Lithium and gold: two safe havens in a storm – by Robin Bromby (InvestorIntel – February 12, 2016)

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Two commodities that are doing so well when almost everything else is not: lithium and gold. While as different as chalk and cheese, they are becoming increasingly valuable in terms of what people are prepared to pay for them. Indeed, last month The Economist did a lithium update under the headline “An increasingly precious metal”.

On a day when oil sinks again, nickel subsides below $8000/tonne (compared to $50,000 at its peak), the world groans under surpluses of everything from iron ore to aluminium, the Japanese stockmarket (and others) are in panic mode, and with negative interest rates becoming the central bankers’ last, desperate resort, it is remarkable the lithium and gold stand well away from the pack.

Gold we know about. It rose as much as $56/oz on Thursday, its biggest one-day gain since 2009. London’s The Daily Telegraph on Thursday had this shouting headline: “Investors ‘go bananas’ for gold bars as global stock markets tumble”.

The second headline then told readers: “Bullion dealers report record sales as buyers ‘queue round the block’ to purchase the precious metal”.

Well, apparently something similar is happening in China to lithium with reports that industrial users there are buying at increasingly high spot prices – the latest report quotes $16,000 for lithium carbonate.

While gold is the new (yet again) safe haven, so lithium is seen as the “new gasoline” (in the words of Goldman Sachs). As The Economist put it, “the element is a vital component of batteries that power everything from cars to laptops and power tools”.

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