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Molycorp, Inc Common Stock Message Board

  • rpclhp rpclhp Jan 21, 2011 12:14 AM Flag

    Let's dig deeper and we'll find bigger holes in the Rare Earth fad

    First of all, the guy on Fast Money is really off base for recommending this stock. The next issue is labeling this stock as a takeover candidate. I mean seriously, what enterprise outside of the U.S gov't would pay over 3.5 billion for a company whose value is greater than the total worth of the rare earth market when nothing meaningful is coming out of the ground from this company for several years? Its kind of like NASA during the Cold War. At that time we invested billions for the purpose of establishing supremacy over a threatening superpower. The problem is the appetite in Washington is to reduce budgets and find strategic alternatives that save money. Their aren't billions of slush money to be invested in heavy machinery and mining when a bunch of scientists in a lab can design synthetic replacements in less time, for less money, with less environmental impact.

    Moreover, China won't let Rare Earth skyrocket because they realize the increasing incentive to develop alternatives will drive innovation and investment in these competing areas. China's rare earth dominance is much like OPEC: lets charge enough so we get rich and have power over the world but not charge so much that everyone rises up in protest.

    Some contend China will let rare earth skyrocket and this will kill all alternative energy companies across the globe except their own which have access to the input resources needed and the lowest production costs in the world. I contend that the USA can win this energy war through innovation and adjusting to the new cost realities facing the components inside of their technology. The Chinese do not want us to jump start or subsidize our own rare earth industry because it takes away one of their competitive advantages. New technology replacing these rare earths is real. Developing our own billion dollar industry is a worthy goal but is only a concept and is not grounded in reality in 2011, 2012, 2013, 2014, and even 2015.

    To boil it down, the Chinese are testing us with their restrictive rare earth policy. They want to see what elements the USA will continue to pay for if the price goes up 1000% percent. These elements will be considered Rare Earth. They are also curious to know "Which rare earth can we develop alternatives for?"

    Also, the Chinese have their own issues. They need to contend with quelling social unrest at every turn. The horrible pollution a rare earth mine creates is one of these areas they will address by taking our intellectual property that we establish in inventing alternatives and they will use it to drive their own alternative energy industry. Rinse and repeat.

    I hate to play conspiracy theorist but the pumpers on T.V are just looking for more attractive entry points to load up the truck on put options. The thousands of individual investors who go out and buy this tomorrow because some guy was being completely irresponsible and said buy this on Fast Money are going to regret following this advice. Lastly and most importantly, there are executives with 30+ millions of shares sitting on 300% gains who just weeks ago had 400% plus gains who have already stated that their was a Rare Earth bubble at approximately 200% gains. So if you believe them, there is 50% downside from these levels and they can sell in 3 business days. But what do I know, they run the company. Take their word for it.

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