While the mainstream press would have you pour your capital into high-risk index funds, I’d like to invite informed investors to think differently – and consider the commodities that will power the planet in the coming years.
Governments aren’t particularly fond of fossil fuels, and many industrialized nations are targeting zero-carbon goals for 2030 or 2050. Meanwhile, many index funds take positions in old-fashioned oil, gas, and coal companies.
If you have a retirement account that’s managed by someone else, chances are pretty good that you’re allocated into power sources that are getting phased out. It’s much better to be positioned to benefit from future trends, rather than to try and fight against them.
Surely, you’re aware that electric vehicles are gaining in popularity and adoption; some governments are even offering incentives to purchase an electric car nowadays.
You can own shares of the manufacturers of these vehicles, but there’s risk because not every automaker will necessarily succeed. On the other hand, you might consider investing in a mineral which electric vehicle makers will need generally.
I’m referring to lithium, which is in a long-term bull market right now. As nations cut down on carbon emissions by phasing out internal-combustion-engine cars, the demand for lithium will continue to increase.
Analysts predict that 75% of all mined lithium could go to electric vehicles by 2025, but there’s a critical shortage in the making.
Remember, a shortage doesn’t necessarily mean that the amount of lithium in the world will go down. If the supply reaches a plateau while the demand soars, then there would still be a deficit:
As you can see in the chart above, the world didn’t plan properly for the electric vehicle boom. As a result, the supply-and-demand balance will be out of whack for lithium, and that’s likely to boost the price.
Now, lithium isn’t the only mineral that will have a place in the low-emissions future. In 2021, governments are realizing that it’s necessary to have a mix of power sources, and that includes nuclear energy.
Of course, there will be no nuclear energy without uranium, and the last thing the U.S. government wants is to rely too heavily on Russia, China, or Kazakhstan for this essential element.
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Both Trump and Biden recognize the importance of nuclear energy, and both Presidents have made commitments to develop America’s self-sufficiency. Any dependence on nations outside of North America could jeopardize the security of the U.S., so this will undoubtedly remain a high priority in the future.
But it’s not just about security – it’s also about minimizing the environmental impact. The media would have people believe that wind and solar are always the cleanest energy sources, but don’t let anybody misinform you:
The data shows that nuclear energy competes with wind and solar power sources as low-emission-intensity alternatives to fossil fuels. As governments take action to promote the nuclear energy industry, investors should consider joining in the nuclear renaissance.
Rob Crayfourd, a portfolio manager at the New City Investment Managers’ Geiger Counter fund, observed that multiple nations are on board with this revolution. “Biden and the EU’s policies are very much keen to incorporate nuclear as part of the energy mix,” Crayfourd said.
At the same time, China has pledged to increase the country’s nuclear power generation to 70 gigawatts by 2025 (up from 50 gigawatts currently) as part of President Xi Jinping’s plans to move away from coal.
Moreover, analysts at Morgan Stanley have predicted that global nuclear power capacity will to increase by 8 gigawatts this year, and grow at a 1.7% compound annual rate until 2026.
All of this will provide a windfall for commodities miners – especially those which explore and develop lithium and uranium assets – and for folks who take an early position in the best miners on Earth.
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