Whether you love him or hate him, you can’t deny the fact that Elon Musk is a consummate showman; he knows how to promote.

When he introduced Tesla Inc.’s (NASDAQ: TSLA) latest vehicle – the Model 3 – back in 2016, almost half a million customers were willing to deposit $1,000 just to secure a place in line.

That helped to kick off a massive run-up in demand for lithium-ion (Li-ion) batteries, which power the vast majority of electric vehicles.

Now, a lot goes into making Li-ion batteries, but what isn’t commonly known is that one metal in particular is absolutely critical.

So important, in fact, that the average 60-kilowatt electric vehicle (EV) battery holds a whopping 18 pounds of the stuff.

By some estimates, total demand for this substance will more than quadruple in just the next 15 years, thanks mostly to surging EV production.

The thing is, supply is already severely challenged. Most of the world’s supply comes from one African nation with a wild history of instability and conflict.

But I’m going to show you a special investment with a low-risk business model and potential for staggering upside as demand intensifies.

The Worldwide Car Industry Is Spending Billions

That’s right – the international car industry is investing over $100 billion to develop and produce EVs. That’s just to start.

Just recently, the Saudi sovereign wealth fund committed $1 billion to Lucid Motors, an EV maker. That’s Saudi, as in Saudi Arabia – the country with about 16% of the world’s proven petroleum reserves, leader of OPEC, and 87% of budget revenue from oil.

In the next five years, no less than 40 “gigafactories” will be built. They will churn out massive amounts of Li-ion batteries.

For the most part, that’s not “anticipating” demand. These factories are built based on firm orders.

That’s where cobalt comes into the Li-ion battery story. Here’s what you need to know about cobalt and lithium-ion batteries.

Although cobalt has multiple industrial and commercial uses, the most dominant by far is in batteries, representing half of demand.

And cobalt is a significant part of lithium-ion batteries.

Lithium cobalt oxide batteries, common to laptops and smartphones, contain roughly 60% cobalt. Lithium-nickel-cobalt-aluminum oxide batteries, with about 9% cobalt, are the most appropriate type of high-load battery being used in larger storage projects.

And lithium-nickel-manganese-cobalt oxide batteries contain about 10% to 20% cobalt and are the preferred technology for larger batteries, typically used in electric vehicles.

No matter how you slice it, cobalt is a highly significant portion of the future battery market.

But here’s the crunch… more than 60% of world supply comes from the perennially war-torn Democratic Republic of Congo.

Thanks to serious political instability and concerns about child labor, many cobalt consumers are anxious to secure supply elsewhere.

Meanwhile, a grave supply crunch lies ahead as battery demand soars for electronics and storage, but especially for EVs in the near future.

Besides Tesla and upcoming Lucid Inc. (OTCMKTS: LCDX), there’s BMW(OTCMKTS: BMWYY), Nissan Motor Co. Ltd. (OTCMKTS: NSANY), General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F), Kia Motors Corp. (KRX: 000270), Volvo (OTCMKTS: VLVLY), Volkswagen Group (OTCMKTS: VWAGY), Audi AG (OTCMKTS: AUDVF), Mercedes (OTCMKTS: DDAIF), and a host of others who’ve announced multiple EV models in just the next few years.

Apple Inc. (NASDAQ: AAPL) happens to be one of the top cobalt users worldwide. Even just a few grams in each device adds up in a flash, so the company’s on the hunt for a direct offtake agreement from a cobalt miner.

According to the International Energy Agency, EVs worldwide will hit 125 million by 2030, up almost 4,000% from current levels.

All those new batteries to supply to EVs will require plenty of cobalt.

You can see what the hype – then subsequent EV lineup announcement from auto manufacturers – did to the cobalt price over the last two years.

Cobalt was up 320% before correcting over the last six months. I think cobalt will find strong support at current levels and start a robust gradual climb from here.

Here’s the Best Way to Play This Energy Metal

There are no pure cobalt ETFs that I know of, though this company comes the closest.

Cobalt 27 Capital Corp. (TSXV: KBLT), which also trades in the United States “over the counter” as CBLLF, is an energy metals investment vehicle.

It owns 2,905 metric tons of physical cobalt.

It’s also acquired the world’s first-producing cobalt-nickel stream on the Ramu Nickel-Cobalt Mine, as well as a cobalt stream on Vale’s Voisey’s Bay mine, starting in 2021.

But return potential doesn’t just rest on higher cobalt prices. Cobalt 27 is looking to fuel growth through its strategy of streams and royalties.

Including the two named above, the company manages a portfolio of 12 streams and royalties, including the construction-ready Dumont Nickel-Cobalt project in Quebec, as well as other exploration projects. In addition, Cobalt 27 has an interest in mineral properties containing cobalt.

The company’s focus is on streams that provide near-term cash flow. Meanwhile, these streams and royalties allow for considerable upside with limited downside exposure.

Cobalt 27 will benefit from earnings and dividends, resource growth, and expanding production.

By holding physical cobalt and owning streams and royalties, the company avoids the risks inherent in mining, like increasing capital, operating, and environmental costs.

Cobalt 27’s share price has been caught up in the sell-off suffered by commodities in general as the U.S. dollar recently enjoyed a relief rally and investors have continued flocking to regular stocks.

A closer look at recent cobalt price action suggests $25 may be the new support level.

My advice it to buy a 50% position in Cobalt 27 once its share price closes above $5.75 and then the balance once it surpasses $6.75. This should help mitigate downside risk.

Remember, cobalt supply remains tight, a situation likely to persist through 2021 at least. The fundamentals remain compelling as both China and the United States consider cobalt a strategic metal.

As EVs gain market share, cobalt will gain, and Cobalt 27 should offer plenty of leverage.

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Source: Money Morning 

The widely anticipated September Fed rate hike is now behind us.

And the market’s reaction, at least so far, has been right out of the textbook.

The dollar is up, and gold prices are down.

But we know what happens next…

Gold prices will start to rally.

The dollar is still showing signs of having peaked, and gold continues to suggest it’s building a base before rallying.

As it turns out, speculators have their biggest futures bets against gold in 17 years. The last time levels were similar was in 2001, and that’s when gold rallied by almost 300% in just over 24 months.

There’s no guarantee we’re at an interim bottom, but the signs are pointing toward those odds.

Let’s take a closer look at what happened to the price of gold last week, plus how the Fed is changing my latest gold price prediction…

Fed Rate Hikes Are Good for Gold Prices

The first half of last week brought more gold consolidation with the yellow metal moving within a tight $9 range.

The gold price action was all at the back end of the week, which is no surprise, given participants were waiting for confirmation of the Fed rate hike.

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They got it.  As expected, gold prices dropped at the expense of the dollar’s gain.

Here’s what the U.S Dollar Index (DXY) did over the last five trading days…

Little real gains came on Wednesday (Sept. 26) after the Fed hike and press release. Gold prices ended at $1,194, which was the bottom of its recent trading range.

But on Thursday (Sept. 27), the euro dropped, pushing the DXY higher as concern over a possible delay for Italy’s budget proposal weighed on the currency. The dollar soared, taking the DXY to 95.3 by mid-morning, a 130-basis-point gain from Tuesday’s (Sept. 25) low.

Gold prices were beaten down on Thursday in the wake of euro weakness and a somewhat hawkish outlook from the Fed that rate hikes would continue into 2020.

But traders took dollar profits on Friday (Sept. 28) as the rate hike euphoria wore off. That pushed the DXY back to 95.10 by mid-afternoon, and gold rallied by $10 from $1,183 to $1,193 through the late morning and into the close.

Now, the textbook response from here is to see the start of the next gold price rally.

Here’s why – and how high you can expect gold prices to climb to…

My October Gold Price Forecast

With Friday’s close, the dollar index is back up to 95, which is about the level of the 50-day moving average.

But notice that the 50-day moving average (the blue line below) has recently dipped lower, suggesting the trend has indeed shifted downward.

As I had expected last week, we are getting a bounce in the DXY as it had approached oversold levels. But I still think weakness will soon return.

Tariffs and economic strength have boosted the greenback, but that’s only going to help for so long. As other nations wean themselves off pricey American imports, the United States will feel the impact. Trump adamantly wants a weaker dollar and talks it down at every opportunity to help favor U.S. exports.

Here are a few interesting charts for gold and gold stocks.

Given Friday’s bounce, which doesn’t show on this chart, we could be looking at a double bottom in gold prices if it holds.

As for gold stocks, they’ve shown more relative strength than gold itself.

More interesting is recent action in the Gold Miners Bullish Percent Index ($BPGDM).

When the index turns up from oversold levels (typically below 30), we get a buy signal. If there is solid follow-through, we could be looking at strong gains in gold stocks over the next couple of months.

If we get a gold rally abetted by renewed dollar weakness, then look for gold to quickly cross the $1,210 level (50-day moving average). I’d then expect a push higher to the $1,230 to $1,240 range.

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