Mining
Three Major Reasons for Gold in 2016
Three Major Reasons for Gold in 2016
Presented by: Advantage Gold
This year looks to be another one of increased volatility as the market see-saws in different directions. Here are three compelling reasons why 2016 may be the perfect time to add gold to your portfolio.
1: “Stay the Course”
Financial experts often mention that “buying and holding” stocks through good and bad times is the best way to guarantee returns.
Investors that bought equities before the Financial Crisis have had a 20.2% return up until January 25, 2016. They “stayed the course” and were rewarded with an eventual return.
However, those that held gold during that same time period until today have had a 48.6% return, which is more than double that of the general market. This is even true with gold declining roughly 40% from its peak since late 2011.
Does it make more sense to “stay the course” in 2016 with stocks, or gold?
2: Two-Term Presidents
The last four presidents to serve two terms have had stock markets rise significantly during their tenures.
However, the stock markets also suffered catastrophic losses in each of their final years as president.
For example, during George W. Bush’s tenure, the S&P 500 nearly doubled from a bottom of 801 during the Dotcom bust to a peak of 1,562. Then the Financial Crisis hit at the end of Bush’s second term and the market went down to 677 points.
Obama is now in his last year, and the market is up 178% from its bottom in 2009. Will the trend continue?
3: Oil vs. Gold
Oil and gold have a relatively strong historical relationship. They are hard assets that move similarly in inflationary environments.
However, gold and oil also have some major differences in how supply and demand tends to affect the price.
Oil: Every day the world consumes 93 million barrels of oil. However, over the last two years there has been an excess of supply coupled with weakening demand from China and a slowing world economy. This has led to oil falling from over $100 per barrel to $30. Despite this glut, OPEC continues to produce record amounts of oil to maintain market share. Oil is delivered and consumed, and these fundamentals of supply and demand closely apply. More supply + weakening demand = lower prices.
Gold: Meanwhile, gold miner production is expected to peak in 2015 or 2016, and to decrease from there. Since gold is mostly traded via paper markets and not delivered, the nearly five-year low price point for gold may not fully reflect its supply and demand fundamentals. Gold discoveries are rarer than ever, and the cost and risks to mine are very high. Yet, this declining output is not yet seen in the gold price.
Gold to Oil Ratio
Lastly, the ratio between these two goods helps to explain what is going on in the world. Gold represents a safe haven during times of financial stress, and oil represents the overall health of the economy and industry.
The gold to oil ratio is expressed in the amount of oil barrels that can be bought with 1 oz of gold. A lower ratio means that the economy is doing well. Meanwhile, history shows that whenever the ratio is above 20, there has been some type of market crisis.
Today, this ratio is higher than ever in history at 37.
Would you rather own oil or gold?
Mining
White Gold: Mapping U.S. Lithium Mines
In this graphic, Visual Capitalist partnerered with EnergyX to explore the size and location of U.S. lithium mines.
White Gold: Mapping U.S. Lithium Mines
The U.S. doubled imports of lithium-ion batteries for the third consecutive year in 2022, and with EV demand growing yearly, U.S. lithium mines must ramp up production or rely on other nations for their supply of refined lithium.
To determine if the domestic U.S. lithium opportunity can meet demand, we partnered with EnergyX to determine how much lithium sits within U.S. borders.
U.S. Lithium Projects
The most crucial measure of a lithium mine’s potential is the quantity that can be extracted from the source.
For each lithium resource, the potential volume of lithium carbonate equivalent (LCE) was calculated with a ratio of one metric ton of lithium producing 5.32 metric tons of LCE. Cumulatively, existing U.S. lithium projects contain 94.8 million metric tons of LCE.
Rank | Project Name | LCE, million metric tons (est.) |
---|---|---|
1 | McDermitt Caldera | 21.5 |
2 | Thacker Pass | 19.1 |
3 | Tonopah Flats | 18.0 |
4 | TLC Lithium | 10.7 |
5 | Clayton Valley (Century Lithium) | 6.3 |
6 | Zeus Lithium | 6.3 |
7 | Rhyolite Ridge | 3.4 |
8 | Arkansas Smackover (Phase 1A) | 2.8 |
9 | Basin Project | 2.2 |
10 | McGee Deposit | 2.1 |
11 | Arkansas Smackover (South West) | 1.8 |
12 | Clayton Valley (Lithium-X, Pure Energy) | 0.8 |
13 | Big Sandy | 0.3 |
14 | Imperial Valley/Salton Sea | 0.3 |
U.S. Lithium Opportunities, By State
U.S. lithium projects mainly exist in western states, with comparatively minor opportunities in central or eastern states.
State | LCE, million metric tons (est.) |
---|---|
Nevada | 88.2 |
Arkansas | 4.6 |
Arizona | 2.5 |
California | 0.3 |
Currently, the U.S. is sitting on a wealth of lithium that it is underutilizing. For context, in 2022, the U.S. only produced about 5,000 metric tons of LCE and imported a projected 19,000 metric tons of LCE, showing that the demand for the mineral is healthy.
The Next Gold Rush?
U.S. lithium companies have the opportunity to become global leaders in lithium production and accelerate the transition to sustainable energy sources. This is particularly important as the demand for lithium is increasing every year.
EnergyX is on a mission to meet U.S. lithium demands using groundbreaking technology that can extract 300% more lithium from a source than traditional methods.
You can take advantage of this opportunity by investing in EnergyX and joining other significant players like GM in becoming a shareholder.
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