Will Lithium Be Your Next Precious Metal Investment?
Due to the upcoming increase in the number of cars that use batteries, lithium is poised to increase in value over the next half century.
Just to review . . .
When demand increases for a material that is in limited supply, the value of that material increases. The more the demand increases and the more limited the supply, the more the value increases. It’s the old law of supply and demand.
But there are significant differences between lithium and gold, silver, or platinum. We have to remember that although lithium is in increasing demand, it is intrinsically less valuable than gold, because only small quantities of gold are mined every year, while lithium is found virtually everywhere in the Earth’s crust. It is also found in minerals that must be mined from the sea floor.
Lithium carbonite (a compound in which most lithium is mined) is currently selling for about $7.25 per kilogram. Battery-grade lithium which has been processed from lithium carbonite, in contrast, is selling for prices that are closing in on gold, which is currently selling for about $58,000 per kilogram.
But the Value of Lithium Is Poised to Increase Anyway
Why? Again, it is because of the coming surge in demand, due to the increase in the number of cars that use batteries – whether those cars are plug-in electrics, plug-in hybrids, or non-plug-in hybrids, they will need batteries.
According to a number of sources, including Enerdata.com, 50% of the world’s cars in year 2050 will be electric in some way, and will need batteries. And according to most estimates, there will be 3 billion vehicles on the world’s roads by then, compared to 1 billion today.
So, should you start collecting supplies of lithium today? No, you shouldn’t. Here are some of the reasons why.
Lithium Explodes
Like other alkali metals, it is highly reactive. In order to be stored safely in laboratory settings, it must be immersed in oil to prevent it from oxidizing. Like sodium, it is dangerous to handle or process. If you drop it into water, it will explode.
Even lithium batteries pose risks and can explode if handled improperly. For example, printed circuit boards that have lithium batteries mounted on them should be recycled by professionals. To avoid fire or explosions, the batteries must be removed before the rest of the boards are shredded or processed in other ways.
The Safest Way to Invest in Lithium Is to Invest in Lithium Company Stocks
Maybe that doesn’t bother you. But the fact is that the safest way to invest in lithium – and one that doesn’t expose you to the risk of storing or handling it – is to invest in companies that are in the business of mining lithium and/or making batteries or the materials that are used to make them. And many factors can cause a company’s stock to rise or fall. If a company isn’t well run, for example, the stock value can fall, which has nothing to do with the price of lithium.
Lithium Prices Can Sag or Go Flat
As we write this post, the price of battery-grade lithium has gone flat, due to a fall in demand for batteries that was caused by the coronavirus pandemic.
We Favor Investing in Gold Scrap, Silver Scrap and Platinum Scrap Instead
There are many reasons. One is that there are understandable, reliable ways to purchase gold, silver and platinum scrap and own them yourself; you don’t have to buy stock in a company that deals in them. Another is that gold, silver, and platinum are stable and safe to own and store.
A third reason is that it is easy to liquidate your holdings in gold, silver, and platinum. You can call us at 800-426-2344 and have us recycle your metal scrap for you. We are very bullish on precious metals, much less so on lithium. If you give us a call to discuss how you can profit from your precious metals, you will find out why.