Tuesday, December 21, 2010

How To Invest In Lithium Stocks

People have called Lithium the "Oil of the 21st century" and are curious about how to invest in Lithium stocks.  Why? Because battery-powered cars are becoming more popular with the advent of hybrid vehicles, and these cars are powered by batteries that require lithium. While many are frustrated by the slow pace of change and the fact that battery-powered cars still comprise a small part of the market these days, there is progress in developing alternative energy. Lithium stocks are "hot" as well as demand for the commodity. Here are some ways to invest in lithium stocks.
  1. One of the best lithium stocks to buy is Sociedad Quimica Y Minera de Chile (SQM). This is a hybrid fertilizer and lithium play.
  2. Find an index fund for commodities which contains lithium as one of its holdings. It is difficult to find a "pure play" on lithium, since the discovery of the importance of the commodity is still in its infant stages, but it is a good idea to be on the lookout for commodity stocks or mining stocks which will begin to incorporate lithium as part of their business.
  3. Find an index fund with exposure to Bolivia, which contains half the world's reserves of lithium. This may be a very indirect way to invest in lithium, but with increasing demand for the economy, it seems almost certain that the Bolivian economy will also reap benefit.
  4. Diversify Risk among several stocks.  SQM and Rockwood Holdings (ROC) already have existing lithium mines, and are probably the least risky ways to invest in lithium stocks because they have a proven track record. Galaxy Resources Limited (GXy) is an Australian company that is in the process of opening lithium mines and lithium processing plants in China. It is considered a medium-risk play on investing in lithium stocks because it is in the process of what is expected to be a successful development. Lomiko Metals Inc (LMR) is a less tried-and-true way to invest in lithium stocks, and is considered more speculative.

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