Palisade Research - Fri, Feb 2, 2018

Nickel's Fundamentals Are Better than Ever - Find Out Why It Keeps Outperforming

sci-fi image of a spaceship and a girl blowing away a balloon

The price of nickel is up 29% in the last 6 months.

But 20% of that is from the last 60 days. . .

60-day line chart from Dec. 2017 for spot nickel prices per pound

Within the shadows, nickel has been setting up for an exciting future.

Diminishing supplies and surging demand has tightened the market for the metal.

And as an investor - I love this situation.

Here are some key points. . .

"A combination of surging China imports, tighter supplies and fund interest are expected to sustain prices of stainless steel ingredient nickel, which have reached their highest level in more than two years" - wrote Reuters on 01/30/2018.

Deficits between 80,000 - 90,000 tonnes are expected this year - similar to 2017.

Chinese demand accounts for half of all nickel output.

And that number is getting bigger. . .

1-year line chart of total China imported refined nickel tonnes from January 2017

"Latest data shows China's nickel imports more than doubled in December from a year earlier to 41,315 tonnes."

Mining giant - First Quantum Minerals - recently announced that their nickel production dropped 25% last year due to their Australian mine shutting down.

And there are no new supplies coming online anytime soon. . .

The dollar is also down 14% since January 2017 - a three year low.

This matters because commodities are priced in dollars on the global markets. And as I have been writing about for a while - the lower the dollar falls; the more commodity prices rise.

This means a higher nickel price.

line chart of the nickel price per pound versus the USD Index from February 2015

Because of the fundamental story here - falling nickel supplies paired with surging demand - I am really looking forward to nickels future.

Last week I wrote a short article highlighting three of our favorite nickel plays.

If you haven't read it yet, make sure you do because it's chalk full of good ideas on how to play nickel.

Even though the nickel price is surging - nickel stocks are still flat.

This is happening because. . .

One: nickel investing isn't a huge market. How many hedge funds or investment banks do you see talking about it? This gives retail investors a head start to get positioned before prices rise high enough that they finally catch on - remember what happened with Bitcoin?

Second: once the price of nickel rallies long enough that the market expects it to keep going, they will rush in. Many forget but perception is everything when it comes to investing.

This small window gives investors a good opportunity to buy shares of quality nickel stocks at low prices.

As things unfold and better investing ideas come about, I'll make sure to share them with you.

Palisade Global Investments Limited holds shares of GIGA, MUM, TTC. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.

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