Gold is hot but there’s another metal which is hotter, nickel. Up 30% over the past two months nickel has delivered more than double the performance of gold which is up 13% over the same time, and the gap could get a lot wider as the supply of nickel stagnates and demand accelerates.
The driving force behind the recent awakening of gold is well-understood and can be summed up as a flight to safety as the China v U.S. trade war slows global growth and values of conventional, or fiat currencies, are debased by governments resorting to quantitative easing or other forms of creating money.
Nickel’s drivers are different and far easier to understand and boil down to a simple case of supply exceeding demand which, in past nickel booms, was essentially a case of mines failing to keep up with the requirements of steel mills making stainless steel, a material which has traditional consumed close to 80% of the world’s nickel.
Demand Growing For Nickel In Batteries
Stainless steel remains the primary market for nickel but there’s a faster-growing market which until a few years ago was insignificant; lithium-ion batteries.
A standard source of power in small appliances such as cell-phones with their nickel-cadmium (NiCd) batteries, or nickel-metal hydride (NiMh) rechargeable batteries the big game today is in the battery packs which power electric cars such as the Tesla, Prius and Leaf.