Tuesday 13 December 2011

Inflation Adjusted Historical Lithium Price since 1952 - in Pounds Sterling and US Dollars

 Lithium Price still cheaper then in the 1980s and 1990s - Just

Lithium and its compounds have several industrial applications, including heat-resistant glass and ceramics, high strength-to-weight alloys used in aircraft, lithium batteries and lithium-ion batteries.  The end-use markets for Lithium and its compounds are estimated to be: ceramics and glass, 31%; batteries, 23%; lubricating greases, 9%; air treatment, 6%; primary aluminium production, 6%; continuous casting, 4%; rubber and thermoplastics, 4%; pharmaceuticals, 2%; and other uses, 15% (Ref: US Geological Survey, Mineral Commodity Summaries 2011).  With the ever increasing use and demand for high performance lithium and lithium-ion batteries, in a range of applications from laptops and mobile phones to electric cars, this is a very important element to examine. 

The estimated annual average lithium price data came from the US Geological Survey.  The US Geological Survey used lithium carbonate as a proxy to estimate the price for lithium, as lithium carbonate is a good estimator of its price due to the large quantity and importance of this compound compared to other lithium compounds.  

The historical UK Pound to US Dollar exchange rate data came from Lawrence H. Officer, "Dollar-Pound Exchange Rate From 1791," MeasuringWorth, 2011 at www.measuringworth.com The prices were adjusted for inflation by converting the nominal price into the equivalent in 2010 US Dollars and 2010 GP Pounds Stirling.  The US inflation data came from the historical CPI from the US Department of LaborFor the UK inflation the data came from Dominic Webb (2006) "Inflation: the Value of the Pound 1750-2005" Economic Policy and Statistics Section, Research Paper 06/09, House of Commons Library, UK.  From this you get the following results shown in the graph below.
graph showing the historic price of lithium carbonate and the inflation adjusted lithium carbonater price since 1950 to 2011 in Pounds Sterling and Dollars
Historical Annual Average and Inflation Adjusted Lithium Carbonate Price since 1952 in US Dollars and UK Pounds


The doted lines are the unadjusted nominal annual average lithium carbonate price, and the sold lines are the inflation adjusted lithium carbonate price.  The first thing that becomes obvious is that the unadjusted lithium carbonate piece bottomed in the mid to late 1960s, in both UK Pounds and US Dollars at around £350 and $970 per metric ton respectively. 

However when you examine the inflation adjusted lithium carbonate price you observe that it crashed in 2000 a reached an all-time low in 2005 in both GB Pounds and US Dollars at around £930 and $1,30 per metric ton respectively.   Since them the price has risen by 2009 to approximately £3,000 and $4,600 per metric ton respectively.  This trend can be observed more easily in the chart below, which shows only the inflation adjusted lithium carbonate price.
Graph showing the inflation adjusted price of lithium carbonate since 1950 and clearly shows that it is almost as cheap as it has ever been.
Inflation Adjusted Lithium Carbonate Price since 1952 in US Dollars and Pounds Sterling



The second thing that you observe is that the US Dollar price of lithium carbonate was approximately constant from 1975 till the mid 1980s.  Using the stability in the price as a baseline the inflation adjusted lithium carbonate price in UK Pounds and US Dollars were indexed from price in 1975 and this is shown below.
Graph showing the inflation adjusted price of lithium carbonate indexed to the price in1975 and it clearly shows that it is almost as cheap as it has ever been since 1950.
Historical Inflation Adjusted Lithium Carbonate Price since 1952 in US Dollars and GB Pounds, Indexed to 1975


It is also interesting to note the compounded rate of change for the inflation adjusted lithium carbonate prices index in US Dollars and GB Pounds, tracked each other pretty closely.  Although there is much greater volatility in the price in UK Pounds due to the exchange rate volatility in the late 1970s and early 1980s.

The indexed price data clearly displays that since the late 1960s the inflation adjusted lithium carbonate prices has been pretty constant until the crash in 2000.  The price only dropped to approximately 25% of the late 1970s and early 1980s price.  Additionally the rapid price rise since 2006 has taken the price to about 65% of that in the late 1970s and early 1980s.  So from a historical perspective the 2009 is significantly off the inflation adjusted prices of the early 1960s and before and the relatively stable price from 1970s till 2000.


Thursday 8 December 2011

Inflation Adjusted Historic Silver Price - Pounds Sterling and US Dollars

Every day you hear about Gold or the price of Gold mentioned.  Occasionally you see a chart of the historical price or if you are really lucky, the historical inflation adjusted Gold price (almost always in US Dollars).  A couple of months ago I calculated and posted the historical and inflation adjusted Gold price in Pounds Sterling and US Dollars since 1900 (see hereUpdated Inflation Adjusted Gold Price - US Dollars and UK Pounds).  Now I will show the both the historic Silver price and historical inflation adjusted Silver price in US Dollars and GB Pounds.

The annual average Silver price data came from www.kitco.com and it went back to 1792.  The Historical UK Pound to US Dollar exchange rate data came from Lawrence H. Officer, "Dollar-Pound Exchange Rate From 1791," MeasuringWorth, 2011 at www.measuringworth.com/exchangepound/.  

The prices were adjusted for inflation by converting the nominal price into the equivalent in 2010 US Dollars and 2010 GP Pounds Stirling.  The US inflation data came from the historical CPI from the US Department of Labor.  The UK inflation the data came from Dominic Webb (2006) "Inflation: the Value of the Pound 1750-2005" Economic Policy and Statistics Section, Research Paper 06/09, House of Commons Library, UK.  From this you get the following results shown in the graph below. 

Chart showing the historic price of silver and the inflation adjusted silver price since 1792 to 2010 in Pounds Sterling and Dollars
Historical Annual Average and Inflation Adjusted Silver Price Since 1792 in US Dollars and GB Pounds

The doted lines are the unadjusted annual average Silver price, and the sold lines are the inflation adjusted Silver price.  The first thing that becomes obvious is that the unadjusted Silver piece bottomed in the 1930s, in both UK Pounds and US Dollars at £0.07 and $0.25 per troy ounce respectively.  

However when you examine the inflation adjusted Silver price you observe that it has bottom at around the same price (approximately £4 and $4 in 2010 value) at the beginning of the each of the following decades, 1930s, 1940, 1990s and 2000s.  In fact, for much of the 20th century (from the 1920s to mid 1960s and from the early 1990s until the mid 2000s) the inflation adjusted Silver price has been very low compare to the long term historic average, (which was approximately £15 and $17 in 2010 value).  Below is the inflation adjusted Silver price in UK Pounds and US Dollars indexed back to 1800

Graph showing the index inflation adjusted silver price is cheaper than it was from the 1810 till 1890's
Historical Inflation Adjusted Silver Price Since 1792 in US Dollars and GB Pounds, Indexed to 1800

The second thing that you observe is that the average Silver price in 2010 is now above the long term inflation adjusted historical average.  The price that year was comparable to the price from the mid 1890s until the 1920s. 

It is also interesting to note the compounded rate of change for the inflation adjusted Silver prices index in US Dollars and GB Pounds, tracked each other pretty closely for the majority of the 20th Century.  However before then, there was a sustained period of time since the 1820s when inflation adjusted Silver price indexed to 1800 was significantly larger in Dollars than Pounds?

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