Tuesday, February 21, 2012

Rare Earth Research Report

We have received countless emails from readers requesting direction in the rare earth sector.  As you begin to understand the fundamentals driving the rare earth market an investment seems mandatory.  The trouble is, most mainstream brokers are ignoring the space as their New York offices are not yet instructing them to participate.

After serious consideration, we partnered with Kevin Kerr of Kerr Trading to produce a comprehensive overview of the sector.  With this macro view in mind we suggest the 8 stocks that we feel are deserving of our capital.  There are over 250 projects currently being advanced but we feel that only 8 companies possess the proper economic, geologic and political fundamentals necessary for success.

If you buy the 8 stocks discussed in the report you will spend more in commissions that you will on the actual report.  Please pass this link along to anyone you know that would be interested in avoiding the steep learning learning curve present this sector.

4 comments:

VisaDude said...

Have you ever come across:

http://www.swissmetalassets.com/

for investing in physical Rare Earth Metals and having them stored on your behalf?

I'd be interested to hear your thoughts on this approach to investing in this commodity (versus investing in stocks).

Space Wrangler said...

Yes, Swiss Metal discussed this with our team last year. While they seem to be on top of he program they are running, it is in our view a cumbersome approach.
Our view is based on desiring capital gains. If physical holding is a must, we suggest Dacha Strategic Metals DSM.V on the Venture Exchange.
We still feel that only 3-5 hard rock mines will be built during this upcoming boom. At today's equity valuations, buying shares in those debt-free companies likely to reach development seems to be the low hanging fruit.

Cheers.

VisaDude said...

Thanks for the quick reply!

Although I like SMA, their baskets are expensive (ie: I can't invest $1000, I have to buy their cheapest basket at +-$7000). Also, what are the spreads when investing this way? I would assume they are quite high.

I have never heard of DSM.V and shall research it, many thanks for this.

Does your report recommend stocks that can be bought on US stock exchanges? Or are they listed elsewhere?

Space Wrangler said...

The other thing to consider is this: Rare earths are only useful to producers of products that require them. This creates a big difference when considering physical possession as compared to a gold coin that is easy to transport and recognized worldwide.

Rare earths cost for example $250-750 per kg where a kg of gold is $60k.

Where the report could be useful is in laying out why these elements are critical today as many products, including many defense applications, are just not possible without them. The west stopped producing the elements in the mid 1980's. Since then many technological advancements have been made requiring the elements and China has 97% of current production, only 35% of in ground supply.

Finally, the report lays out an opinion as to how the sector could be viewed for investment. The massive supply gap should be closed by 2016 so any project coming online after that would not benefit from the skewed economics in place today. We feel there will only be 3-5 mines built and suggest 8 companies that deserve consideration out of over 200 projects being marketed today. 3 of those 8 are in Aussie, 2 in Canada, 1 in Europe and 2 in the US. All of the shares are available to US investors, 5 through NYSE and 3 have pink sheet dual listings that represent their Aussie listings. The spreads on the pinks are greater but still about 3% which is not that bad.

If you want to grab a copy directly email me at ksircapital@gmail.com.