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Just on the Lithium carbonate pricing issue with ORE.ORE...

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Gunslinger27

500 Posts.

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20/12/18

21:27

Post #: 36926553
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Originally posted by radx: ↑

Hey @Izt148,

The only stocks I'm long are Gold producers for the reasons I've outlined.
Everything else seems to be just getting smashed/dragged down with the overall market.

There are a few ETF's that track the US Treasury bonds if you want to invest that way, they all offer up decent leverage to capture the moves.

I'm waiting for the Fed to go full dovish and signal a halt in rate hikes which will boost commodity prices as the USD starts to devalue.
I'll be looking to buy 'in-demand' commodity stocks like, Gold (more so), Uranium, Oil & Natural Gas.
This will all depend if/when and what is in demand, I'm confident Gold and Uranium definitely will be though.

I'm not convinced (yet), that all commodities will catch a bid when the Fed goes full dovish.
At the moment, I believe that only 'in-demand' commodities like what I've listed above will do well.
(This lack of demand may prevent Australia from having a soft landing like it did in the GFC)

Everything is heavily oversold at the moment so a bounce should come with any piece of 'good news' (although I can't see any of the horizon.)
IMO when this happens though, it will just be another counter trend move to the overall downtrend.

There's also talk that the US has stipulated that China cannot devalue its currency anymore to offset the trade tariffs when they met at the G20 meeting earlier this month.
This is probably stopping China from lowering interest rates and/or doing any meaningful QE to help re-stimulate their economy.
(I read this somewhere but I cannot find the link.)
If it's true, then there's probably not going to much help for 'demand' of world wide goods while this 90 day agreement is in place.

IMO the longer we are in this declining growth phase the worse it will be, as many companies are/ have been heavily overleveraged from the low interest rate environment.
If this decline continues for awhile then a lot of these companies may start struggling to pay back their debts from lower profits/sales caused by lack of 'demand'.

These things also have a bad habit of snowballing when 1 falls/fails.

Deutsche Bank, GE & China's HNA Group are a few names I keep hearing about that are in trouble, I also hear that they're "Too big to fail...".

I haven't researched the corporate debt area enough yet to form a full opinion, someone else here may have better knowledge than me to share on the issue, if they see it as one?

So based on the above I don't really see a bright outlook for the next 3 months.
Also friends that I speak to outside the market have no idea that any of this is going on, to me that shows that they haven't been impacted at all yet.
When/if it gets to their level then it will probably add even more tightening (less spending) and lack of demand.

Hope that helps or gives you something to work off for your decisions.

ps I also saw this tweet today,
Looks like Lithium producers are finally starting to get hit by the lack of demand for products (lithium batteries).
Although the market had been telling us this since January when most of the Lithium producer stocks peaked...
This is also around the same time that China's growth peaked...

View attachment 1396991

I would be interested in hearing a bull case for the market if anyone has one or when they think it might start to turn around?

I just can't see one developing in the next 3+ months.

Expand

Just on the Lithium carbonate pricing issue with ORE.

ORE produces Lithium carbonate from brine.

Battery grade Lithium hydroxide is generally produced from hard rock.

The price of battery grade Lithium hydroxide has been unaffected.

Most if not all Australian hard rock lithium producers are locked into offtake arrangements for existing and future production.

Way to much fear and disinformation around.

Last edited by Gunslinger27: 20/12/18

XAO Value at posting: 5,572.9
12 Upvote

2 Great analysis

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