|September 11, 2009|
Do you know what the hell terbium is? How about europium… ever heard of that one? Me neither. But these rare metals are making some of our subscribers a fortune…
Before yesterday, I had never heard the term "Heavy Rare Earth Elements." This is a trade name for a group of 15 rare metals that are seeing surging demand for use in technology.
Rusty McDougal knows what they are. And so do his subscribers. For more than a year, Rusty has been telling his readers that "Rare Earth Elements will become a full blown mania." And it looks like his prediction is coming true.
One of the stocks Rusty recommended to his readers is up 3,740% from its low on December 22, 2008.
Yes – three thousand, seven hundred and forty percent! Rusty has been recommending the stock since 2007. So, many of his subscribers had a chance to catch this move.
The reason for the blast off is simple…
Rare Earth Elements are exceedingly rare and hard to locate. They are found in sufficient quantities only in certain parts of the world. And the demand for these metals is increasing rapidly.
They are used to enhance the power of magnets in computer hard drives. They are used in wind turbines… catalytic converters… and the motors of hybrid cars. They are used to make lasers. And they are found in just about every iPod, BlackBerry, plasma TV, and mobile phone on the planet. They can even help filter viruses and bacteria from water.
And China just decided they don't want to share the metals they dig up…
China controls 95% of the world supply of Rare Earth Elements. That's because most of these materials come from mines in Inner Mongolia. And two weeks ago, the Chinese Ministry of Industry and Information Technology called for a total ban on the exports of most of them. Others will be restricted by quotas.
That means some countries and industries will have a difficult time obtaining these strategic materials, no matter what price they are willing to pay. And it also means that the companies who have them will become exceedingly valuable.
The company that Rusty recommended to his subscribers – Ucore Uranium – has become 3,740% more valuable in less than a year. The stock has gained 200% in the two weeks since China made the announcement regarding export quotas.
Would you believe these kinds of gains are not that unusual?
When we introduced Rusty to our readers over two years ago, some people thought we were crazy… or liars. "You can't make thousand percent returns with any consistency," we heard. "Most investors don't even do it once in a lifetime."
And few people could believe that Rusty has personally achieved these kinds of results not once… or a few times… but more than a dozen times. In one case, he made an investment that returned 9,323%. Another stock he purchased rose 6,777%. I don't have to tell you what those results could do for your wealth.
The resource exploration sector is not for everyone. And it is not for the bulk of your portfolio. But when you can make 5x… 10x… even 100x on your money, all it takes is a small amount invested to return a fortune.
You need to spread your investments across a range of companies. And you need to know what you're doing or follow a trusted guide. For a growing number of IDE subscribers, Rusty McDougal has become their guide.
And if you have been a subscriber to Resource Windfall Speculator or have taken any gains from Rusty's recommendations, please let us know how you're doing and what you think of his research: email@example.com
Resource investors were not always as giddy as they are today. No sector of the market was hit as hard in the credit crisis as the junior resource sector.
But in crisis, there is always opportunity…
In 2008, the exploration industry was decimated. The quality of the companies didn't matter. Elite management teams didn't matter. Proven reserves didn't matter. Even cash on hand didn't matter. The entire sector was sold with impunity and every company in it was caught in the vicious downward spiral.
But through it all, we continued to remind you that the dislocation in this sector was unsustainable. The entire commodities supply pipeline begins with junior exploration and mining companies. These are not intangible financial instruments. They are real assets that require years of search and development before they can be brought to market.
In the fall of last year, Rusty wrote:
Since then, the entire sector is up almost 80%. Select companies, including many within our portfolios, have done much, much better. Here's a chart of the Toronto Exchange. And don't forget… the mania stage of the gold bull market is still ahead.
If you're interested in resources, you're probably concerned about inflation… and there is a new inflationary threat to consider.
At the end of August, the International Monetary Fund pumped about $250 billion into foreign-exchange reserves. The countries which received these "Special Drawing Rights" can convert them into hard currencies.
SDRs have been around for about 40 years. But they have never been a convertible asset before. That has now changed. What this means is that we no longer just have to worry about national central banks creating money out of thin air. Now the world central bank can do the same thing.
They don't need to borrow the money. And they don't need anyone's consent. They simply create the bookkeeping entry and credit the countries they feel worthy of receiving the reserves.
In a commentary published on Kitco, Paul Nathan writes:
Considering this piece of news, our advice would be to "invest resourcefully."
We received considerable feedback from our message yesterday about the "employment bubble" and out of control government spending.
"For my part I think that the government has created a Ponzi scheme of unprecedented scale in human history, but interestingly enough no one dares to mention that word. Although government moves are considered legit and Madoff is a patented felon, his Ponzi remains of appetizer proportions compared to what the government has prepared.
Here, here, Patrick. Our own Jon Herring has written in these pages about the Ponzi scheme of unfunded liabilities. "The New York Times suggests that Madoff's scam 'may be the largest Ponzi scheme in history,'" he writes. "Unfortunately, there is no bigger Ponzi scheme than those operated by the federal government – Social Security and Medicare. Both programs are nothing but inverted pyramids with money from new contributions going to pay withdrawals."
The only difference is that Charles Ponzi and Bernie Madoff didn't force people to give them money.
"Wow – what a great statistic – negative job growth over the last 9 years – now I don't feel so bad that my career hasn't done much lately (I guess I'm just supposed to be thankful I have a job). I've luckily been in a growth sector (wireless) for a few years now, but a big part of my job over the last year has been spent in China dealing with Chinese companies, and… America needs to wake up.
"The technical capabilities of the Chinese, Indians, and others in that region are quickly surpassing the US, not only taking good jobs, which they've been doing for the last 10 years, but the sales that use to go to American corporations. In the wireless sector, the Chinese companies continue to grow at a tremendous rate, putting companies like Motorola, Alcatel-Lucent, and Nortel on the ropes.
"The U.S. government needs to stop pouring OUR money down dirty, old drains – i.e. auto manufacturing, banking, oil industry – and focus on creating new business opportunities for the U.S. to take a lead in - like clean energy, eco-construction and (even) wireless (before it's too late). Whether you liked him or not, Clinton spurred a lot of growth in the 90's when he focused the government on creating jobs in technology, but today most of our financial resources are propping up failing, and dare I say, non-value add industries like banking (making good loans and circulating money isn't that difficult).
"Wall Street is part of the problem. Given such a short term focus, it only exacerbates the issue of resource allocation. Wall Street doesn't do a good job valuing something nascent – especially when times our tough. Stimulus money shouldn't go to the losers and failures – it should go to the ideas and companies that can help pull us out from our malaise. Until Government gets out of the corporate hand-out business, our economy and people will continue to suffer."
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