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Gareth Hatch
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Gareth Hatch is a Founding Principal of Technology Metals Research, LLC. He is interested in helping people to understand the challenges associated with the growing demand for rare-earth elements [REEs] and other critical and strategic materials, and how those challenges affect market sectors... More
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Technology Metals Research, LLC
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Technology Metals Research, LLC
  • The Curious Case Of The REE Companies That Aren't 1 comment
    Jan 14, 2011 7:41 PM | about stocks: SHZ, XINGF, GMO, TC

    In the last few weeks a curious meme has been propagating throughout the rare-metals ecosystem, both online and off. It started on a few obscure blogs, but quickly reared its ugly head at outlets such as Benzinga, Seeking Alpha, TheStreet, Street Insider and even CNBC.

    I'm talking about the rare-earth companies that aren't.

    A handful of commentators have got it into their heads that companies such as China Shen Zhou Minerals and Resources (AMEX:SHZ),Qiao Xing Universal Resources (NASDAQGM:XING), General Moly (AMEX:GMO) and Thompson Creek Metals Company (NYSE:TC) are rare-earth companies. Those a little late to the game have simply been copying the garbage put out by the earlier hacks, and before you know it, a Potemkin village of new rare-earth companies has been born.

    We can partially thank the Van Eck Rare Earth / Strategic Metals ETF (NYSEARCA:REMX) for most of the confusion - or more specifically, the apparent inability of giddy investors and commentarati to actually read and comprehend the description of this fund, beyond the third and fourth words of its title. Perhaps that's a little too much to ask these days, I don't know. Two of the four companies above (General Moly and Thompson Creek) are featured in this fund. Again - for the record, they neither produce rare earths nor are they developing rare-earth projects.

    The same goes for the other two companies, but the reason for their emergence as faux rare-earth companies is less clear. Others who have spotted the issue  have suggested that something nefarious might be afoot. In the past month, China Shen Zhou Minerals and Resources has seen its stock more than double;  Qiao Xing Universal Resources almost doubled before settling at an increase of around 55% in the same period. these might be good stocks; they might even be good mining companies. They are not, however, rare-earth companies.

    I suppose this is yet another illustration of the need to Do Your Own Due Diligence, folks....



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Themes: rare earths Stocks: SHZ, XINGF, GMO, TC
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  • jfada
    , contributor
    Comments (29) | Send Message
     
    The Chinese government has included Molybdenum in their list of materials that are to be subject to production limits. Companies such as XING, that are not rare earth producers, have reacted to the news in speculation that the price for that commodity will also increase in price due to the limited production
    17 Jan 2011, 09:51 AM Reply Like
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