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Should you be Investing in Lithium Stocks?

Lithium spot prices have soared steadily throughout 2021, flowing with equal momentum into 2022 as well. Prices of stocks such as LIT and LAC have also risen all along with a few sporadic and intermittent dips, indicating underlying market volatility.

The volatility in lithium stocks is dependent on the complex relationships between the demand and supply of lithium in the market - demand from majorly electric vehicles (EVs) and electronics manufacturers. And supplies from companies that mine and produce lithium.

The variability in stock prices can be due to any economic or geopolitical reason that disrupts the intricate interplay of supply and demand.

Since the Lithium market is associated with inherent unpredictabilities, it is wise to opt for long-term investments while avoiding the lure of short-term profits. Our future relies heavily on minimizing pollution, and lithium plays a pivotal role in that.

Let's see how:

Benefits of Investing in Lithium

1. Promotes Portfolio Diversification

Investing in lithium is a step toward diversifying your portfolio and reducing risks. Precious metals asset classes, including gold and solver, are common yet necessary investment portfolio inclusions, acting as a hedge against inflation.

In the current times of high inflation and interest rates, it makes good sense to allocate a small portion of your portfolio to lithium.

2. Increased demand from EV industries

The EV industry is a boon for our future that can singlehandedly make or break our plans to combat global warming. Lithium-ion batteries are ubiquitous in the EV market and sit at the center of the EV revolution.

Compared to other batteries, the benefits of lithium-ions are numerous like fast charging, lightweight, and temperature tolerance. These advantages explain why the EV industry is hugely reliant on lithium.