The New Commodity Super-Cycle Written by Christian DeHaemer The New Commodity Super-Cycle
The last bull market in commodities was pushed by China’s rapid growth in manufacturing coupled with cheap money and rabid speculation by Wall Street hot shots.
Demand increased year after year, while supply was tight in the aftermath of a prolonged bear market.
That’s how it works...
At the top, companies over-expand and leverage up, taking on massive debt they will never pay back.
At the bottom, when prices have dropped, these weak companies are destroyed. Mines and wells are shut down. Hedge funds close and no one wants to talk about the stocks.
This is where we are now. Over the past few years, gold conferences that once had 50,000 visitors now have 500.
But things are changing. There is a stealth bull market in commodities...
The Metal Equity Total Return Index has doubled since 2016.
But the big movers are in areas you might not expect. These metals have to do with the alternative energy market — that is, they are used in batteries, wind turbines, and solar power…
Metals like lithium, cobalt, and manganese are in high demand and heading for a supply crunch, all moving higher...
Demand is surging. There are now 10 Gigafactories in the works to produce batteries for electric cars. Elon Musk might have to add four more, and Volkswagen says it will eventually need 40!
Overall, Bloomberg reports that global battery-making capacity is set to more than double by 2021, topping 278 gigawatt-hours a year compared to 103 gigawatt-hours at present. Batteries need these specialty metals.
Many people would tell you the way to play this boom in alt-energy is to buy Tesla, the electric car company, or GE, a major producer of wind turbines. But these people are idiots.
The way to play the alt-energy boom is to buy the miners. They are severely undervalued, they have what the EV carmakers desperately need, and they will see their margins, incomes, revenue, and stock prices soar.