Rare earth market news dominated by coverage of Lynas Corporation Ltd.’s (ASX: LYC) Advanced Materials Processing (LAMP) facility in Malaysia this last couple of days…this morning Neo Material Technologies Inc. (TSX: NEM) released their first quarter results ending March 31, 2012, noting that revenues were USD$179 million versus USD$203 million in the previous quarter and USD$133 million in the corresponding quarter in 2011. We are anticipating Molycorp Inc.’s (NYSE: MCP) financial reports for the first quarter to be released tomorrow, May 10, 2012; I have literally touched town in San Francisco for the for Asian Metal 2012 International Rare Earth Summit where I was sitting next to Luisa Moreno, the Metals and Mining Analyst from Jacob Securities.
I called the market bottom on Facebook this morning, after seeing that Eric Coffin had done the same — just saw that Thom Calandra is on our heels. Published a piece on the buying opportunities less than 2 weeks ago titled The Rare Earth Sale of the Year: Buy Now! and if you want to hear someone that I listen to, check out the interview I did with Gene Arensberg, Editor of the GotGoldReport — Investors Dive In – Significant Buying Opportunities Currently Exist. As a respected technical analyst, private investor and the “Vulture King”, Gene talked about the cascading selloff of stocks, having all sellers and no buyers in the market and how these factors make for a great time to buy stocks — so much so that he was selling his gold to invest in junior resource companies.
To me this was a flag that we were near the bottom.
Today, Gene pointed out that this extreme market volatility was expected and has arrived. He reiterated that now’s the time to hunker down but not get scared and reminds us that these types of events are always temporary and “soon-enough will be replaced by the opposite condition.” He too sees this crisis as an opportunity: “Just like in the latter months of 2008, these are the times when absurdly low priced stink bids can connect with disgusted, panicky sellers just wanting the pain to stop. For those Vultures who have resources to deploy and the confidence to deploy them, these are the times when our accumulated gold and cash can be very, very powerful.”
With investors across all sectors asking “why is this happening?” we can look to Europe for some answers. One timely factor is the uncertainty over the Greece bailout. The outcome of Greece’s recent elections left no party winning enough votes to form a government. This means that forming a coalition government or having a second election are the only options. So far a coalition has not been formed and if clashes persist over the next few days, another election will likely be called in June. This political uncertainty is a cause of great concern for Greece’s international creditors who are calling for cost-cutting terms to be part of the multi-billion-dollar bailout.
Another factor is France’s recent election that ushered in Francois Hollande who campaigned on an anti-austerity platform. The installation of Mr. Hollande as the new President will effectively end former President Nicolas Sarkozy’s firm partnership with Angela Merkel, Germany’s Chancellor — they both were committed to European austerity.
Both elections have resulted in even further financial market volatility that has impacted share prices across the board significantly. In addition they show how both political and economic factors can be mixed to cause investor fear and market instability. Despite these current trends, I remain confident that this is the bottom of the market and that we can expect a bounceback…
To me red means go — it’s the time to buy.
Disclaimer: Lynas Corporation Ltd. is a RareMetalBlog sponsor. Tracy Weslosky is the CEO for Pro-Edge Consultants Inc. and is not licensed to make investment recommendations.