Despite the high level of action, markets have gone nearly nowhere for more than a year. Disappointing both bulls and bears, stocks are following an unclear pattern while the market pundits are weighing the possibility of a recession, and corporate earnings are on a decline. The stock market performance is becoming increasingly uncertain.
Nevertheless, let me finish describing the ongoing story of doom and gloom at this point, as there is one quite under-followed niche of the market that is hiding in the commodity sector and deserves more attention. While the markets are still trying to figure out whether the recent commodity price performance might be a precursor to a new commodity boom, there is one commodity for which this has clearly been the case for quite a while already.
It seems that a large part of the optimism that has fled the markets lately has found itself a shelter in the lithium industry. Even though the real potential still remains to be seen, the amount of optimism produced clearly exceeds this industrial metal's production level. It is called "the new gasoline" by Goldman Sachs, and even "the world's hottest commodity" by The Economist. The reason why the metal is expected to experience a boom is the surging demand for lithium-ion batteries. Lithium carbonate and lithium hydroxide are the two main components that are used in the production of cathode materials for batteries (despite the metal having many different uses, the bullish thesis is focusing on this particular industry). Can lithium's role in battery production be replaced by another material? Speaking of the nearest 1-3 years, the answer is a clear "no" as the metal is currently the best combination of low-weight and high energy density, not to mention the costs associated with switching the technology should a
