Where the Real Economic Crunch Exists
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Ian Cooper WealthDaily .com |
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When you think of where your iPods, cell phones, computers and electronic motors come from, think about this. China holds 97% of the materials that go into each of those products.
And all China has to do is halt the export of such materials and we’re screwed...
Electronics would disappear from the shelves, and products that depend on these materials would see prices skyrocket… possibly bankrupting the very companies that depend on these sales.
And if China does decide to do something, get out of the way.
Failure for them is not an option. And the implications of such a move would be devastating…
And unfortunately, there are many people that have little to no understanding of the importance of rare earth metals. Including those mentioned above, tack on computers, TVs, high tech products, energy-reducing light bulbs… and the list goes on.
But the worst part is the impact on our future… the impact on electric batteries and motors, and green technologies. So if China really does hold back on rare earth, we’d better have a plan on how we’re going to make up for the short supply… and fast.
And it could very easily happen by 2012…
Yep, according to The Independent, by 2012, China could halt all exports of rare earth elements, reserving them for its own economic expansion.
And there’s nothing Congress can do, according to Brian Hicks.
“It’s part of a plan that Deng Xioping claimed almost two decades ago: “Do for China what oil did for Saudi Arabia.””
Before long, many will be panicking over this issue, including Toyota and their Prius, which depends on 2.2 lbs. of neodymium in the hybrid's electric motor and 22-33 lbs. of lanthanum in the car's battery pack.
Just take a look at the news from The Telegraph… and the fear will be palpable.
“Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons. A draft report by China's Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tons a year, far below global needs.”
Even Jack Lifton, a rare earth expert, believes, “A real crunch is coming. In America, Britain and elsewhere, we have not yet woken up to the fact that there is an urgent need to secure the supply of rare earths outside China.”
Worse still, there are many people, companies, corporations, and head honchos that haven’t even heard of the problem…
But when they find out the hard way, they’ll need an immediate solution. Fortunately, we’ve found the solution in Greenland.
The Other Problem… Demand is Outpacing Supply
The other problem with rare earth metals is that demand is quickly outpacing supply. Over the last decade alone, demand has risen from 40,000 tons to more than 120,000.
And get this… in order to build more green technologies, for example, the world will need another 200,000 tons of rare earth by 2014, according to The Independent.
This, as China threatens to cut exports to nothing by 2012 – which could be met with the disappearance of wind turbines, the Toyota Prius, iPhones and iPods.
But Find Those Unearthing Rare Earth… and Boom!
To see just how urgent a need rare earth is, take a look at what’s happening to any companies unearthing rare earth.
Share prices of First Gold Exploration Inc. (TSX-V: EFG) skyrocketed as much as 180% after the company announced a new high-grade discovery of rare earth elements and lithium at its Éléonore Property in Northern Québec, according to Luke Burgess.
“The company reported that recent grab samples from an area between two of First Gold's previous lithium and rare earth element discoveries - contained very high grades of lithium, rubidium, tantalum, beryllium, niobium, and gallium.”
“The announcement of the new discovery sent the stock soaring from $0.34 to a high of $0.95. Share prices cooled off by the end of the day to close at $0.68 - a 113% gain.”
We're even looking at a rare earth company that in Greenland, which holds 25% of the world's rare earth supply.
You see, on January 1, 2010, Denmark relinquished its sovereign hold over Greenland's mineral rights... turning the country's $273 billion rare earth resource into private property.
"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 bated breath," says Brian Hicks.
"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."
While the company has already exploded about 160% to the upside, a recent pullback gives us the perfect opportunity to ride another run… This is a stock you buy, forget about, and check back on in a year when the rare earth metals boom takes hold.
Luckily, the editors of Pure Asset Trader have unearthed a rare earth find that could solve all our problems… and give China an extended middle finger.
Unfortunately, the mere mention of the stock in these pages of Wealth Daily would send the stock skyrocketing… and we can’t afford for that to happen. Which is why we’ve uncovered the name of this play in Pure Asset Trader, where we limit the number of readers without unfairly moving stocks.
Stay Ahead of the Curve,
Ian L. Cooper
WealthDaily.com
For eight years, he's avoided the herd mentality of Wall Street.
That would explain why he bought housing before the 2004 rise and shorted sub-prime and big housing names before the 2007 fall... all while the "experts" suggested doing the opposite.
In 1999, Ian left a job in public relations because he couldn't stand saying good things about companies he didn't like, and he's been a financial analyst ever since. His passion for Wall Street, technical analysis and the idea of fast money fueled the move.
Since then, Ian has written numerous articles on topics as diverse as trading news, mergers and acquisitions, crude oil, housing, and emerging market opportunities.
He's appeared in Investor's Business Daily and Forbes.com and has been a frequent guest on Money Matters with Barry Armstrong, Stock Dr. with Lee Seiler, and On the Money with Mike Stein.
Nowadays, Ian relies on technical and fundamental analysis for investment decisions, and has leveraged his options and stock trading passion to fuel his search for quick profits, which is just what you can expect him to deliver to his readership.