Lithium/Cobalt – One of the better long term investments?

As usual on Sunday morning, I am spending most time researching fundamental information online.

I started with this great infographic:

Nearly 3000% expected increase in demand for Lithium? That could drive prices up quite a bit! Cobalt nearly 2000%.

More at this link.

Then I checked out the car that UBS tore down to research materials (all prices in pesos):

Wow, that’s not so cheap! But seems like a great car – 238 miles with no charge really let’s you travel gas free. Charges completely in under 10 hours. Great daily car, but it seems like it’s not the time to be buying EVs yet. In the next 2-3 years the prices are bound to go much lower.

This is pretty much the direction the world is going into. It is not even so much about Tesla or Chevrolet – pretty much every major car maker has semi or full EV, or developing one.

So I thought that maybe this is something worth looking into as an investment.

Let’s look at the chart, first for Lithium:

One after another many major R levels broken since 2016, including major Bearish trendline. Next target – all time highs near $45. This is the furthest back I could find with a quick search.

And Cobalt:

Unsurprising correlation.

Zooming in on Lithium…

(Note that this is not actually Lithium chart – it is ETF. More on that later)

Major Bullish trend, no question about it! Best investment opportunities were in 2016, but there are bound to be more corrections along the way.

Wait, what happened during the last week??? Huge gap and the biggest Bullish week in recent years. On top of that, the biggest trading volume EVER.

Apparently, as I was reading earlier this week (but not connecting the dots properly in my head), China has just unveiled a plan to ban petrol cars! Sounds crazy! But the crazier part is that in case of China it means that they are going to replace gas powered cars with coal powered cars, because that’s where China gets 65% of its power. 😀

Well, leaving environmental issues aside, the news is driving Lithium way up.

Coming back to the recent volume/price spike, here is an article going into it in more detail.


So how could one trade Lithium? Apparently, you can’t – at least not pure Lithium (i.e. Futures). All the details are in this great article by Reuters.

And this article discusses top Lithium producing countries.
And top Lithium producing companies.

USD and JPY, long term overview

31 - UJ MN

Despite all the doom and gloom that most analytics suggest for USD, price action suggests otherwise. To me it is always important to compare economic events with traders’ psychology I am reading on the charts.

USD has been trading in bearish cycle on Monthly for almost 2 years now. USD is the most bearish currency in that time frame, right after GBP. Additionally, COT reports has been showing increasingly negative sentiment for USD (which did recover in the past months). Fundamental releases were pretty negative for USD as well, and US economy is far from doing well. FED is unable to hike rates even by another 0.25%. So where is a huge USD trend reversal?

The only significant bearish move between all USD pairs was seen in UJ. If we look at the USD profile overall, it has barely corrected to its strong bullish trend. Not only that, but it is approaching strong support areas right now. If bears were not able to show significant bearish cycle when everything was going against USD, I am fully expecting the coming bullish cycle to be strong.

Of course, a reversal of Monthly price action will take time, so we are planning the next 6-12 months here. USD might go lower for a while, but it doesn’t look like the Market is accepting it at these prices very well.

Looking at JPY, which was undoubtedly the strongest currency during he last 2 years, it is also approaching a point where traders are not willing to pay this much for it. UJ in particular is trading in a very important Monthly support area, as seen on the chart. With such expensive Yen, Japanese government is in trouble. They’ve been trying to stop the trend, quite unsuccessfully during the last 6-12 months. However, right now we are at a point where speculators are finally going to help BOJ and start selling JPY.

As usual, it is crucial to watch price action in real time, to adjust our plan as necessary.