Woah Molybdenum!
From the Maven Letter | February 8, 2023
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Here’s a chart that caught my eye last week.
Molybdenum is primarily used in stainless steel. And look at that price move. It’s accredited to a range of factors, from mine disruptions in Chile to falling Chinese ore quality and rising demand for high performance steels from the renewables and military sectors.
Fair enough. It’s an impressive move. I’m not interested in trying to ‘play’ molybdenum for a few reasons, starting with how risky it is to follow on a major price spike and that moly is largely a by product from other mines so it’s har d to get any direct exposure anyway. But I like the chart because it’s yet another reminder that we don’t have enough mines.
That seems like too broad a statement to hold water…but the forces that have conspired against new mines in the last few years have not been limited to particular metals. Lack of investor interest, conservative management teams more interested in profits and dividends than new builds, and ever longer and harder permitting hurdles have slowed new mine builds of all varieties.
That’s w hy the metals argument is so robust: the world is short on all kinds of metals, from major ones like copper and silver to small markets like molybdenum and cobalt. Shortages across the metals spectrum means charts like this will keep popping up, each time encouraging more investors to consider the opportunity in metals.
Yes, generalist investors still need us to get through the ‘recession question’ before really considering metals. But when they do, the fundamentals are strong across the space.
I’ll wrap t his short comment with a quote from Ross Beaty, one of the most successful mining investors of our time. During the recent VRIC conference, he said:
“In all of my career, I don’t think there’s been a more interesting time for metals. Just about every metal in the periodic table is in a bullish trend.”
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