Before gold and silver started taking off a few months ago, lithium had been the only non-disappointing commodity investment around for quite a while… and we covered a bunch of teasers for lithium producers and explorers over the past year, most of which were built on the “Tesla’s gigafactory is going to need more lithium than is currently produced, so prices will inevitably soar” argument.
The gigafactory is fairly new, of course, but the argument that electric cars will drive lithium prices higher is just about a decade old now — and it’s perfectly logical, since the amount of lithium used per battery for automobiles is obviously far larger than the amount used for each laptop or phone battery… we just need that large volume of electric cars with lithium-ion batteries to finally scale up. And it probably will, though the growth trend hit a hiccup last year when fewer electric cars were sold in the US than in 2014 (that largely because cheap oil removes one of the incentives for buying an electric car).
In the words of today’s ad:
“Elon Musk plans to build 500,000 Tesla 3s every year. That amount is already on pre-order.
“And to meet that goal, he says he will need the world’s entire lithium supply. And he’ll need it year after year.
“That’s astounding.”
So what have we seen so far on the lithium-teasing front? In recent months we’ve seen the push for “Metal Oil” that was teasing Orocobre, Dajin Resources and Enersys, the “Salt Fuel” pitch that was teasing the large cap players Albemarle and FMC, and the delightfully hyped-up “Extraterrestrial Gold” ad that was teasing Pure Energy Minerals…. so that’s quite a cross-section of the established lithium names sprinkled in with a few hopefuls and “up and comers.” But this time, it’s a different stock getting the teaser treatment.
The ad comes from Nick Hodge, it’s a pitch for his Early Advantage service (currently $799 a year) and he says he’s going to get you in early on “Lithium Rush Profits” … so what’s the stock?
Well, for that we have to dig into the ad (if you want to play along at home, you can see the original ad here). Here’s a bit of the intro:
“The Lithium Boom Story You’re NOT Being Told
“The one and ONLY move to turn $10,000 into $1 million on the lithium energy boom.“While most investors ‘in the know’ will miss out on this virtually unknown 100-bagger play…
“I’ve already shown a small group of my readers 1,667% gains on lithium in four months — and we’re just getting started…”
And apparently that gain he showed his readers was actually on the same stock he’s teasing today, so that narrows it down a little bit…
“… there’s one — and ONLY one — play to get rich on the lithium boom in 2016.
“And why this $2 firm could deliver 100-fold gains THIS year, even as its competitors flop.
“In fact, my readers and I have already taken home 1,667% gains on this lithium play in the last few months.”
OK, so there’s some stock that’s now around $2, and which Hodge pitched when it was priced in pennies. What do we get in the way of specifics?
Quite a bit, actually — perhaps because Hodge is happy to publicize this stock after it made such a big run. Here are some more clues:
“… its founder has made himself and investors rich on a lithium buyout before….
“Another one of its founders is a billionaire with close ties to Bill and Hillary Clinton.
“A political insider who gives this company a direct line to the White House.
“He’s also an energy market ‘superstar’ responsible for generating mind-blowing returns like 200,000%.”
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OK, so that’s probably enough — that “political insider” is almost certainly Frank Giustra, who is involved with the Clinton Foundation and also gets teased as a mining and energy insider from time to time (he had a big win in uranium a while back, I don’t remember the rest of his investing history — and he was also one of the founders of Lionsgate, the film studio that hit new highs on the back of the Hunger Games and Twilight movies).
Which means many of you have already connected the dots on which lithium stock this is … but don’t spoil the surprise for everyone else, let’s check out some more of the ad:
“Right now, a few big players monopolize the lithium supply. They’re not pure plays with a lot of upside. And the others are just small timers with no real proven reserves.
“Sure, they may hand you a few points as the lithium tide lifts all ships. But I don’t expect much else out of them, certainly no actual lithium production. And neither should you.
“That’s why I stayed on the sidelines of this industry throughout most of 2015. But with the new developments from Musk and Buffett, I knew there were riches to be made. I just needed to find the most profitable way everyday investors could get a share.”
And a few more clues about the specific stock:
“… back when I identified this tiny play, went out to its mines, and met its company execs…
“It was only trading at 15 cents.
“What’s more, you couldn’t buy it on a single stock exchange.
“But after I saw its plan and savvy management, I sent a buy alert to my readers.
“I even gave them the ‘in’ to buy it. The kind you can only get from having a contact — like me — with the company.
“Since then we’ve watched it surge for storybook gains.
“From 15 cents… to half-a-buck… to $1.50 and now — as of writing this — it’s reached $2.53.”
And then some pretty wild promises to go with that 15 cent to $2.50 move…
“I don’t think we’re even close to finished.
“In fact, it may sound unbelievable, but I expect this tiny $2 company to reach no less than $34 in 2016.”
Wowsers. OK, so where’s this lithium coming from? More clues:
“… this Clay County land is only footsteps away from America’s only operating lithium mine.
“In fact, it couldn’t have a better position if we bought the mine itself!
“… this tiny $2 firm is sitting on prime lithium land like no other…
“Not just in Nevada but in the world’s ‘Saudi Arabia’ of lithium.”
The “Saudi Arabia” reference must be to the source of much of the world’s lithium, the salt flats of the upper Andes in South America, with production largely in Chile and Argentina and some huge unproduced (largely for political reasons) potential in Bolivia.
And we get some hints about the other guy behind the company, in addition to the hints about Frank Giustra — apparently there’s another “flipper” involved here who has turned little commodity stocks into fortunes before, these are the clues:
“2016 Catalyst #1: The BIG Lithium Buyout of 2016
“This man has done it time and time again.
“For instance…
“He founded a uranium play called Energy Metals Corp. with $10 million. Two years later, he turned around and flipped it for $1.8 billion.
“That’s an 18,000% return.
“Good enough to turn $10,000 into a staggering $1.8 million retirement nest egg.
“Shortly after, he once again made shareholders millions — doing the exact same thing with a company called Potash One.
“Again, in just 2 ½ years he was able to build and sell the asset — this time for $4.50 a share, and all cash, in November 2010.
“You get the picture.
“This guy is a genius at taking small sums of money and generating mega-fortunes for himself and investors.”
OK then… so who’s the company here?
This is, as some of you have already surmised, Lithium X (LIX on the Venture exchange in Toronto, LIXXF OTC in the US). And yes, Hodge probably could have gotten his readers involved in the private placement that got the ball rolling last Fall at 15 cents a share — that was when the current company was created out of a reverse merger, a private placement, and the acquisition of lithium claims in Nevada from a company called Clayton Valley (the acquirer was then called Royce Resources, it changed to Lithium X quickly after that).
Lithium X has been moving quickly, they’ve since acquired other potential lithium projects in Nevada and also bought an Argentina lithium asset called Sal de Los Angeles in an all-stock deal, and they’ve sold new equity along the way in raising a total of something like $25 million (including a $10 million offering that closed just a couple weeks ago). The market cap now, assuming no warrants or preferred shares that I haven’t noticed, should be just about C$100 million. The stock did peak around C$2.50 in mid-April, it has come back in a bit and now trades around C$1.60.
And… I’ve got to get out on another training ride, so I have to leave it there for you to discuss among yourselves. This is a case of arbitrage to a “name” investor, a promotional executive, and an improving lithium market — which is my way of saying that the assets they’re buying are, according to the investors bidding up the share price, worth more in the hands of Lithium X than they were under their previous owners.
That could quite possibly remain true in this case, at least for now, but it gives room for a considerable amount of volatility because the valuation is based not just on the assets “in the ground” and on the timeline to potential commercial development of those assets, but on investor sentiment as folks jump aboard what they consider to be a thrill ride.
That works really well while it’s working, and if lithium continues to rise in price and profile it may well keep working, particularly if there’s a real “lithium bubble” in the share prices of the junior lithium names… but it’s important to remember that the downside can be sharp and fast if you’re wrong about lithium, or if management loses the love of investors, or if this does turn out to be a lithium “bubble” akin to the graphite bubble or the rare earths bubble that we saw in past years and you don’t manage to sell near the top.
Beyond that, which is a general caution that doesn’t necessarily relate to the specific assets acquired by Lithium X (which I haven’t researched at all, other than to note that the purchase price was very low compared to the valuation of LIX), you’re on your own today — think Lithium will keep booming? Do you want to hitch your wagon to investors like Frank Giustra to try to catch the next wave? Think Hodge is right about this stock going into the $30s this year? I’m sure there are some Gumshoe readers out there who own this stock, so please let us know your thinking by sharing a comment below. Thanks!
He could be right, I have owned and still own LIXXF, GALXF NMKEF LACDF SSMLF among some others.
Which stock nick hodge recommend for $2
Whenever I see Nick Hodge’s name, I run (not walk) to the nearest EXIT.
No thank you.
I run to Stock Gumshoe. I wonder if Nick knows it’s here? I also love detective work (that’s all it is in this case) but as long as there are cannabis-related stocks to buy, I’ll leave lithium to Elon and Warren.
vlibassi, could you let me know the name of some good inexpencive cannabis stocks , I know about Gwp thats out of my league. If so I would appreciate it.
Best Regard’s
I am a great – grandmother. I have a small savings and need to earn enough money to pay the bills and live on. Can any of you stock masters give me a good canibus stock that will go up quickly and make a good profit. I am also learning about Lithium investments. Thank you in advance for your help.
I would not bet on lithium with the possibility of sodium anodes and aluminum-graphite anodes making significant progress.
They are a long way off, with the Aluminum types, there are 3 but not even close for Car Batteries, 10 years or so away.
He could be right, One of these is going to be a big winner, Either LIXXF, NMKEF(Favorite) SSMLF GALXF LACDF DJIFF ect, Another one that I like is Formation Metals FMETF, They have the only fully permitted Cobalt Mine in the USA in Idaho, waiting on Cobalt prices to go up.
Forgot to mention OROCF And the big boy ALB
Lest we doubt the broad interest in lithium now that it’s had a big leg up, I just heard CNBC trotting live from Clayton Valley, specifically because of Pure Energy Minerals’ project there (which also neighbors Albemare’s lithium “mine”). These stocks (other than Albemarle, FMC and SQM, which aren’t pure plays) are mostly too small to gracefully handle the broad attention of huge outlets like CNBC, perhaps the ride will continue.
Has anyone ever thought of this novel idea??? If he really truly “believed” that this investment was going to turn $10,000 into a Million why would he share it with you??????? He would load up himself and sing sunshine and lollypops all the way to the bank. Do you really think he cares about making you rich???? Have I spoken to you about the “Bridge” that I have for sale??????
I bought NMKEF at .30, might want to take a look at share price now, They go into full commercial production in H2, 2018. It has come down from $1.50, but its poised for big gains, signed a deal with Boston Scientific among others…
LITHIUM X IS NOTHING TO LAUGH AT, I assure you, but there are other players, which ones come out on top is the only question.
Unfortunately, to get stocks to go up quickly you usually need lots more people to get excited about buying them — particularly if they’re smal companies without any real fundamentals. So to some degree pundits can create the outcome they predict — more so the smaller the stock is and the bigger the pundit’s megaphone.
If he has a lot of followers, he can get rich on the price of admission. He wouldn’t have a sales pitch if he didn’t include testimonials of people who have profited big time.
I would hope if Nick Hodge is known to be a scammer or dishonest in his representations that Travis would alert us to that up front or not cover his tease at all.
All newsletter ads are dishonest in their representations, because they all at least exaggerate and take ideas and stocks out of context. Hodge is more aggressive than many in promoting his letters, and he has talked up a lot of stuff that I thought was penny stock junk in the past but that doesn’t mean they’ve all worked out terribly — I take all teased stocks at face value regardless of who touts them, but don’t know what Hodge is like personally.
Look at ORRP OROPLATA – should be lynched !
1000 shares for $1250. I’ll go for a ride.
Lets see $36 x 1000 = $36000
If it goes bust I lost a lot less than I’m down in silver.
what is symbol of 1000 shares you hold
rather would go for a ride on?
I think buying a 100 shares at this point might be well worth the gamble!!!
The principal bubble at here, is the recycling statute in effect within the European Community. Under that law, anyone putting a hazardous substance in the market, is responsible for withdrawing it and storing it safely, when it becomes obsolete.
Elon Musk’s Solar City company, bases it’s growth on the Power Wall, a rack of lithium batteries he intends to install in private homes, commercial buildings, and anywhere else, to store energy from wind or solar systems, then use it as needed for household applications or to charge the batteries of one’s Tesla automobile. Moreover, the Gigafactory depends on both the Power Wall and the Tesla automobiles, as a market for it’s products.
Here’s the problem. If Musk replaces every existing lead-acid battery with a lithium battery, he will destroy the recycling market for lead.
European law will hold him responsible for the cost of finding somewhere safe, to store all of that obsolete lead.
The only way out of this pickle, is to find a way to continue using lead-acid batteries. (The Power Wall would be ideal. Lead’s disadvantage over lithium is it’s mass. A stationary battery that mounts on a wall, is less of a weight problem, than a portable battery that mounts in a car and has to push itself around town and up hills as it moves the car.) But there’s a catch: If Musk uses more lead in the Power Wall, he diminishes the throughput of his Gigafactory.
Thus far, Tesla and Solar City have had a free ride, courtesy of politicians and central bankers who’ve worked very effectively at attaining negative growth in Europe, Japan, and the US. Along with negative growth have come negative interest rates…some investors find it cheaper to hire armed guards and rent space in a Swiss vault, for a few gold bars, than to hold cash and pay the European Central Bank for the service of storing the cash. Under negative-rate conditions, owning a solar installation or some wind turbines seems a safe investment, because the energy recovered, will be salable at some price.
But at some point, competition will break out, and the free-money party will come to an end. When that happens, many of these renewables plays will depreciate quickly, because the income they create from energy sales, won’t justify the capital cost of their creation. If a $40-million wind turbine only produces enough electricity to compete with a $5-million conventional plant, the owner of the turbine cannot expect to sell the turbine for $50 million. Perhaps $8 million will become the market price.
When the lithium bubble bursts, lithium mining plays will be hit hardest.
Because lithium affects the human brain, European recycling law will treat scrap lithium exactly as it treats scrap lead. Tesla, or whoever buys out the Gigafactory, will be obligated to buy and re-use, burnt-out batteries, for lithium recovery. They will be required to use this recycled lithium up completely, before adding any from other sources.
Viewed from that standpoint, senior lithium miners who actually bring production on stream, will generate a return on investment, until the bubble bursts. Miners with reserves under exploration, but no mine production, will take a beating in the markets. Do not count out, any mining company who generate lithium as a by-product of other mineral extraction. There’s an Israeli firm whose name escapes me at the moment, who established a phosphoric acid plant that yields a wee bit of lithium as a byproduct, as calcium di-lithium phosphate…the very substance that inspired Gene Roddenberry to name the imaginary fuel for Starfleet spacecraft, “Di-Lithium Crystals”, on his SciFi program, Star Trek. One prime advantage of making lithium as a byproduct: If the price collapses, you can store the byproduct until you receive orders for more.
Wow what an in-depth evaluation. Please teach me more.
I remember from another newsletter that insiders were selling a few weeks ago and it looked iffy – said to hold off for now. Can’t find it in my archives.
Energy in general is going to be quite big in the next 10 years.
I don’t think it will make it there this year; with the dropping oil prices, and the upcoming elections, I don’t think that there will be that many electric automobiles finished this year.
So yeah Carl, I totally agree,
This isn’t the year for mass production.
Most company’s are either in compliance mode,
or not starting their big run up.
Bolt will sell a few,
they might do well but really until the Model 3 is running there isn’t a huge demand.
That said, I’ve a Chevy volt and trying to figure out how to buy a tesla,
might need a pesky job.
LIXXF was a recycling automotive bus. It doesn’t have a significant bus in Lithium, but it is trying to move in that direction.. Was known as Royce Resources Corp
hmglf is the one to buy!!!!!!!!
Frank Giustra is a crook with a long history of involvement with the Clintons. For more, read “Clinton Cash.”
This must be a hot topic…. Here are two links to articles that can distinguish one company from another to find the more prominent ones to follow…..
http://seekingalpha.com/article/3988497-lithium-extraction-techniques-look-latest-technologies-companies-involved
and
http://www.pureenergyminerals.com/technology-overview/
From these, I’m looking at OTCMKTS:HMGLF, OTCMKTS:LACDF and OTCQX:NMKEF
I picked up 2 K of Nemaska Lithium@ $0.40 a year ago and it has tripled since. Put them on your radar…
This company out of Liechtenstein will be a truly Tesla killer. Tesla cars
poor milage, when they burn nobody can stop the fire, in cold climate temp no batteries work good, way too expensive, Tesla never ever made any profits.
http://www.nanoflowcell.com/
Redox Flow Batteries, the technology behind nanoflowcell, are are a very interesting alternative to lithium batteries with the main advantage, that storage and use of energy are seperated.
There are first technical applications (e.g. https://www.betterworldsolutions.eu/smart-grid-battery-redox-flow-battery/).
However, for the time being it is difficult to evaluate nanoflowcell.com technically and commercially due to their scarce information policy.
It would be interesting to learn more about them
or about more powerful companies in the filed of redox flow batteries.
May be it’s a pity that Elon Musk did not know / not consider this technology.
You might be interested in http://www.redtenergy.com/ , listed on the London AIM market.
“Elon Musk plans to build 500,000 Tesla 3s every year” – this is an incorrect statement in the ad. Tesla are ultimately shooting for 500,000 deliveries per year across their line up, not of the Model 3 alone. But that’s by-the-by – it doesn’t change the fact that there’ll be huge demand for lithium as the years go by as the internal combustion engine dies a slow painful death, not to mention the potential of the energy storage industry.