On any sort of logical basis, coal would appear to be a good L-T value. However, it is part a coal story and part another story. The general market is roughly 35% overvalued (Q ratio, regression to the mean, trailing 10 year P/E, historical scatter graphs, etc.). However, the most important factor affecting valuations is inflation. Inflation is likely to head higher. http://fintrend.com/wp-content/uploads/2011/11/Moore_Inflation_Predictor5.jpg Also, S&P 500 earnings are going to drop too. Then throw in Europe, and sovereign debt generally in the Euro Zone, UK, USA, Japan, and perhaps even China. As most assets classes decline in value (some metals may hold value) people are going to feel poorer (which will be true) and spend less. This downward affect on assets generally is likely to bring very low valuations. In this environment, coal is likely to go lower. I would certainly suggest letting the dust settle for a month or two. Then I think consolidation will start to occur in coal. Let's put this another way. In 2007-2008-2009 we had a financial crash. We are probably going to have another financial crash, only this time caused by sovereign debt events. Also, the mining industry generally is cheap. RIO for example is a reasonable alternative investment relative to BTU. Don't try to catch a falling knife. Watch this for the next several weeks, and then perhaps if it goes lower it will be a good time to move into substantial coal positions. I like and own BTU, although only a small position. I too an thinking about buying more. But there will be plenty of time to do so IMO.
Although I agree with your statement that coal will go lower, I disagree with your reasons.
The fast track to nat gas and other forms of energy in the US will send coal lower for awhile. US coal companies will be leaner. A lot will depend on US coal's finding markets elsewhere in the world and transport costs and new coal exploration elsewhere will factor into their viability.
I still believe that clean coal needs to and will become an alternative to present day processing. There is too much available coal to waste. Unfortunately the tidal wave forcing US coal into near extinction is finding its way into every headline about energy policy and nat gas is the new 'golden boy'.
There are murmurings about ecological damage regarding fracking that perhaps is possibly being hushed by several different interests.
The developing world is exploding and it won't stop. After several years of double digit growth it is taking a breath but 7-8% isn't a bad number.