A Material World: Opposing Forces In Technology Metals

There are opposing forces at work in the market for technology metals that are creating profitable opportunities for knowledgeable investors.

On the positive side, demand currently exceeds the supply of all the critical metals — and should continue to do so for many years. That imbalance would ordinarily push up prices of the metals and the stocks of their leading producers.

However, investors are looking at the global trade war — and the uncertain global economic outlook — and worry that demand for the metals will soon fall. Those worries are leading to lower prices in the tech metal industry.

I urge readers to take a longer-term view of the demand for technology metals. The global march towards cleaner, more efficient energy production and transportation is unstoppable — which will push prices up significantly for copper, cobalt, lithium, and nickel.

Viewed from that perspective, the leading metal producers should pay handsome rewards to long-term investors who buy them when they are cheap.

I especially like the outlook for Freeport McMoRan (FCX) the world’s leading producer of copper — a metal that’s used in every tech device that produces or uses electricity.

Electric cars, solar panels, wind generators, the smart grid, high capacity batteries, power plants, and so on, use huge amounts of copper. So does the construction industry. I don’t think long-term investors will do anything but profit from Freeport, especially from today’s lower price.

The long-term outlook for nickel is also excellent. The metal is up 30% since January due largely to the decision by the Indonesian government to ban the export of unprocessed ore. By 2021, this major producer of nickel is expected to use most of the metal it mines to make high-grade stainless steel.

The nickel pinch will be good news for Glencore (GLNCY) that’s also a leading producer of the metal — plus copper and cobalt. All three metals are needed in large quantities to make high-capacity batteries for electric cars and countless devices that most of us use everyday.

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