Cobalt – Showing Signs of Life (April 16, 2019)

Around this time last year, the price of cobalt was just about done peaking, hitting a high of not quite $50/lb (~$100,000/t), but you can be damn sure there were a lot of bulls still taking on that side of the trade, expecting the rip-roaring rollercoaster ride up to keep on climbing.

Well, as is usually the case with the market, it will then decide to do something entirely different than what most anyone expected…

In the case of cobalt, the metal (and associated mining stocks) have been engulfed in a brutal bear market for the ages, over the last year or so…

From LME.

With the benefit of hindsight, it’s starting to look like early March was the bottom, as the price of cobalt collapsed to an outrageously low level of ~$13/lb, much to the dismay of many speculators who were expecting a hyper-growth story in electric vehicles (EVs) to really light the fuse for a sustained run up in the cobalt price.

In other words, demand was supposed to far outweigh supply

Over the next few years/decade, the BULL THESIS is still certainly possible, but in the interim, thanks to ramped up mine production emanating out from the Democratic Republic of Congo (not to mention artisanal mining), the market currently has more than enough cobalt to meet demand.

In any case, the history/track record of cobalt clearly states that this metal is exceptionally volatile and price action is prone to reversing course in an instant.

I mean, just check out the following one month chart!

From InfoMine.

One minute, cobalt is trading near $13/lb, and the next thing you know (if you aren’t monitoring this stuff every single day) it’s now back up to $16.33/lb!

For me personally, I wouldn’t get too excited until the price of cobalt can ratchet back up to over $20/lb (perhaps even $25/lb) and stay there (i.e. hold support).

In the grand scheme of things, it’s still super duper early days for the clean energy/EV hyper-growth story, so yeah, let’s try and not sweat the technique too much, sit back patiently, and watch how things play out.

 

I’ve got my popcorn ready, though!

 

To better days ahead.

 

Fight On!

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