What’s Up with Cobalt Today?

Have you heard of Elon Musk?

I presume your answer is yes. If not, may I ask whether you’re living under a rock?

Elon Musk is the founder of Tesla Motors [NYSE:TSLA] — the world’s most famous electric vehicle company. He famously tweeted a few years back,

Battery “breakthroughs” need to state power and energy density (not the same thing), plus how long they last. They usually fail on energy.

That sentence can easily pass over one’s head. I mean, what’s the difference between power and energy density?

That’s a trick question. It doesn’t really matter. At least, not for investors…

But one battery metal ― blue gold ― has a huge impact on battery energy density. That’s how much energy you can story in a battery, mind you. That’s why punters are screaming to buy it.

Should you buy or sell?

Blue gold ― or cobalt ― surged when civil unrest broke out in the Democratic Republic of Congo (DRC) — the world’s largest cobalt supplier — in December, 2016. The country’s president, Joseph Kabila, refused to step down when his constitutional mandate expired. Kabila hung onto power until the recent election on 30 December, 2018, where he lost (again) in disrupted fashion.

The Washington Post reported on 9 January:

Congo’s electoral commission declared Felix ­Tshisekedi the winner of a contentious presidential election in the pre-dawn hours of Thursday, setting the stage for the country’s first democratic transfer of power, despite delays, irregularities and evidence of fraud.

Tshisekedi’s win was announced almost two weeks after the Dec. 30 election. He garnered just under 40 percent of votes cast in a field of 21 candidates.

He will replace Joseph Kabila, who has been president for the past 18 years. Tshisekedi represents Congo’s oldest political party, founded by his father, which has spent decades in the opposition.

Kabila said he would step down in August. He was in power two years longer than his constitutional term limit. That said, given the disputed election result, there are rumours the ghost of Kabila will remain in power for a long time to come.

More on this, and why it matters so much to Aussie investors, in a tick…

Cobalt on track for another run

Here’s the latest story for cobalt:

MoneyMorning 07-11-18

Source: Infomine.com

[Click to open in a new window]

The base metal is trading around US$19 per tonne today.

Technically, cobalt is experiencing a correction ― nothing goes up in a straight line forever. Cobalt has corrected to re-test the technical support level US$19 per pound, shown by the blue trend line. If this level can’t hold, the base metal could re-test the red support trendline at US$17 per tonne ― the long-term major support level dating back to 2013.

I believe cobalt could bounce in the months ahead, mind you.

‘Blue gold’ is trading around support. Plus, given widespread opinion, Joseph Kabila’s legacy is unlikely to go away. Bloomberg reported on 10 January (my emphasis added):

There has been speculation that the announcement of Tshisekedi’s victory could be part of a deal with outgoing President Joseph Kabila, which means that the new president may not challenge the status quo, said senior analyst Shawn Robert Duthie [from Africa Risk Consulting].

I don’t expect major changes to DRC’s mining policies as Tshisekedi will unlikely be willing to undo much of what the previous administration has done.

Congo is a “hugely important region for copper and cobalt, and this result could cause disruption to output,” depending the response of the influential Catholic church, said analyst Ben Davis [from Liberum Capital]. However, copper and cobalt prices “would likely rise globally to offset this impact.”

Indeed, given the overall opinion, the election result won’t have much impact. Joseph Kabila remains in power, and if he leaves as expected, it doesn’t seem like the country will change much any time soon.

Kabila’s legacy is likely to remain for a long time to come.

The future of cobalt

Africa News reported on 13 January:

Democratic Republic of Congo should recount the votes of its contested presidential election that the runner-up says was rigged, the Southern African Development Community (SADC) said on Sunday.

The Dec. 30 poll was supposed to mark Congo’s first uncontested democratic transfer of power in 59 years of restive independence and the beginning of a new era following 18 years of chaotic rule by President Joseph Kabila.

But runner-up Martin Fayulu claims that he in fact won by a landslide and that the official winner, opposition leader Felix Tshisekedi, struck a deal with Kabila to be declared victor. Tshisekedi and Kabila deny this.

If little change happens in the months ahead, cobalt could skyrocket again. Remember, ‘blue gold’ was originally a supply story. It had nothing to do with demand. Supply issues built because of poor policies in the DRC. And, with supply issues still lingering in the background, cobalt demand is now catching up.

The bottom line: cobalt may have another big run this year. But more on this another time. BTW, if you enjoyed this research and want to read more of my stuff, check out Gold & Commodities Stock Trader. I have tipped three of the best gold stocks on the ASX, which could take off to triple digit gains in the months ahead.


Jason Stevenson,
Resources Analyst, Markets & Money

Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:

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