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| Brought to you by The Oxford Club | Wednesday, August 31, 2016 |
Is Your Dividend Stock Safe?
Dividends are the last place to get decent income.
Savings accounts... Treasurys... bonds... They all pay next to nothing.
Dividends are all that's left. But 2016 could be the year of the dividend cut. That's why we've created a tool to help determine if your dividends are safe. Just type in a company name to find out. Details on how you can access our tool here. |
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This Prehistoric Element Is the New Gasoline
 Today's story starts all the way back at the Big Bang.
Yeah, that Big Bang. The cosmic creation of both space and time, a surge of unimaginable energy that sparked the beginning of our universe.
Before you start seeing flashbacks from eighth-grade science class, let me assure you, this science lesson ends with a big investing opportunity. It's called the "new gasoline."
That's because it will completely change the way we generate energy. And it preexists the dinosaurs. But before we get to that...
Let's talk about the origins of this new gasoline and the world as we know it.
Cosmic Blink of an Eye
It all started with a big "KA-BOOM!" Then the universe was unimaginably hot.
When it was 3 minutes old, scientists say, the universe cooled enough for the first protons and neutrons to form. And out of that primeval energy cauldron, the first elements sprang: hydrogen, helium, beryllium and lithium.
Hydrogen, being the egomaniac of elements, still makes up about 90% of the universe today. (Don't pay it any attention. You're just enabling its ego trip.)
Then about 300,000 years went by - the blink of an eye in cosmic terms.
The elements finally cooled enough to form atoms. And they kept clumping together. And out of that soup, the first stars formed.
Stars were born. And stars died, flying apart in stellar death screams called "supernovas." That's where we get the heavier elements - iron, carbon, silicon, gold... plus, you and me. The elements that make up you were born in the heart of a star. Never forget that.
Another element that lurked around after the Big Bang? Lithium.
That's right. All the lithium on Earth - and in the universe, for that matter - is an echo of the Big Bang.
And it's now about to lead a fuel revolution.
Biggest Areas of Growth
You know what lithium is. Your phone wouldn't work without a lithium battery. The same goes for your laptop... and maybe your hearing aid or pacemaker.
Lithium is in so many things: aircraft parts, grease, glass, paint, medicines... But the real growth potential - the reason you're reading this today - is in batteries.
Right now, batteries account for 40% of the lithium market. But we're just getting started.
In fact, batteries may suck up 65% of the world's lithium production in less than a decade.
And it's not just the batteries in your phone and computer. The biggest areas of growth are in batteries for transportation, and power storage for home and the grid.
And wouldn't you know it? Those types of batteries - where the growth is - use a heck of a lot more lithium than your cellphone. I'm talking pounds, not ounces. | | Look! More Than 145 Companies Your Stockbroker Did NOT Tell You About
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Consider some of the fastest-growing companies... SpaceX has jumped 26,309% in value... Dropbox has rocketed 31,733%... and Pinterest has exploded a breathtaking 487,404%. Crazy big gains! But here's the thing...
All of these 145 businesses started out as private companies, and your broker would have NEVER told you about them. But now, at last, there's a great way to find the next private companies poised for hyper-growth. Details here. |
How much growth we'll see in the world's lithium market is a matter of debate. But according to market analysts at Macquarie, global demand for lithium will double between now and 2020.
That's only four years away!
Sure, production will grow. But still, according to an estimate from Credit Suisse, demand for lithium could outstrip supply in 2020 by 25%.
By then, the world will need more than 380,000 tons of lithium carbonate equivalent a year.
And yeah, a lot of that growth will come from batteries.
What does that do to prices? Here comes another earth-shaking KA-BOOM! In China, a major user of the metal, the price of battery-grade lithium has surged to more than $20,000 per ton from just $7,000 per ton in 2015, according to a report from CRU Group.
Prices will zig-zag up and down from here. But the big trend is higher.
The New Gasoline
A lot of lithium demand will be fueled by rising demand for electric vehicles. Goldman Sachs calls lithium the "new gasoline." That's catchy. Anyway, Goldman says that for every 1% rise in EV market share, lithium demand rises 70,000 tons annually.
Well, EVs are pricey, right? Not for much longer. Bloomberg research shows that EVs will cost the same as conventional internal combustion cars by 2022. That's just six years from now! And by 2040, EVs should make up 35% of all new light duty vehicle sales. Wow!
Beyond that, Bloomberg says EVs will become cheaper to buy and run than gasoline-powered cars. What do you think that will do to demand?
Meanwhile, you've heard how Tesla is building a "Gigafactory" in Nevada. That's nice. But Tesla isn't alone. There are a good dozen battery gigafactories set to come online or expand by 2020.
Check out this chart from Panasonic that forecasts explosive growth in lithium-ion battery demand... That's a trend I would like to ride.
And there's an easy way to do it. I'm talking about the Global X Lithium ETF (NYSE: LIT). It owns everything from miners to battery makers. Looking at a performance chart from the beginning of the year, you can see that the fund has more than tripled the gains of the S&P 500. Sure, the ETF has trended sideways for the past few months. I think it's just taking a break before its next big move.
The Lithium ETF has an expense ratio of 0.77% and average volume of just under 150,000 shares per day. Do your own due diligence before you buy anything.
Demand for the prehistoric white metal is ready to explode. And the contents of the Global X Lithium ETF are the match.
Good investing,
Sean |
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