Bring on the Rare Earth Wars.

One of my many former employers, the Singapore Straights Times, reported yesterday that China planned to cut rare earth export quotas by 30% next year. The story comes on the heels of a voluntary ban of exports to Japan on September 21, after their arrest of a Chinese fishing boat captain (click here for “Have You Seen Molycorp Lately” at http://www.madhedgefundtrader.com/september-30-2010-3.html ).

Traders went apoplectic, taking my lead stock, Molycorp (MCP), up a mind boggling 30% in three days, matched by a 27% pop in Canada’s Avalon Rare Metals (AVARF), and a 10% gain by Australia’s Lynas Corp. (LYSCF). Lynas is now up an unbelievable 473% since I first recommended it five months ago (click here for “Rare Earths Are About to Become a Lot More Rare” at http://www.madhedgefundtrader.com/may-3-2010-4.html ). This is like hitting four back to back home runs (I’m using baseball metaphors this week, since the hometown San Francisco Giants are in the play offs).

As China controls 97% of the world’s rare earth production, and consumers are desperate to lock in supplies so they can build everything from hybrid cars to IPods to heat seeking missiles, you can expect to hear a lot more about this space. I have already seen the odd story showing up in the mainstream media. Not only that, in the future I expect to see similar developments across the entire resource space, including precious metals, copper, iron ore, molybdenum, tin, nickel, aluminum, and all of the food groups. We are on the eve of the era of The Great Resource Shortage.

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

Comments

[UrbanAnalyst]

Stunning timing and great insight:

"China Said to Resume Shipping Rare Earth Minerals" - NYT, Oct 28, 2010

http://www.nytimes.com/2010/10/29/business/energy-environment/29rare.html?_r=1&ref=business

Though not mentioned in this missive above, MHFT no doubt advised clients to trim positions before this announcement... or so the world will be told when his "performance" figures are shown next.

[RoRoTrader]

You have a rare kind of genius similar to rareE minerals.