September 30, 2010 – Have You Seen Molycorp Lately?

Featured Trades: (RARE EARTHS), (MCP), (AVARF), (LYSCF)


3) Have You Seen Molycorp Lately? I have only recommended one stock IPO this year, and that is for the resurrecting rare earths producer, Molycorp (MCP).  Since the July launch, it has rocketed 114% from $14 to $30, and then pulled back 15% today (click here for ‘It’s Off to the Races at Molycorp’).

What set the cat among the pigeons this week was Japan’s seizure of a Chinese fishing vessel in disputed waters between the two countries. Japan arrested the captain, and China threatened to cut off Japan from supplies of rare earths for its huge electronics industry. Japan later released the captain, and China denied it made the threat, all rare earths stocks, including my picks of MCP, Avalon Rare Metals (AVARF), and Lynas (LYSCF) went ballistic anyway.

It is enough to say that the markets are incredibly nervous about rare earths supplies, volatility is increasing, and it is still in the early days in this industry.  For more on this obscure backwater of the commodities markets, please click here for ‘Peak Rare Earths is Upon Us’. When will the next spike in rare earths occur? On October 5, the House Armed Services Committee holds hearings on the American military dependence on Chinese rare earths supplies, which need these metals for virtually all advanced weapons systems. Watch this space.

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I Was Looking for Salmon, Not Samarium

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