While JP Morgan says lithium surplus... I'm profitably taking the other side

We live in interesting times. The Kazakhstan government has resigned and First Deputy Prime Minister Roman Sklyar will serve as acting prime minister. Let that sink in. Everyone quit.

This from a major player in the uranium space as uranium just surged past the $106/lb level. 

There are wars on multiple fronts with signs of new wars on the horizon as the US has initiated an “extended ground campaign” on the Iran backed Houthis as retaliation for the killing of three US soldiers. 

The dollar index is near the 105 level once again while gold – while boring – continues to sense something is about to break with the yellow metal close to new all-time highs.

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Governments and corporations keep pledging billions of dollars to the energy transition and yet the things needed to make that transition tangible continue to be stuck in the mud, most notably lithium.

Oh yeah, we have a $34 trillion debt bubble while rates surge higher and the stock market makes new all-time highs.

Making sense of the many moving parts can leave one dizzy and, in some cases, some things just don’t make sense. 

So what to do? In times like this, I like to keep things simple and continue to own the assets that we need, the exception being gold. We don’t need gold but given the debt levels, you bet I own some.

JP Morgan will have you believe that there will be an oversupply in the lithium space for the foreseeable future, as in years. I explain to subscribers – in the next Junior Resource Monthly issue out this week – the reasons why that simply won’t hold water.

I’ll give you a hint. Their report assumes that all production slated to come online will come on without a hitch. Even then, the surplus is expected to be roughly just 2% in 2024. We’ll see how that plays out… but there are already production cuts and delays happening across the board. If the margin of error is 2%, I’ll happily take the other side of that.

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Does that mean copper and lithium can’t see lower prices? Of course not. Like I said, we live in interesting times. But I sleep soundly knowing that, at the end of the day, the market will come back to reality. And when that reality hits, I want to be positioned owning the things that the world needs to make the things the world needs.

I’m positioned. Subscribers are positioned. And as Hedgeye’s Keith McCullough likes to say, “Now is not the time to be doing nothing.”

Let’s get it!

Gerardo Del Real

Gerardo Del Real
Editor, Daily Profit Cycle