One of the greats in the business spoke with King World News about what is going to be a huge surprise for the world.

Stephen Leeb:  “It has been a busy week. On Tuesday, in his address to Congress, President Trump promised major tax cuts and significant infrastructure spending, a strong pro-growth message that sent stocks surging and bonds tumbling. Then, on Friday, Fed chair Yellen as good as promised a rate hike when the Fed meets in a couple of weeks. Higher rates are never good for gold, which dropped a bit less than 2 percent…

But given this double-barreled blow from the country’s top two policymakers, that’s a very modest drop. For example, gold fell by 5 percent – and silver even more – in August 2016 following an upside surprise in the employment report.

The implications of another event during the week, while perhaps not a major contributor to the resilience of the precious metals, are starting to paint the perimeter of the economic world we live in. Once it reaches the center – Katy bar the door – gold and silver are off to the moon. I am speaking about the more than 10 percent jump in Albemarle, one of the world’s largest lithium producers. Lithium is a metal that has become increasingly dear as demand has surged on the back of its use in batteries for electric cars or vehicles (EVs). Indeed, lithium has become known as white oil, and is a major reason many analysts see a dimmer future for the black stuff.

I, too, think lithium will go a lot higher, but I don’t agree that it poses a major threat to fossil fuels or even to gasoline-powered cars. Lithium and oil have a key thing in common: both are finite. For each, as we drain supplies, the costs of extracting more will continue to rise. While oil prices are down 50 percent from 10-year highs, that’s only because producers are accepting much lower margins. Breakeven costs for oil are far higher today than a decade ago and will keep going up, making it inevitable that oil prices will also rise, probably very sharply.

At least, that’s how I see it. But in fantasyland, aka Wall Street, many believe lithium will eventually replace oil as electricity and rechargeable batteries power an ever-bigger proportion of vehicles. Moreover, lithium isn’t used just in vehicles. Tesla, the best known EV company, and some Chinese companies including AES are manufacturing lithium batteries to store wind and solar energy for a renewable-powered electrical grid. So, looking at the potential demand, no wonder Wall Street is bullish on the metal. 

The question is whether the supplies will be there, and before toasting the new world of plenty, there are a lot of numbers to crunch that should give you pause. Morningstar estimates that, largely because of EVs, lithium demand will rise 16 percent a year through at least 2025. This rate of growth translates into a fivefold increase in demand, from the current 175,000 tons a year to 775,000 tons. That rate – which would be the fastest growth of any significant commodity in at least a century – would leave the world with a shortfall of 100,000 tons a year by 2025.…..More Here