By Konstantin Ogurchenkov, analyst, Casey Research

Steelmakers and high-tech plays like Tesla have something in common…

They’re rushing to secure nickel.

Why? Nickel is an important input for steelmakers… EV batteries… and more.

And 2021 ended with a 110,000-tonne shortage of nickel, or a 59% drop in nickel’s supply…

Which caused prices to rise 26% last year.

It’s simple supply and demand… and this trend will likely persist this year.

As I’ll show you in a moment, there’s still a lot of room for nickel to run.

But first…

If this is your first time reading the Dispatch, welcome. If you’ve been here before, welcome back.

I’m Konstantin Ogurchenkov, and I’ve been a Casey Research analyst since 2015. I’ve worked under great newsletter editors like Louis James and Doug Casey. And for the past several years, Dave Forest and John Pangere. (In fact, Dave and I are neighbors.)

I’ve learned a lot from them. And now, I want to share some of these money-making skills, as well as the analysis expertise I picked up from the greats.

Today, I’ll show you what to expect from nickel this year… and how to profit.

The Great Shortage

The chart below shows nickel prices in blue and stockpiles at the London Metal Exchange (the LME) in orange. The LME is the biggest hub for base metals and a good benchmark for resource investors worldwide…

The price and warehouse stocks of nickel usually move in opposite directions, as low stockpiles push prices higher.

2021 was a great example:

Chart

Stockpiles fell 59%, leading prices to rise 26%.

The price rise looks robust… But even at $23,000 per tonne, it’s still trading at a huge discount compared to the past bull run.

Back in 2007, nickel prices surged to $54,050 per tonne.

And while stockpiles keep heading lower, prices will rise even further. This will be a major indicator for the metal’s performance this year.

Once stocks start building up again, nickel prices will begin losing steam.

This is unlikely to happen soon… because there’s more and more demand for nickel.

That’s why big users like Tesla are scrambling to secure nickel supply.

In fact, my mentor Dave Forest called this back in 2020 (current subscribers can catch up here):

For one thing, high-profile tech firms like Tesla are scouring for nickel supply. As I discussed last month, rumors are swirling about Tesla funding nickel mines in North America.

It took longer than expected, but Tesla went so far as to get supply from an early-stage nickel project:

Chart

It may come online in several years, if the White House gets on board…

Musk vs. Biden

Tesla needs nickel. It’s a vital part of its electric vehicle batteries. 

Nickel demand from batteries will grow from 6.8% (last year) to 16.5% in 2026.

Today, China is the biggest user. But by 2026, the U.S. is expected to lead the space.

But for that to happen, the U.S. needs to create domestic nickel supply.

This is crucial. Because today, the U.S. has only one primary nickel mine running. It’s the Eagle Mine in Michigan.

The White House is backing up everything related to green energy these days. Billions of dollars are going into reducing carbon emissions.

As part of the move, Biden wants the U.S. to be a battery powerhouse… and raw materials, like nickel, copper, and lithium, will make the clean future real.

… Yet his actions aren’t matching up. Recently, the Biden administration cancelled two mineral leases for a proposed nickel-copper mine in Minnesota.

That’s the same state where Tesla secured nickel supply.

Not a great sign… Elon Musk may have to get into new deals outside of the U.S. to keep production going.

This is just one example of a huge disconnect inside the U.S. clean energy push.

Nickel is a huge input for green energy, but supplies will have no chance for growth while the White House blocks new mines. And demand for the metal continues to rise…

But it’s a perfect setup for growth in prices. At least in the near term.

And we know how to play it…

Our Way to Profit

Now, we’re not going to play this setup with Tesla or by buying physical nickel. You can do that for precious metals… but not for base metals.

Instead, we can use the iPath Series B Bloomberg Nickel Subindex Total Return ETN (JJN).

It tracks nickel prices with no risks related to nickel mining…

No complex trading or futures contracts. Just a single ticker – JJN – to get into the nickel market without holding actual metal.

It’s an exchange-traded note or ETN, which is similar to exchange-traded funds or ETFs.

It has 0.45% in fees and a good trading volume of over 19,000 units trading per day.

There will be no problem getting in or out of it.

Overall, this ETN is a simple way to play the rise in nickel prices over the next year.

Let’s gain,

Konstantin Ogurchenkov
Analyst, Casey Research

P.S. If you want a more streamlined way to play this supply crunch in tech metals for huge profits… Dave Forest holds a great non-U.S. nickel play in his International Speculator portfolio.

This may be a target for the next deal in the industry. Check out his briefing on the crisis in tech metals right here.

Casey Research Is Hiring… Could You Be the One for the Job?

Casey Research is searching for a highly experienced, connected, credible senior research analyst. What makes you tick? All things electric vehicles.

You believe in the technology… you believe it will change the layout of the world… and you understand the enormous investment opportunities in the EV sector.

You also have big ideas about what’s ahead for the electric vehicle industry… and which niche areas of the market are set to boom based on the demand for metals, tech, charging stations, safety, you name it.

To put it simply, if you have smart ideas… you have a vision for the EV market… and you can demonstrate how investors can make money from it, we want to talk with you.

The outcome: potentially partner with the Casey Research team to help lead our EV research efforts.

Responsibilities

  • Immerse yourself in everything related to electric vehicles

  • Be the go-to expert for EV investment analysis and commentary

  • Research and analyze trends in the EV industry

  • Augment existing research on EV-related companies

  • Help develop investment themes and ideas

  • Build on existing industry contacts, travel to trade shows, industry events, and conferences

Qualifications

  • Ideally several years in the EV industry, working for a related company, in consulting, or private equity

  • Bachelor’s degree a plus but not required for a real industry expert

  • Demonstrable industry connections/network

  • Deep understanding of EV supply chain

  • Strong analytical skills

  • Can handle multiple, complex issues, and prioritize in demanding situations

  • Sedentary work that primarily involves sitting/standing

  • Visual acuity for reading and using the computer

  • Ability to hear

  • Ability to freely move about the office

  • Ability to use the phone/computer/keyboard/mouse/general office equipment for extended periods of time

  • Ability to communicate well with others in order to exchange information

  • Fluency in the English language

If you think this sounds like you, send a message to [email protected] with the subject line: Your Go-To EV Expert.

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