Lithium isn’t a bubble, it’s a fundamental change in energy usage – by James West (MidasLetter/Financial Post – June 3, 2016)

James West is an investor and the author of the Midas Letter, an investing research report focused on Canadian markets.

Lately the tone of coverage in regard to the new bull market in lithium has turned cautionary, with a growing chorus of experts warning that lithium is going to be a “bubble just like other bubbles.”

But the price jump in lithium — catalyzed by statements made by Elon Musk, CEO of Tesla Motors in reference to an accelerated demand for lithium by his company, and certain unnamed Goldman Sachs analysts (“it’s white gasoline”) — is actually the result of a maturity in our collective acknowledged requirement to leave the hydrocarbon era in the dust.

The evidence demonstrating an anthropological influence on everything from weather patterns to ocean temperatures to aquatic biomassol impels our yearning for a better solution to the combustion engine and coal-fired power plants at the base of our energy consumption.

So we shouldn’t be the least bit surprised that the solar, wind, and tidal power that are replacing dirtier power generation schemes are going to need efficient forms of storage for the transformation to electric power.

While the price of oil edges higher to reflect the fact that we still consume 90 million barrels of the stuff per day, there is no denying the fact that successive generations are inheriting bigger atmospheric and pelagic problems.

Thus, while the spark that has been lit under the price of lithium is indeed the result of promotional influences on financial players, it’s not one that once begun will subside or reverse course.

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