Dave’s note: Today’s Dispatch is a prime example of a market that’s gone into overdrive because of Russian sanctions… inflation at 40-year-highs… and volatile markets.
All these factors are causing investors to take a closer look at what they’re investing in to stay ahead.
Our job at Casey Research is to help you do that.
On Wednesday, April 6, my colleague Jeff Brown is introducing a technique used by the world’s wealthiest families to protect and grow their wealth in good economic times… and bad.
And for the first time, it’s open to retail investors. Reserve your spot to make sure you come out of these volatile markets with your wealth intact.
Then, check out what Tesla is doing in secret and how it can help you profit.
By David Forest, editor, Strategic Investor
Tesla’s been striking secret deals lately.
It’s scouring the planet for one of the most controversial pieces of hard tech on the market.
Reports suggest Tesla recently signed a huge deal for nickel. But it’s intentionally keeping the news quiet…
Sanctions Put Hard Tech at Risk
That’s because the race for this hard tech is heating up. Since the Russian invasion of Ukraine on February 24, nickel users went into panic mode.
Russia supplies 17% of the world’s “Class 1 nickel.” That’s the high-grade nickel which makes up the cathode for batteries in Teslas and many other EVs globally.
Sanctions put that hard tech at risk. Russian supply might be lost completely. Nickel users like Tesla fear a massive void in the market.
What’s more… even if the Ukraine war ends tomorrow, it might still take time for sanctions to lift.
There’s a good chance sanctions might remain in place even with the war ceasing. Worse, Russia might choose to divert its nickel away from Western buyers.
A kind of “hard tech” Cold War could follow.
But there’s more…
The Nickel Market Is Breaking Down
Nickel’s price itself signaled something has gone terribly wrong in the market those past few weeks.
Nickel on the London Metal Exchange tripled in a couple of days last month. We don’t see 200% spikes like that in normal markets.
The massive surge in nickel shows a market breaking down. Supply went into danger mode with Russian sanctions looming.
Users see a complete shortage coming. They’re falling over themselves to secure supply at any cost.
That’s where Tesla’s backroom deals come in…
Reports in the last few days say Elon Musk’s company zeroed in on Canada. It’s looking to nickel produced in Ontario, run by the Brazilian company Vale (pronounced Val-ay).
If that sounds odd, it is.
No one’s been paying attention to nickel for decades now. Canadian miners cared so little, they sold the bulk of their nickel production to Brazil.
That allowed Brazil’s Vale to become one of the biggest nickel producers on Earth. They’re now one of the only big nickel producers friendly to America.
A lot of the world’s Class 1 nickel lies in less-friendly spots. China is the world’s largest producer of this hard tech. That’s a no-go for Tesla… and likely for any Western firm.
That’s why Tesla dived into the Brazilian-controlled Canadian mines. There just aren’t any other options to secure nickel supply amid the recent panic buying.
Sources say Tesla signed up for several years of nickel from Vale. That’s because it’s not just looking for nickel right now… The EV giant is desperate for nickel years down the road.
That makes sense. There’s no end in sight for the supply woes on this hard tech.
Tesla is looking at all these possibilities. And its conclusion: lock up all the nickel it can outside of Russia. Right now, as quickly as possible.
These new deals show just how desperate Tesla has become in recent weeks.
Elon Musk previously signed nickel deals with several different miners. But Tesla always announced these supply arrangements.
With the new Canada deal, however, they tried to keep it secret. Tesla doesn’t want people getting the same idea and trying to poach Canadian nickel.
That’s likely because competition for nickel hard tech is hitting a crisis point.
Car Companies Want in on EVs
Volkswagen, BMW, Ford, and nearly every other car company on Earth went all-in on EVs lately. They need nickel… and every other hard tech that goes into electric vehicles.
That’s a lot of potential supply competition. Tesla knows this. They no longer want word getting out on where they’re looking for nickel supplies.
With nickel prices remaining high, we’re going to see more jockeying like this from EV users.
That’s tough for buyers… but great for companies producing nickel. Anyone with supply is eyeing premium treatment from firms like Tesla.
Vale is a huge company, and if you’re looking for a way to get in on Tesla’s secret hard tech deals… and the spike in nickel… it’s a great way to get some exposure.
But I suspect we’ll see Tesla looking to smaller nickel firms as well. There just aren’t a lot of options.
That could be a windfall for hard tech investors.
Just look at junior nickel stocks. In the past, junior hard tech companies spiked 10x when they struck supply deals with Tesla.
We’re on the verge of seeing that again. Get ready for massive, overnight gains. Just like we’ve seen in nickel’s price itself.
Keep walking the path,
Editor, Strategic Investor