Lithium: the lucky commodity? – by Robin Bromby (InvestorIntel.com – May 3, 2016)

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Lithium seems to be lucky: it has roared into prominence just when most other things are doing badly, which has given it more pronounced (or at least more noticeable) thrust than probably may have been the case if all boats were rising. Call it the after-burner effect. It is the space capsule that keeps on going when the booster rockets fall away after take-off.

In the past, whatever was the latest fashion in commodity investing had surged in unison with the market in general. So when uranium went crazy in 2007, and hit $136/lb, or when phosphate and potash had their moments in the sun, or nickel went to $50,000/tonne, or gold threatened to get to $2,000/oz, they were not the only shows on the road. Today lithium pretty much is the only story in the minerals sector that is stirring the blood.

(However, this needs some qualifications: one, many of the late-starting lithium hopefuls are going to be a disappointment, just as they were in previous bubbles.

Two, this does not imply that lithium, and lithium companies, will keep rising in the longer term. No, all I am saying is that in the shorter term the lithium story seems bullet-proof; but even that may be proved wrong.)

Even when rare earths soared in 2011, the metals commodities generally were doing comparatively well. But the REE phenomenon was, unlike graphite and lithium, a story not so much of technological revelation as a political one – the REE story had been around a while and the technology developments influencing its end use were well known and demand was not expected to balloon dramatically (the projections indicated a rise in demand, but no gold rush-type stampede).

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