Nickel Turnaround Gains Traction
The most dominant theme in the metals sector right now is the leadership of lithium in an otherwise dull (short-term) market environment.
With our position in the Global Lithium & Battery Tech ETF (LIT) on the upswing—thanks to surging demand for the white metal—it’s clear that investors are focused on the growing opportunities in the rapidly expanding electric vehicle (EV) market.
While most participants are aware of how critical lithium is for batteries used by EVs, it’s not as commonly known that nickel also has an important use in the auto market as a battery mineral. As The Nickel Institute recently observed:
“Using nickel in car batteries offers greater energy density and storage at lower cost, delivering a longer range for vehicles, currently one of the restraints to EV uptake.”
Informed investors are waking up to the potential of this metal, as evidenced by the turnaround in nickel prices in recent months. After topping out at just under $19,700 per ton in February, the LME nickel price fell to $16,000 before reversing in April and recently hitting $18,540.
The turnaround process has been so imperceptibly slow that most metal investors seemed to have forgotten the once-hot nickel market even exists. But recent market clues suggest that there’s an intermediate-term opportunity in this industry-critical metal.
To that end, I’m going to add the iPath Series B Bloomberg Nickel Subindex Total Return ETN (JJN) to our portfolio today. Keep in mind this is an exchange-traded note (ETN), not a traditional ETF, which is an unsecured debt note that trades more like a bond than a stock. That said, I’m recommending only a small, conservative position in this nickel-tracking vehicle.
I’ll have more to say about the nickel market and JJN in our next regular report on Tuesday next week.
WHAT TO DO NOW
Buy a small position in iPath Series B Bloomberg Nickel Subindex Total Return ETN (JJN) here or on pullbacks. I’m suggesting an initial stop-loss slightly under the 22.27 level (nearly pivotal low from June 18) on a closing basis. BUY A HALF