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China Mineral Plays Inching

|Includes: China Gengsheng Minerals, Inc (CHGS), SHZ

Some of the most explosive moves in stocks have come from mineral plays. The mineral plays that rose the most in the last two months have been Chinese companies, as rumors spread that China would cut the export quotas on rare earth and minerals.  This created one of the most monumental runs in recent history in any stock group.  Stocks like China Shen Zhou Mining & Resources Inc. (AMEX:SHZ), Qiao Xing Universal Resources, Inc. (NASDAQ:XING) and China GengSheng Minerals, Inc. (AMEX:CHGS) ran like monsters. SHZ went from a Dollar in October to a high in early January of $10.84 while CHGS went from just over a Dollar in October to a high of $6.74 in late December. In addition, XING took off from a low of $1.75 in December to a high of $3.92 in early January.

These runs have been for the history books however, since the early January time frame, all three of these plays have sold sharply. SHZ has fallen from its high of $10.84 back to the mid five level while XING is back to $2.50. At some point these stocks may be a bounce candidate and if timed correctly, could pay off in a big way.

Today, CHGS is taking off in a major way.  The stock is trading at $3.19, +0.53 (+19.92%).  The company reportedly signed a two year $10 million refractories contract.  This is causing a major run in the stock and could ignite the other mineral, rare earth China plays. Keep a watchful eye on SHZ and XING.  While these two have not run yet, they should be on watch for a sympathy run after the large pull backs they have seen.

Gareth Soloway