing anywhere, but for now, its most practical application may be as anETF for swing traders.
Bull case: All commodities equities suddenly comeback into fashion and/or a legitimate lithium shortage comes to pass.Either scenario would probably send LIT soaring.
Bear case: Investors pass on emerging markets andcommodities again or they start to believe the supply/demand dynamicswith lithium are not conducive to being long lithium equities.