Why the Lithium ETF Is in Demand

Aug. 8.10 | About: Global X (LIT)

The recent launch of the lithium ETF has gotten a lot of attention. The ETF is currently one of the only ways to profit from the increased use and popularity of this metal.

Lithium is a different source of fuel, but it’s touched many lives and is constantly in demand. It powers lithium-ion batteries used in cell phones, automobiles, laptops and digital cameras. It’s also a highly-reactive metal that’s not traded on any exchange, reports Matthew McCall for Investopedia.

Global X Lithium ETF (NYSEArca: LIT) invests in the limited number of lithium companies in existence; three companies make up 45% of the ETF, so bear in mind that this could increase volatility. The rest of the holdings are in battery-related companies.

Alonso Soto for Reuters reports that Chile, holder of some of the world’s biggest reserves of lithium, has set output limits for lithium producers SQM and Rockwood Holdings. Lawmakers have said the country should keep its tight grip over an industry that could bring billions of dollars in revenue in the future.

Other uses for lithium include: a mood stabilizing drug, industrial applications, alloys in aircraft and nuclear physics, according to Wikipedia.