I’m looking for the best lithium stocks to buy as a way to profit from the electric vehicle (EV) revolution. Penny stock Zinnwald Lithium (LSE: ZINN) is one such mining share I think could deliver exceptional returns.
Investing in early-stage miners like this is dangerous business. Zinnwald isn’t set to begin producing lithium from Saxony in Germany until 2023. So the company isn’t revenues generating and could see its balance sheet stretched if it encounters any development problems. In this scenario, shareholders can be tapped for cash and/or debt can be taken on.
As I say though, the upside of investing in Zinnwald Lithium is that it gives me exposure to the EV sector. And, more specifically, it could make me a lot of money if lithium supplies run low and prices soar.
Last week, the head of Stellantis Carlos Tavares — manufacturer of brands like Peugeot, Fiat and Jeep — warned that a shortage of batteries is set for around 2025 or 2026.
The rate at which EV sales are tipped to soar could make lithium stocks like Zinnwald some of the hottest mining shares to own for the next decade.
A gold stock I’d buy
I think buying gold mining stocks is a clever idea too as inflation soars across the globe. I am thinking of doing this by investing in Brazilian gold explorer and producer Serabi Gold (LSE: SRB).
Gold prices are caught in the crosswinds at the moment. Demand is being supported by some shocking inflation gauges from across the globe and rising inflationary warnings from economists and central banks. Fears over the impact of rampant price rises on the economic recovery is also fuelling the safe-haven metal.
However, at the same time, rising bond yields and a resurgent US dollar are hampering gold prices. A stronger dollar effectively makes it more expensive to buy buck-denominated assets like bullion.
There’s a risk that gold prices could continue retreating (they recently dipped to three-month lows just above $1,800 per ounce). And especially if central banks hike interest rates fiercer than expected. But it’s my belief that metal prices should rise as inflation moves to eye-popping levels.
The European Commission is the latest major institution to raise its forecasts. In recent days, it supercharged its inflation forecasts from just a few months ago. It now expects inflation to average 6.1% in 2022, up significantly from 3.5% previously.
And it’s possible that inflation will beat even these revised forecasts as the war in Ukraine drags on.
Holding stocks like Serabi Gold are a good insurance policy for investors like me as insurance for when economic shocks happen. And buying this particular penny stock today could be a good idea as production from Serabi’s Palito mine recovers strongly following disruptions earlier in 2022.