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24 April 2019

Put your money where your mouth is



I have a few very good friends who watch the nickel (and cobalt, to an extent) market like hawks. They are convinced that the spread of battery-powered vehicles is going to cause a major rally and that by holding a long position they are going to make substantial gains out of that seismic shift in behaviour. They can quote all the growth figures, tell me how much nickel a battery needs, and how the onward march is unstoppable. 

Well, at some time, probably, as long as replacement battery technologies don’t emerge too soon, they’re going to be right. But there are bumps along the way. While recent reports from Norway - a country of about three million - suggest that electric vehicles have now reached fifty percent of auto sales, China - which is the one that really matters - has seemingly seen a slowdown of growth in EVs. 

The biggest current hurdle for me, though, as I have written before, is the inadequacy of the charging network. That’s why, incidentally, I don’t hold a long position in nickel (or cobalt, or lithium); what I do have, though, is good quality copper mining equity. Because you can have as many batteries as you like, but unless and until the electric current has enough copper cable to flow down, nobody’s going anywhere. 

Charging facilities do vary. Tesla have the best network - free to some, charged to others (depending upon the deal when you bought the car) - but the others are a bit of a mess, largely because there is no unified method of payment. Each network has a charge card, but they don’t generally work between networks. So the combination of availability of chargers and simplicity of payment is still a blockage to the growth of the market.

However, that’s not really what I wanted to write about today. Going back to those friends I referred to above, it intrigues me how many seem prepared to base a trading strategy upon the expectation that somebody else will do what one is not prepared to do oneself. You see, it’s all very well being able to tell me how many Chinese have bought an electric car, and how much increased demand for nickel that is going to create and how much that means the price will rally, but there is something essentially unreal about it when you roll up in an internal combustion engined car yourself. It’s not often that we see a major potential shift of emphasis in a major industry, still less often that we - as individual consumers - can directly participate in that change. But that is exactly where we are now; we can each influence the change in habits. 

So come on, guys; you know who you are…… Instead of waiting for the Chinese to do it for you, how about putting your money where your mouth is? Bite the bullet and stop expecting somebody else to do the heavy lifting for you that you’re not ready to do yourselves. That’ll help the nickel price………. And anyway, you might like the product; both my cars are now hybrid (not pure electric, for the charging network reasons I mention above) and I’m really pleased with both of them.  

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