Rachel’s note: One of the themes we cover here at the Dispatch is the unfolding tech boom and its groundbreaking technologies.
They’ll require fuel to power them. And Dave Forest, our resident commodities expert, says that one class of metals will become the new steel, oil, and coal of today.
He’s traveled the globe… to find the best companies for readers to take advantage of this tech revolution. In fact, one of his picks is up 263% in under four months. You can find all the details here.
Then, read on for today’s essay. We’re handing things over to Chris Lowe, Dave’s longtime colleague. Below, they discuss what’s ahead for the one key material every tech giant is competing for…
Chris Lowe: Hey, folks. It’s Chris Lowe, editor at The Daily Cut. I’ve got Dave Forest of Casey Research on the line.
Hey, Dave. How’s it going?
David Forest: Hey, Chris. I’m good. You?
Chris: I’m pretty good.
Let’s jump in and start talking about one of the big themes that’s really resonating with our readers – the big changes in technology that we’re seeing.
You’ve been covering the trends of 5G and electric vehicles (EVs), but from a commodities perspective. And one of the things you’ve been talking about lately is “tech metals.”
So do you want to introduce folks to what tech metals are, and how they fit with technology? Why is a guy like you, a geologist, talking to your readers about tech themes like electric vehicles and 5G?
Dave: It’s something I’ve always been excited about.
When you read about the massive fortunes that were made in the time when America industrialized… in railroads, infrastructure, and automobiles… the biggest fortunes were made by the people who owned the raw materials.
So it wasn’t Henry Ford. It was guys like Rockefeller and Carnegie who actually owned iron ore and coal. They made fortunes because they owned the stuff that went into everything.
If you were making an automobile, you needed gasoline. If you were making a railroad, you needed steel.
When you get these big, industrial changes, there are foundational commodities that go into everything. They’re the ground floor of this tech boom.
You mentioned electric vehicles. They use a bunch of different metals. Nickel is one of them, along with cobalt and lithium. They’re all essential for the batteries in an electric vehicle. And copper is essential for the wiring.
These are the steel, oil, and coal of today.
And it’s very timely that we’re talking now.
Last month, there were reports that Tesla is close to doing a deal with a nickel mining company in Canada.
And Elon Musk has said publicly that he needs all the nickel he can get. He’s actually begged miners to produce more nickel.
So it looks like Tesla is now going to start investing in the mining space.
This is huge news. The stock that was mentioned in connection with them went from about 50 cents to $1.84 in a couple of days.
Everybody’s catching on that if the guys producing this stuff do a deal with Tesla, that gives them access to an absolutely huge market.
This is the kind of thing we’re seeing starting to happen. And it’s not just exciting technologically. It’s exciting from an investing perspective as well. The gains on some of these stocks are phenomenal.
Chris: Elon Musk was talking about lithium on a recent earnings call. But you were talking about this at the beginning of the summer.
What was percolating through to you at the beginning of the summer when you made that recommendation?
Dave: Tesla is ramping up production. So are all the EV makers around the world. And all these cars need lithium in their batteries.
Lithium is the primary battery metal. These are lithium-ion batteries. When you look at the supply and demand projections, they need a lot more lithium than the world is mining right now.
And again, last month, we got another big example of that.
It’s not Tesla, but CATL. It’s a Chinese company, and one of the largest battery manufacturers in the world.
It announced an $8.5 million direct investment into a lithium brine.
CATL doesn’t just want to buy lithium. It wants to actually own a lithium company to make sure it’s got the inside track on getting the supply.
It’s so competitive. Everybody’s looking for this stuff.
So does it make sense that Tesla would want to own part of a lithium mine that’s right on its doorstep when all this demand is ramping up? Probably.
Chris: Dave, it’s been great talking with you. And I hope we can catch up again, but I’ll leave it there for now.
Dave: Thanks a lot, Chris. Stay safe.
Rachel’s note: Dave’s been following this lithium story since the beginning of the summer. And he’s on top of all the latest news.
If you want to learn more about what his boots-on-the-ground research has uncovered… including the best way to play lithium with just a small bet today… go here.