In the latest edition of Capital 10X’s Green Metals in Focus series, we examine the underlying commodity charts. Green metals are the strategic play on the green economy; they underpin resource efficiency, electric vehicles and battery technology.
Our initial Green Metals in Focus coverage identified vanadium as an undervalued resource in the Green Industrial Revolution – driving innovation in mining, manufacturing and other verticals.
In this edition we examine the underlying commodity charts of the key green metals: copper, lithium, cobalt, vanadium and nickel. We believe each of these charts are showing strong levels of support and are positioned for breakouts.
The Parabolic Run of Electric Vehicle Stocks
Before we jump into the green metals charts it’s critical to highlight how parabolic their end markets have risen, namely electric vehicles.
Last week Capital 10X highlighted the boom in electric vehicle stocks post the U.S. election. If we look at the bellwether Tesla, it’s up a stratospheric 750% since the beginning of 2019.
The copper chart in comparison to Tesla’s chart, makes the red metal look downright deep value.
There’s been great momentum in 2020 – the copper price has risen as a hedge against inflation and its inherent leverage to economic stimulus. Copper is a dollar away from breaking its last all-time high at $4.50 per pound.
Capital 10X has previously highlighted copper miners, First Quantum (TSX:FM) and Sierra Metals (NYSE:SMTS, TSX:SMT), as the best positioned from a fundamental valuation perspective.
The chart for Lithium (regarded as a “battery metal”) is well below it’s all time high of $300 per metric tonne, showing support at the $100 to $110 line. Global Lithium production and demand are inextricably tied to the manufacture of electric vehicles. We’ve seen demand for Lithium rise significantly over the past 3 years, racing to meet the rapid increase in electric vehicle production.
Another battery metal – Cobalt has a chart very similar to Lithium. Cobalt is 200% from it’s previous high, and is currently sitting at its support line.
Vandium – the resource efficiency and battery metal, is at a strong support level of $5 per pound, over 400% away from the recent peak. It is a true green industrial metal – we’ve highlighted a recent study which breaks down the real energy savings when vanadium is added to steel reinforcement bars. Steel reinforcement bars are used in construction the world over.
In Capital 10X’s initiation on vanadium, we highlighted Largo Resources (TSX:LGO) as one of the best positioned plays, with the highest grade and the lowest cost vs. peers.
Nickel has been structurally moving higher since its bottom in 2016 – with higher highs and higher lows.
These green metal charts are well positioned for breakouts, ready to join their end-market peers – namely electric vehicles.
Sierra Metals is a market awareness client of Capital 10X.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.