Rare earth more valuable than gold?

Posted on by The INO.com Team

I recently took a trip to China where I was able to explore and get a better firsthand understanding of what is going on in that country, and not just all the hype one reads about.

You can read about my trip and my conclusions right here.

I also think you'll find it interesting that the Shanghai index that we discussed in my earlier blog posting is proving to be accurate.

In today's blog posting we are going to be discussing a resource that China has more of than anywhere else on the planet, rare earth.

So what is rare earth?

According to Wikipedia which is an excellent source of information rare earth is as follows. This is taken directly from Wikipedia:

As defined by IUPAC, rare earth elements or rare earth metals are a collection of seventeen chemical elements in the periodic table, specifically the fifteen lanthanides plus scandium and yttrium.[2] Scandium and yttrium are considered rare earth elements since they tend to occur in the same ore deposits as the lanthanides and exhibit similar chemical properties.

Despite their name, rare earth elements (with the exception of the radioactive promethium) are relatively plentiful in the Earth's crust, with cerium being the 25th most abundant element at 68 parts per million (similar to copper). However, because of their geochemical properties rare earth elements are typically dispersed and not often found in concentrated and economically exploitable forms known as rare earth minerals.[3] It was the very scarcity of these minerals (previously called "earths") that led to the term "rare earth". The first such mineral discovered was gadolinite, a compound of cerium, yttrium, iron, silicon and other elements. This mineral was extracted from a mine in the village of Ytterby, Sweden; many of the rare earth elements bear names derived from this location.

If you'd like to learn more about rare earth, I recommend going straight to Wikipedia.

Today I want to talk about a rare earth stock that you can trade on the NYSE called MolyCorp, symbol MCP. Here's what MolyCorp has to say about rare earth elements (the following information was taken from the MolyCorp website):

While Rare Earth materials and permanent magnets are utilized in a wide range of products too diverse to list exhaustively (See Appendix A for a partial list), they are critical and enabling for many emerging Green Energy technologies, High Tech applications and Defense Systems, such as Hybrid Cars, Plug-in Hybrid Electric Vehicles (PHEVs), the latest generation of efficient wind power turbines, energy efficient compact florescent lighting, computer disk drives, cell phones, missile guidance systems, “ Smart Bombs,” and many other applications. We refer to these as “ Rare Earth Dependent Technologies.” Without Rare Earth magnets and materials, these technologies would not be commercially viable.
it would appear that with the recovery underway the demand for rare earth elements should remain strong particularly since China has cut back dramatically on exports of this precious commodity that many people think is more valuable than gold.

Now that you have some background into rare earth, let's take a look at the MolyCorp stock.

We'll be using MarketClub's "Trade Triangles" and analyzing this market to see whether it is a buy after its recent pullback. Our "Trade Triangles" have done very well in this market as you will see on the chart below.

I also want to say that I own a position in this stock as I like the overall chart formation and the upside potential which I think will carry it to new highs. If you want to be conservative, you may wish to wait for our a green weekly "Trade Triangles" to kick in on the upside.

As always there are risks involved in any investment and this one is no different. Personally, I am placing my stops below $40 a share. I would use any two-day pullback as an opportunity to purchase this stock.

This blog posting is for educational purposes only and should not be construed as a recommendation to buy this stock.

All the best,

Adam Hewison
President of INO.com
Co-founder of MarketClub

25 thoughts on “Rare earth more valuable than gold?”

  1. Rare earth elements are definitely the latest buried treasure! My favorite technology companies are worried they won’t be able to get enough, making Greenland Minerals and Energy Ltd. (GGG:ASX) an outstanding investment opportunity. They just bought one of the world’s biggest, untapped multi-element rare earth deposits on the tip of Greenland. It was a smart move, with blockbuster profit potential.

  2. Adam, you mention you have a current position in MCP, but the Weekly Triangle is red. Are you simply ignoring the Weekly timing signal?

    1. Mike,

      MCP has pulled back 62% and is oversold. Conservative traders should wait for the weekly green Trade Triangle to kick in before going long.

      Thanks,
      Adam

  3. Adam,

    You recently announced a monthly trade triangle buy signal on UNG in an online seminar. That signal does not seem to have worked out as anticipated. Is it still a monthly buy?

    1. GM,

      Thank you for your feedback.

      The long term Monthly green trade triangle is still in effect.

      All the best,
      Adam

  4. Keep your eyes on this small rare earth miner V.ruu ,they have a large find with an infracture already built soon this stock will rise to the moon.

  5. Your welcome. There is a Gold company thats very well positioned as well. They were featured at the San Francisco Metals convention a couple of monhs ago. Niogold, well capitalized, up and running and just renently published an assay report of 7-22 grams per ton..massive amounts! ..They also have significant REE on a few of their properties.

  6. May you please tell me how to get the MarketClub’s “Trade Triangles”. I think is very important to use it. Thank you.
    Regards
    Jose Carlos

  7. You need to be very careful regarding the market for rare earths.There are more than a dozen different rare earths and they generally occur together as a mixture. A process to separate them is used which can be environmentally nasty and labor intensive (the Chinese were able to drive everyone, including MCP, out of the market because of this).Not all deposits contain them all. There are two major categories, light (LREE) and heavy (HREE). The HREE components are the ones in short supply. The LREE are quite plentiful and there is a danger that the world could soon be awash in them. MCP has a lot of LREE s.

  8. Good article. The tech Genie is out of the bottle, and there is no turning back, even with a currency collapse in the US. The rest of the world isnt doing that bad by comparison I really like QREDF, (Quantum) a Canadian company that's rockin. Just got up listed to top tier OTCBB They have the Niobium in large quantities. I also like Utra lithium, missleading name, as they have the Tantalum and are doing a deal with Canadian Ore Bodies.

  9. Rare earth isn't rare.The infrastructure to process it is rare.Molycorp has infrastructure already in place.Takes about five years to build a mine and processing plant.Roads,hydro,permits etc.

  10. Adam thank you very much for sharing such valuable information, but I still like to be conservative and therefore I will wait for its Green Week "Trade Triangles" to put in the upside and then I will decide.

    Have a good weekend

    Luis F. Barón

    1. Luis,

      Thank you for your feedback. As you know I'm all for that strategy waiting for the weekly green trade triangle kicking in and accelerating upward momentum.

      All the best,
      Adam

  11. "But the demand for gold and silver will continue due to inflationary pressures" - not sure about it.... but demand for food (wheat, corn, coffee etc) will increase

  12. You may also be interested in TGB, Taseko Mines, who recently announced a "SUCCESSFUL DRILL PROGRAM AT TASEKO MINES' ALEY PROPERTY (that) INDICATES A MAJOR NIOBIUM DEPOSIT WITH POTENTIAL TO DEVELOP A SIGNIFICANT OPERATION". Niobium is a rare earth metal and TGB would have one of only five major Niobium mines in the world once it develops this recent find. (IAG, IAMGOLD, has one of the other five.)

    Taskeo is a junior copper miner and also has a pending gold mine application before the Canadian govt. Taskeo's diversity in copper, gold, niobium make it an excellent position to hold during these times of Fiat money abundance.

  13. I have been following the rare earth for a while, but MCP bothers me for still waiting to go into production, and waiting on CA approvals could be like watching the growth of an adult turtle shell. I prefer the REMX (etf for rare earth) and started buying in $20 area for accounts.

    I also have XING as I was in it several years ago and bought back in at 1.85 and traded a couple times over 3 and still holding some as they have moved from cell phone business to buying rare earth mines in China.

  15. Adam, thanks for sharing and my rare earth stock is XING.

    BUT I rather have the physical gold,silver,copper when the house of cards finally crashes and this is no joke it will crash in a not too distant future, nations do not go bankrupt they just destroy their currency and that is the number one problem with BIG government.

    Rare earth is good for investment but nothing more, as the inflation keeps pushing the price of the goods up less and less people will be able to get their hands on the high tech gadgets and that will curb the demand for the rare earth. Also as the budget for the number one customer of the rare earth the military is cut and it will be without any doubt the demand will plunge rapidly.

    But the demand for gold and silver will continue due to inflationary pressures.

    just my 2 cents.

  16. Adam- I am on board with what you are saying and am already invested in several rare earth positions. My comment is more on the algorithm. Is there any studies underway to improve the timing of the triangles to capture more of the upside of a stock rather than wait for significant pullbacks to trigger. In the MCP example, it reached over 60, then dropped >20% before the red weekly was triggered. I have reviewed several other approaches (both before and after becoming a member) and MarketClub always stands out, "I" just have difficulty always "trusting" the reversal signals as they can be sometimes late or give up too much profit.

    1. Jim,

      Thank you for your positive feedback.

      When a market drops and reverses quickly it is very hard for any trend following method to catch the top. In fact trend following tools are not designed by nature to catch the top or bottom of any move but mainly the fat 80% in the middle.

      You may want to incorporate our daily trade triangles for trading purposes on part of your position. It certainly would've helped you in the case of Molycorp. symbol MCP.

      All the best,
      Adam

  17. all this sounds great, but i'm going to stick with SILVER.
    we bought silver at $5 in 2000 and have almost increased our
    net worth 600% in ten years. that is 60% a year. warren buffet
    made a mere 70% with BRKA. that is a mere 7% a year. silver
    is going to %400 an ounce or even more. silver is the best
    investment in the world, not gold. we're still 100%
    invested in silver and will be.

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