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4 Ways To Play The Post Bubble Lithium Boom

Alex Koyfman

Written By Alex Koyfman

Posted March 20, 2024

Dear Reader,

Well, it’s happening just as we expected… Slowly but surely, lithium prices are starting to edge back up. 

We’re now in week four, and though it’s still early, this could well be the beginning of something with decades-long implications.

lithium price

To those of you who’ve been reading Energy and Capital for the last couple months have heard this time and time again, and once again, I’m going to say it: Lithium’s real growth cycle is only now starting. 

Yeah yeah, I know what you’re going to say. We already saw a lithium price explosion and collapse. How can this be ‘the beginning’ now?

Simple. Because bubbles don’t count. 

Remember back in the early 2000s, when the talking heads told you that the dotcom boom was dead after the tech bubble burst?

Well, look what happened to the tech industry after the bubble. 

dotcom bubble

What was then one of the biggest sector-wide implosions ever, is now barely a blip when viewed in context with the next two decades of evolution and growth.

The same pattern is now being repeated by the cryptocurrency market. 

dotcom bubble

And it’s virtually the same with any rapidly-emerging, disruptive technology. 

Early adopters pave the way, the media latches on, speculators pile in, fear of missing out (FOMO) sets in, pulling in the retail investors by the shipload. 

How Can So Many Fall For This So Many Times?

Soon enough the smart money starts using that influx of retail shareholders as its exit.

Share price trajectory flattens prompting more speculators to cash in, which disappoints the same analysts that were gung-ho a few months earlier, and suddenly everyone is panicking. 

The bubble bursts.

But after the smoke clears, a funny thing happens. 

With the weak hands gone, the emotions burned away, and the simple laws of supply and demand taking over, organic growth can begin. 

This slower, cooler, sustainable growth can then continue for decades… And that’s what we’re beginning to see today. 

Lithium is the oil of tomorrow. There is no doubt about it, but it’s also so much more. 

Because while oil only powered our heavy machinery, lithium has the potential to power everything that we use on a daily basis, from our watches, to our vehicles, to entire cities as we start to move towards decentralized power generation and storage. 

The Universal Energy Storage Medium

Years from now, we will all be looking back to these days as the moment when a transformative commodities revolution began. 

For investors who sat out on the initial insanity and are now looking for a way to ride this trend for years, there are a number of ways to invest in this revolution.

For the risk-averse, the best way to make lithium work for you is to go with the fail-proof option and buy the biggest name in the business. 

North Carolina-based Albemarle (NYSE:ALB) is a $14B giant and the biggest lithium producer in the world, operating properties across the Americas and in Australia.

albemarle

The bubble collapse took share prices down almost ⅔, from a peak of $328 at the end of 2022 to just $120 today. 

That’s what an 80% decline in the price of the underlying resource will get you. But like I said, that FOMA-driven spike needs to be discounted. 

Pretend it never happened. 

Albemarle is a diversified and dominant producer in a land where Lithium production is a sadly neglected trade, so the future presents excellent prospects for the long-sighted investor. 

Not far behind, at just under $14B in market cap, is the Chilean-based Sociedad Química y Minera de Chile S.A. (NYSE: SQM).

SQM

Set to produce 210,000 tons of Lithium bicarbonate in 2024, SQM is also throwing $1.5B into advanced production processes to keep its operations on the cutting edge of industrial science. 

SQM stock took a similar hit when lithium prices collapsed, but that only makes today’s pricing that much more attractive. 

Dialing Up the Risk… Magnifying the Upside Potential

Now, for those looking for explosive potential at the cost of some risk, there’s a range of approaches available there as well. 

My favorite smallcap lithium miner is a British Columbia-based firm operating in the Western United States. 

What’s remarkable about it? Not much, except for the fact that it’s currently sitting on the world’s biggest known lithium resource.

Containing between 40 and 120 million tons of the metal, this geological artifact was created during an ancient eruption of the dreaded Yellowstone Supervolcano, and has the potential to completely alter the global balance of power for the lithium sector. 

Today, the company holding the deed to this land trades for just under a $1B market capitalization. 

The lithium sitting under its feet, however, could be worth up to 3000 times that much. 

To get all the relevant information on this company, click here.

Not Lithium Mining… Lithium Extraction Technology

And finally… To those who don’t mind staying awake at night if it means a potential life-changing windfall sometime in the next 24-36 months, there’s a Lithium extraction technology company that I’ve been following since last summer that recently announced that it had successfully reduced production costs by 64% with its revolutionary new process. 

The methodology is even more compelling, in that it can be plugged into virtually any oil or gas operation and start producing lithium on the side with no interruptions to existing operations. 

This company is tiny at just $20M market cap, but it’s already operating a pilot plant and has proven what it can do with even the the most diluted brine solutions. 

There is a billion dollar potential here if the stars align, and many of them already have. 

Get the full story on that, right here.

Bottom line: Today is the time to be investing in lithium.

The bubble is gone, the FOMA flakes are history. Lithium’s path to energy dominance is set until at least mid-century. 

Don’t make the biggest mistake of your investment career by sitting it out.

Fortune favors the bold,

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Alex Koyfman

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His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.

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