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Rare Earths – The Writing is on the Wall

Found this small blurp from the China People’s Daily floating around the ‘Net today.

China is nto going to wait until it is running out of its strategic metals. They will take action to ensure a viable future supply. Keep your eye on those companies with Rare Earth exposure like Avalon Rare Metals (TSX:AVL), Great Western Minerals (TSXv:GWG), Quest Uranium (TSXv:QUC), Strategic Resources (TSXv:UVR) and newcomer Tasman Metals (TSXv:TSM).

China has more than 50 percent of global reserves of rare earth resources, but China has no pricing rights or discourse powers in international markets. China’s rare-earth has been sold as cheap as cabbages in the past two decades. Energy experts warn that with the current mining rate, strategic resources will be exhausted soon.

China’s total reserves and production scale of rare earth ranks first in the world. The output of wolfram, indium and rare-earth in China accounted for more than 80 percent of the global output.

In Europe, U.S., Japan and ROK, the rare metals are also called “strategic metal” widely used in national defense. However, many countries began to import rare metals from China and other developing countries instead of mining in their countries.

In 1980s, China’s rare-earth industry was in a mess and no one pay attention to it, which resulting in oversupply, thus rare-earth prices have been artificially lowered. China’s rare earth industry is facing a non-profit dilemma. And foreign countries took their chance hoarding much of the market supply.

China’s rare-earth production has reached 96 percent of all global production and exports reached over 60 percent in 2005. However, the pricing right is not reserved for Chinese enterprises. Compared with 1998, China’s rare-earth exports have increased ten times, but the price has decreased by about 36 percent.

Energy experts warn that with the current mining rate, mining area in Baiyunebo, China’s Inner Mongolia will turn to non-rare-earth in the coming 30 years. Rare-earth resources in Jiangxi will be exhausted in the next 20 years and China’s world largest tungsten resources will also be exhausted in 14 years.

In recent years, China has realized the strategic importance of rare-earth. In 2005, crude rare earth ore was listed in the non-exportation catalogue. Foreign countries could only buy purified rare earth materials. And in the same year, export tax of rare earth substantially increased.

In April, Ministry of Land and Resources of China released a new standard of rare earth mining and cut down the output of rare earth; meanwhile, mining permits are still frozen.

By People’s Daily Online Monday November 16th

Article contributed by http://www.investingsuccess.ca

The natural tendency of people to apply physics to finance explains why successful traders are so rare and why they are so immensely rewarded for their skills.

There is no such thing as a “born trader,” because people are born — or learn very early — to respect the laws of physics. This respect is so strong that they apply these laws even in inappropriate situations. Most people who follow the market closely act as if the market is a physical force aimed at their heads. Buying during rallies and selling during declines is akin to ducking when a rock is hurtling toward you.

Successful traders learn to do something that almost no one else can do. They sell near the emotional extreme of a rally and buy near the emotional extreme of a decline. The mental discipline that a successful trader shows in buying low and selling high is akin to that of a person who sees a rock thrown at his head and refuses to duck. He thinks, I’m betting that the rock will veer away at the last moment, of its own accord. In this endeavor, he must ignore the laws of physics to which his mind naturally defaults. In the physical world, this would be insane behavior; in finance, it makes him rich.

Unfortunately, sometimes the rock does not veer. It hits the trader in the head. All he has to rely upon is percentages. He knows from long study that most of the time, the rock coming at him will veer away, but he also must take the consequences when it doesn’t.

The emotional fortitude required to stand in the way of a hurtling stone when you might get hurt is immense, and few people possess it. It is, of course, a great paradox that people who can’t perform this feat get hurt over and over in financial markets and endure a serious stoning, sometimes to death. Many great truths about life are paradoxical, and so is this one.

The natural tendency of people to apply physics to finance explains why successful traders are so rare and why they are so immensely rewarded for their skills.

There is no such thing as a “born trader,” because people are born — or learn very early — to respect the laws of physics. This respect is so strong that they apply these laws even in inappropriate situations. Most people who follow the market closely act as if the market is a physical force aimed at their heads. Buying during rallies and selling during declines is akin to ducking when a rock is hurtling toward you.

Successful traders learn to do something that almost no one else can do. They sell near the emotional extreme of a rally and buy near the emotional extreme of a decline. The mental discipline that a successful trader shows in buying low and selling high is akin to that of a person who sees a rock thrown at his head and refuses to duck. He thinks, I’m betting that the rock will veer away at the last moment, of its own accord. In this endeavor, he must ignore the laws of physics to which his mind naturally defaults. In the physical world, this would be insane behavior; in finance, it makes him rich.

Unfortunately, sometimes the rock does not veer. It hits the trader in the head. All he has to rely upon is percentages. He knows from long study that most of the time, the rock coming at him will veer away, but he also must take the consequences when it doesn’t.

The emotional fortitude required to stand in the way of a hurtling stone when you might get hurt is immense, and few people possess it. It is, of course, a great paradox that people who can’t perform this feat get hurt over and over in financial markets and endure a serious stoning, sometimes to death. Many great truths about life are paradoxical, and so is this one.

You’ve heard about them in the news, you’ve heard they’re easy to trade, but what exactly are index products?

First, let’s define an index. Simply put, an index represents a “basket” or portfolio of stocks or commodities, grouped in a particular way (e.g., the S&P 500 Index is made up of large-capitalization stocks; the Russell 2000® Index is based on small-capitalization stocks). How a particular stock or commodity index tracks the market depends on its composition – the stocks or commodities included in the index, the percentage weight of each component, and the method of calculating each index. The index comprising these stocks or commodities is typically called the “underlying” or “cash.”

Index futures and options closely follow the price movement of these underlying indexes. Index futures are a type of forward contract, which means they are agreements to buy or sell their underlying product at a specific price on a specific date in the future.

For Example:
E-mini S&P 500 and E-mini Nasdaq-100 stock index futures are electronically traded, smaller versions of the stock index futures contracts used by the big financial institutions. (The “E” stands for electronic, and the “mini” refers to the smaller size of these investment tools.) At one-fifth the size of their institutional counterparts (also traded at CME), they can be easily used by individual investors. They provide a highly liquid way to trade stock indexes.

From a practical standpoint, they trade similarly to stocks. You can go long (buy) and then close out your trade by selling. It’s also just as easy for an individual investor to sell first then buy back at a hopefully lower price.  That’s called shorting and it is important that you know that by buying your losses can go no lower than zero, but if you are shorting your downside is unlimited.   You can  buy an E-mini stock index contract – an advantage over trading stocks. As futures contracts on stock indexes, these E-minis trade at a price that is closely related to the underlying stock market index on a day-to-day basis. Like other futures, these products are a type of forward contract. This means they are agreements to buy or sell their underlying product at a specific price on a specific date in the future.

When you trade these products, you are trading on the future direction of the underlying stock indexes. E-mini stock index prices fluctuate as the stock markets move – almost constantly. As a result, these contracts offer virtually endless trading opportunities. Similar to the stock market, you execute these trades via a registered broker over the phone or with electronic order management software on your PC.

Rare Metals Bonanza

Posted by Wealth Daily

on Thursday, 5 November 2009 6:09

20091104_rareearthoxidesjpg

It’s a small chunk of land, about half the size of Rhode Island, located in a part of the world most people know nothing about.

Today, the heads of Toyota, Honda, and the Pentagon all share a common interest.

But they’re not the only ones watching. Venture capitalists, hedge fund managers, and resource companies from all over the globe are also watching and waiting. . . ready to pour billions into Greenland once they get the green light.
Why?
This coming January, when the Kingdom of Denmark relinquishes sovereign control over Greenland’s natural resources, the world’s biggest deposit of Rare Earth Metals (or REEs), will fall into private hands. . . for the first time ever.

This single site boasts deposits valued at an estimated $1.3 trillion. . . and yet, REEs are worth more than just money.

Which is why the world’s leading manufacturers of hybrid cars, wind turbines, batteries, and yes — even the guidance systems to our most sophisticated air and ground defense missiles systems, are watching the events in Greenland unfold with baited breath.

The elements that fall into the category of Rare Earths include:

  • Lanthanum – essential in the production of electric car batteries;
  • Terbium – without this element, high-strength magnets would not exist;
  • Erbium – makes possible a wide range of light-weight, high-strength metal alloys;
  • Thulium – makes high-frequency lasers a reality.
  • And once Greenland takes control of its mineral wealth, this land — totaling barely 800 square miles — is projected to supply 25% of the world’s entire REE market. . . for half a century.

To companies like Toyota and Honda, that have virtually staked their futures on the rapidly expanding hybrid/plug-in car market, and to our own defense industry, which cannot perform even the simplest task without highly-involved electronic assistance, this news could not have come at a better time.

Because for the last decade and a half, our greatest and most populous modern rival has been hard at work to corner the market on these vital elements.

And on April 17 of this year, with the signing of a single contract, the Chinese reached a record 96.7% global market share.

China’s “Dragon Metals”

…..read more HERE.

 

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Brian Hicks is the managing editor and chief investment analyst of the $20 Trillion Report, a weekly investment advisory that covers the energy sector. Since its inception in 2004, the $20 Trillion Report (TTR) portfolio has returned an average gain of 37% per annum.

In addition to running the TTR, Brian also contributes to Wealth Daily and Energy & Capital, two investment dailies that are free to the public.

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