On Wednesday of last week, some of you may have watched a man fly without a plane or hang glider. David Blaine, the illusionist and endurance artist, soared over the Arizona desert by holding onto 50 giant helium balloons. The stunt, called “Ascension,” lasted about an hour, during which Blaine reached a maximum altitude of 24,900 feet, or about 4.7 miles, before parachuting back to earth.
What made his flight possible, of course, was helium, the lighter-than-air stuff that makes your voice sound like Mickey Mouse’s.
Many people may not be aware that the gas is used for much more than filling birthday balloons. It plays a critical role in a number of high-tech applications, from barcode readers to semiconductors to liquid-crystal display (LCD) panels. Magnetic resonance imaging (MRI) machines can’t work without it. Google, Netflix and Amazon have been buying massive quantities of it for their data centers.
So why am I talking about helium right now and not gold or oil or copper? Like those other raw materials, helium is an important but finite resource that must be extracted from the ground. In fact, it’s exclusively a byproduct of natural gas mining.
Also like gold, new large helium deposits are becoming fewer and farther between, even though we’ve only known about the element since 1868, a little over 150 years ago. We’ve only been mining it in earnest since 1915, when the U.S. Army built the first helium extraction plant at the Petrolia Oilfield in North Texas.
As a result, supply is getting tight. Helium is notoriously difficult and expensive to store, for the very good reason that it escapes every known container over time. Ever wondered why balloons lose their helium so fast? It’s because the gas’s atomic radius is so small, it can literally diffuse through any solid. Much of it floats up into the upper atmosphere and eventually gets torn away by the solar wind. Helium is the second-most abundant element in the universe, and yet the day is fast approaching when it may no longer exist on Earth.
Did you know the U.S. has a National Helium Reserve in Amarillo, Texas? Despite the plant having the capacity to hold over 1 billion cubic meters, its reserves are projected to be depleted within two years, according to Desert Mountain Energy, a North American explorer of the gas.
Desert Mountain Energy Announces New Helium Discovery
As I’ve said a number of times in the past, one of the most attractive investment cases of gold is that it’s an extremely rare commodity. Peak gold is here, even as demand for the yellow metal remains steady, and over time this will help support prices.
Investors seeking exposure to gold have other options than physical bullion. There’s individual gold mining stocks, futures, mutual funds and ETFs.
Investors interested in helium aren’t so lucky. There’s no helium futures market that I’m aware of. Explorers and producers are your best bet.
Among our favorites is Desert Mountain Energy. The company is headquartered in Vancouver and listed on the TSX Venture Exchange under the ticker DME.V, but it operates in the U.S. Southwest, particularly in Oklahoma and Arizona, the “Saudi Arabia of helium.”
Desert Mountain is up around 640 percent year-to-date on growing speculation of its prolific Holbrook Basin project in eastern Arizona, first leased in late 2017. Last week, the company announced “significant” helium percentages at two of the project’s wells, which is highly encouraging.
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The jump in share price fits in neatly with the “Lifecycle of a Mine” thesis, whereby mining stocks rise and fall depending on which phase of exploration or production a project is in. In the past I’ve discussed this investor behavior as it applies to gold stocks, but it also applies to any commodity, including helium.
More importantly, though, this demonstrates the benefit investors get with active management. With decades’ worth of experience investing in natural resources, we have an expert understanding of the dynamics involved in the mining process. We were able to get into Desert Mountain soon before its remarkable runup.
For more on the Lifecycle of a Mine, explore our popular slideshow by clicking here.
Base Metals Supported by Recovering Manufacturing Activity
Helium isn’t the only commodity that’s surging on greater demand right now. Copper and iron ore are both up as manufacturing activity around the world continues to recover following the lockdowns. The manufacturing PMIs in the three largest economies—the U.S., China and euro area—all registered above the key 50.0 mark in August, indicating expansion. As I shared with you last this week, U.S. factories hit an incredible 56.0, the fastest pace since late 2018.
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New orders in particular have increased, meaning demand for industrial metals has also improved. The price of copper has surged 41 percent since the March lows and closed at a two-year high of $6,697 per ton in London trading last Wednesday. Meanwhile, iron ore futures on China’s Dalian Commodity Exchange traded at nearly $126 on Thursday, up 70 percent from its April 2 low.
Gold Continues to Shine on Record Money-Printing
Gold may be off its record high of more than $2,070 per ounce, but the long-term investment case remains strong, not least of which because of peak gold production. Currency debasem*nt is still a great fear as the Federal Reserve continues what is essentially the fourth round of quantitative easing (QE). According to Bloomberg, the Fed has now purchased more than $1 trillion of mortgage-backed securities (MBS) since March. Not only is that a record pace of money-printing, but it’s also inflated the Fed’s balance sheet. Believe it or not, the central bank now owns almost a third of all bonds backed by home loans in the U.S.
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On the fiscal side, things are just as elevated. According to a report last week by the Congressional Budget Office (CBO), the amount of federal debt as a percent of gross domestic product (GDP) is on pace to hit, and exceed, the previous record set during World War II. As of Friday, total national debt stood at a mind-boggling $26.7 trillion, or more than $214,000 per U.S. taxpayer.
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It’s starting to look as if appetite for another $1 trillion-or-more coronavirus relief package is waning among lawmakers and the president. Even so, the budget is near levels unseen in this country, with interest payments alone totaling more than $338 billion. This makes gold more attractive as a hedge against devaluation.
No Faith in Inflation
In a recent post, I ran a poll asking if you believe the headline consumer price index (CPI) accurately measures inflation in the U.S. One hundred ninety-one people took the poll, and of those, a whopping 86 percent said they believe inflation is much higher than the monthly figure provided by the Bureau of Labor Statistics (BLS). Thirteen percent said they mostly agree with the CPI, while only 1 percent said they believe inflation is really lower than the headline figure.
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I think these results are very telling. Few people, according to the poll, have faith in the current process to measure inflation, with a vast majority believing prices are rising at a faster rate than we’re being told.
Again I ask you, if you believe inflation is being unreported, why wouldn’t you have gold and gold mining stocks in your portfolio?
Last week I spoke with Kitco’s David Lin about the effect of Fed policy on gold. To find out why I believe now is the “perfect” market for the yellow metal, watch the video below, and make sure to subscribe to our YouTube channel!
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.
The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (06/30/2020): Desert Mountain Energy Corp., Amazon.com Inc., Alphabet Inc.
FAQs
New large helium deposits are becoming fewer and farther between, even though we've only known about the element since 1868, a little over 150 years ago.
What is causing the helium shortage? ›
This nonrenewable element is found deep within the Earth's crust and is in short supply, according to NBC reports. The global helium shortage is due mainly to decreased supply from major producers, including Russia which has curtailed production since the war in Ukraine, according to The Harvard Crimson.
Is there a helium shortage 2023? ›
In the most optimistic scenario, which includes flawless execution by Gazprom to restart Amur, no sanctions on helium exports from Russia, existing sales contracts remaining in place and the ability to overcome logistics challenges, Helium Shortage 4.0 could begin to wind down during the second half of 2023 and come to ...
Is the helium supply depleting? ›
As helium is a non-renewable resource, the Earth is certainly running out of it. Why is the world running out of helium? Helium is the only element on the periodic table which is a non-renewable resource on Earth.
Why are helium prices going up? ›
There are a number of reasons for the price increases on Helium but it all boils down to supply shortfall against strong (growing demand) by important industries with party balloon and dive cylinder fills being only a tiny, perhaps insignificant, segment of that demand.
What will replace helium? ›
Hence, Argon is a substitute for helium.
Who is the largest supplier of helium in the world? ›
The United States is the largest helium producer worldwide. In 2022, the production of helium in the U.S. stood at approximately 75 million cubic meters, taking into account helium extracted from natural gas and helium production from the Cliffside gas field in Texas.
Who has the largest reserves of helium in the world? ›
Global helium reserves 2022, by country
As of 2022, the reserves of helium in the United States amounted to more than 8.5 billion cubic meters, making it the country with the largest reserves of helium globally.
Will the Earth run out of helium in 15 years? ›
Once the gas leaks into the atmosphere, it is light enough to escape the Earth's gravitational field so it bleeds off into space, never to return. We may run out of helium within 25–30 years because it's being consumed so freely.
Can helium be made artificially? ›
Helium is all over the universe—it's the second-most abundant element. But on Earth, it's much less common. It can't be artificially produced and must be extracted from natural gas wells.
Scientists estimate that, at the current rate of global consumption, there is a supply of helium for 100-200 more years.
How many years will helium last? ›
Richardson said it has taken 4.7 billion years for the Earth to accumulate our Helium reserves. The United States' reserves were purchased in 1925 and will be gone in only a hundred years from getting it. Once the Helium is released into the atmosphere it is gone forever.
Can helium reach $1000? ›
If Helium price were to rise at the rate of 25% every year, HNT would reach $1000 in 27 years. Given that Helium is only a moderate case of investment, none of these targets are likely to be met and Helium will not reach 1000.
What is the future prediction for helium? ›
According to the technical analysis of Helium prices expected in 2023, the minimum cost of Helium will be $$0.996. The maximum level that the HNT price can reach is $$1.64. The average trading price is expected around $$2.28.
Should we invest in helium? ›
The average price can be around $14.86, with a marginal percentage change of 50% for 2030. As per our investment advice, the Helium network will grow significantly in the crypto market, making it a good investment option. If you buy HNT at the current price, you may earn a profit of more than 900% by 2030.
What gas is better than helium? ›
Benefits of Hydrogen as a Carrier Gas: Speed 1
Hydrogen has a higher diffusivity than helium, thus its optimum linear velocity is higher and can be used at a higher flow rate without adversely affecting efficiency.
Is there a gas that can replace helium? ›
Argon can be used instead of Helium and is preferred for certain types of metal.
What will make balloons float without helium? ›
Technically any gas that's less dense than air will make a balloon float. In comparison, Hydrogen is half the density of helium and can be better at making a balloon float. Hydrogen gas generates good buoyancy but is not one of the popular nonhelium balloon decoration ideas, since it is explosive.
Could we live without helium? ›
We have to use as little as possible!” Without helium, people would live in a different world. Rockets might not work. Airships might instead have to be filled with hydrogen. Hydrogen easily catches fire.
What will allow the world to not run out of helium? ›
Helium starts out as a different, heavier element. However, exposure to radioactive elements (for example uranium or thorium) can result in the decay of other elements nearby. Essentially, due to exposure to radioactive elements buried under the ground, helium naturally continues to occur.
Helium may be the second most abundant gas in the universe, but it is also the second lightest, making it easy to slip right out of the earth's atmosphere. While outer space is overflowing with Helium, its presence deep under the earth's crust makes it difficult to harvest.
Who buys the most helium in the US? ›
And that's nothing compared to NASA, the single biggest buyer of helium. NASA consumes approximately 75 million cubic feet annually to cool liquid hydrogen and oxygen for rocket fuel.
Where is helium mined in the US? ›
The Cliffside (Texas), Hugoton (Kansas, Oklahoma, and Texas), Panhandle West (Texas), Panoma (Kansas), and Riley Ridge (Wyoming) Fields are the depleting fields from which most U.S.-produced helium is extracted.
What industry uses the most helium? ›
Aerospace & Aircraft
From manufacturing to flight, helium is widely utilized throughout the aerospace and aircraft industry.
Where does most of the US helium come from? ›
Where does helium come from? Helium is a non-renewable natural resource that is most commonly recovered from natural gas deposits. Geologic conditions in Texas, Oklahoma, and Kansas make the natural gas in these areas some of the most helium-rich in the world (with concentrations between 0.3 percent and 2.7 percent).
Does the US have helium reserves? ›
The National Helium Reserve, also known as the Federal Helium Reserve, is a strategic reserve of the United States holding over 1 billion cubic meters (about 170,000,000 kg) of helium gas.
What does the US government use helium for? ›
Helium is used for semiconductor production, resonance imaging (MRI) machines, nuclear power generation, and is significant for federal research at the Department of Energy, the National Aeronautics and Space Administration (NASA), the Department of Defense and at national laboratories across the US.
Will helium run out by 2030? ›
According to Nobel laureate Prof Robert Richardson of Cornell University, the US supplies 80 per cent of the helium used in the world at a very cheap rate and these supplies will run out in 25 to 30 years' time. Earth's helium reserves will run out by 2030, a leading expert has claimed.
Are we running out of oxygen? ›
Our Sun is middle-aged, with about five billion years left in its lifespan. However, it's expected to go through some changes as it gets older, as we all do — and these changes will affect our planet.
What are we running out of in the world? ›
Six things you didn't know we're running out of
- Sand. We're using sand faster than nature can renew it. ...
- Helium. Not just balloons: Helium is essential for use in medical imaging equipment. ...
- Soil. Topsoil and phosphorus: Both neccessary for the growing of food.
Once helium is released in the atmosphere, it will continue rising until it escapes into space, making it the only truly unrecoverable element. Helium in recoverable quantities is found in only a few locations around the world, and these sources are being rapidly depleted.
What is the most abundant element on Earth? ›
- On earth, oxygen is the most common element, making up about 47% of the earth's mass.
- Silicon is second, making up 28%, followed by aluminum (8%), iron (5%), magnesium (2%), calcium (4%), sodium (3%), and potassium (3%).
- All of the remaining elements together make up less than 1% of the earth's mass.
Helium is also necessary to make sure NASA's rockets work properly and is an important part of machines called magnetometers, which help the U.S. military detect enemy submarines.
Are balloons wasting helium? ›
So since helium is relatively inexpensive, we use it for things like party balloons - and those balloons inevitably release their helium to the atmosphere, where it rises to the top of the atmosphere, and eventually escapes into space and is lost forever. Why does helium gas up lift the balloon?
How much helium does Earth have? ›
Helium is thought to be the most abundant element in the universe [3], as it the product of the fusion reaction that happens in the heart of stars. On Earth, however helium is exceedingly rare and comprises only 5.2 ppm of Earth's atmosphere.
What will HNT be worth in 2030? ›
Helium (HNT) Price Predictions 2023 - 2031
| Year | Minimum Price | Average Price |
|---|
| 2028 | $7.52 | $7.89 |
| 2029 | $8.74 | $9.10 |
| 2030 | $9.95 | $10.32 |
| 2031 | $11.16 | $11.53 |
5 more rowsHelium (HNT) Price Prediction
| Year | Minimum Price | Maximum Price |
|---|
| 2029 | $53.35 | $65.76 |
| 2030 | $64.91 | $80.35 |
| 2040 | $215.24 | $251.64 |
| 2050 | $451.78 | $475.51 |
6 more rowsHelium Price Predictions
| Year | Price Prediction |
|---|
| 2024 | $46.404 |
| 2025 | $62.184 |
| 2030 | $268.668 |
| 2040 | $414.1965 |
1 more rowHelium price prediction September 2025: Helium's price for September 2025 according to our analysis should range between $4.33 to $4.98 and the average price of HNT should be around $4.66.
What will be the price of helium in 2024? ›
What will the Helium price be in 2024? Helium (HNT) price is expected to reach $3.15 by 2024.
Helium
| Date | Investors | Round |
|---|
| Feb 2022 * | Deutsche Telekom Tiger Global Management Liberty Global Pantera Capital Ribbit Capital NGP Capital Kingsway Capital Seven Seven Six Goodyear Ventures FTX Telekom Innovation Pool | Series D |
| Total Funding | |
6 more rowsIn January 2022 you could expect to pay $1200 for a Helium miner and earn on average $4 a day and get your upfront cost back in less than a year. In January 2023 you could expect to buy a new miner for about 1/10 the cost that you were able to a year ago.
How long will helium shortage last? ›
Scientists estimate that, at the current rate of global consumption, there is a supply of helium for 100-200 more years. There are only a handful of significant sources of helium in the world — the U.S., Qatar, Algeria and Russia, chief among them.
Why is helium limited on Earth? ›
Earth does have a finite supply of helium. Gravity can't hold onto the tiny element once it's moving quickly in the upper atmosphere, so it escapes into space. And because it's small enough to slip through holes in rocks, helium would escape from Earth whether or not humans were sucking it up.
Which countries produce helium? ›
Helium in the U.S.
Apart from being the world's main producer and one of the largest helium consumers, the U.S holds the most extensive helium reserves worldwide. As of 2022, the country's helium reserves amounted to more than 8.5 billion cubic meters, surpassing the reserves of runners-up Algeria and Russia combined.
Who is the biggest consumer of helium? ›
And that's nothing compared to NASA, the single biggest buyer of helium. NASA consumes approximately 75 million cubic feet annually to cool liquid hydrogen and oxygen for rocket fuel.
Can we make more helium? ›
We cannot produce more helium once it is all extracted from the earth.
Where does the US get helium from? ›
Where does helium come from? Helium is a non-renewable natural resource that is most commonly recovered from natural gas deposits. Geologic conditions in Texas, Oklahoma, and Kansas make the natural gas in these areas some of the most helium-rich in the world (with concentrations between 0.3 percent and 2.7 percent).
What is the main source of helium? ›
The main commercial source of helium is known as natural gas, which contains an average of. Helium.
Who controls the helium supply in the US? ›
The BLM operates and maintains a helium storage reservoir, enrichment plant, and pipeline system near Amarillo, TX, that in FY 2021 supplied approximately 12 percent of domestic demand for helium.
Qatar is the top source for U.S. helium imports, supplying 80 percent of U.S. helium imports last year. But relying on Qatar for helium imports has its downsides. In 2017, the country was embargoed by four of its neighbors – Saudi Arabia, Egypt, Bahrain and the United Arab Emirates.
Does the US export helium? ›
In 2022, helium exports from the United States amounted to an estimated 40 million cubic meters. This figure marks the lowest export volume of helium in the period of consideration.
