One of the megatrends we’ve been tracking for you here at Legacy Research is the era-defining shift from fossil fuels to clean energy.
In dollar terms, I (Chris Lowe) would go as far as saying it’s the biggest trend on our radar.
Figures from Bloomberg reveal that governments and corporations will spend as much as $173 trillion on new energy supplies and infrastructure to make this transition.
One of the ripple effects of this shift is spiking demand for lithium – a key ingredient of rechargeable batteries.
Lithium batteries are critical not only for the rollout of electric vehicles (EVs)… but also for storing wind- and solar-generated power and feeding it onto the grid.
It’s already led to gains of 193%… 283%… and 384% on mining stocks for paid-up Dave Forest subscribers.
But don’t worry if you’ve missed out on these gains so far. Today, I (Chris Lowe) will show why we’re still in the early innings of this profit trend… and it’s not too late to invest.
The Daily Cut is the premium e-letter we created for all paid-up Legacy subscribers.
So if you’re a fan of Dave, Jeff Brown, Teeka Tiwari, Jason Bodner, or Greg Wilson… you’re in the right place.
My job as editor is to make sure you never miss one of their big ideas about how to really move the needle on your wealth.
That’s why I’ve spilled so much ink on the energy transition. Whenever we’ve seen shifts like this throughout history, they’ve brought profound effects with them.
For example, during the era of mass adoption of rail travel in the mid-19th century, railway companies were the first to apply the standardized time zones we use today.
This in turn enabled new efficiencies in industry and trade.
Roughly a century later, the automobile allowed for the great population shift from cities to suburbs. This in turn ushered in the dominance of shopping malls and “big box” retailers over downtown stores.
And the introduction of standardized shipping containers in the 1960s and 1970s brought down freight costs. This helped bring about an era of globalization.
The shift to carbon-neutral energy dwarfs these past transitions. So we can expect the ripple effects from it to be even more profound.
Without the rechargeable batteries lithium makes possible, there are no EVs.
These batteries also make it possible to store the electricity solar panels and wind turbines generate.
That’s critical if these clean power sources are going to take over from coal and natural gas.
The sun isn’t always shining. And the wind isn’t always blowing. So you need to store the electricity they generate to make it available to the grid at times of peak demand.
That’s why clean energy is such a massive opportunity for investors. Here’s Dave with more…
During the last two great energy shifts – from animal power to steam and then from steam to gasoline – the folks who owned the key raw materials that made those shifts possible made the biggest fortunes.
If you were building a railroad, you needed steel. If you wanted to run an automobile, you needed oil. That’s why Andrew Carnegie and John D. Rockefeller are household names today. They made vast fortunes because they owned the raw materials that powered these energy shifts. Carnegie with steel. Rockefeller with oil.
Battery metals – including lithium, cobalt, and nickel – are the steel and oil of today. They’re necessary not only for the energy transition… but also for the tech boom.
Dave is referencing how lithium batteries are also in smartphones, laptops, and just about every other portable electronic device. Even 5G base stations need lithium batteries. Old lead-acid batteries aren’t powerful enough.
That’s why Dave calls lithium the “tech fuel” of the 21st century.
The International Energy Agency forecasts demand for lithium increasing 40-fold by 2040.
EV makers will drive most of that – about 75%.
And even under the rosiest scenarios for new supply coming on stream, that demand will soon overwhelm “operational” – or existing – supplies.
That’s going by forecasts from London-based market research firm Benchmark Mineral Intelligence. Take a look…
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As you can see, demand (curved red line) starts to exceed operational supply (blue section of bars) next year. And the gap between supply and demand gets wider over the next two decades.
Take Neo Lithium Corp (NTTHF).
This Canadian company is behind the 8-million-tonne lithium discovery at Tres Quebradas in Argentina.
On Friday, Dave issued a sell alert for this stock after Chinese mining firm Zijin Mining Group made an all-cash offer for the company.
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Strategic Investor readers who acted on that recommendation are up 384% in just over two and a half years.
In March, Dave closed out a gain of 283% on Lithium Americas (LAC).
And in August, he issued a sell alert for another lithium miner, Albemarle (ALB), for a 193% profit.
Dave put out these sell alerts because of company-specific catalysts… and to lock in gains for his readers in these often highly volatile stocks. He’s still super bullish on the lithium sector. Back to Dave…
Right now, we have rapidly rising lithium demand as EV manufacturing ramps up around the world. At the same time, there’s great uncertainty about exactly where all that new lithium production will come from.
When demand overwhelms supply like that, it causes these sharp price spikes. That’s one of the reasons you can make such vast fortunes in commodities. When something fundamental changes in an industry, the resulting shortage can trigger sudden and massive surges.
Imagine if retail prices for Apple (AAPL) computers leapt higher by 10%, 20%, or even 30% every year. The surge in sales and profits would have Wall Street analysts falling over themselves to scoop up the stock. The same thing will happen to lithium miners if the price of lithium keeps rising.
He’ll continue to hunt for triple-digit gains on best-in-breed lithium miners for his paid-up subscribers.
But if you’re looking for an easy way to get exposure to the energy transition megatrend, check out the Global X Lithium & Battery Tech ETF (LIT).
This exchange-traded fund (ETF) isn’t a pure play on the lithium mining sector. It owns shares in companies involved in the entire lithium supply chain – from mining to battery production.
But it’s still a good way to pick up some general exposure.
It’s up 175% since I first put it on your radar in these pages in October 2018.
If Dave is right, that’s just the start of an even more powerful rally ahead.
Regards,
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Chris Lowe
October 25, 2021
Barcelona, Spain