FOR months now Pure Speculation has been warning that rare earths is just the latest bubble - and, eventually, investors will be hurt.
Now everyone’s jumping on our bandwagon. Our lone voice has been joined now by newspapers and newsletters in North America and London.
This from the Globe & Mail in Toronto: “Although rare earth prices could stay high for a while (mines do not open overnight), new digging and new alternatives are likely to put an expiration date on this bull market.”
And this appeared in London’s Financial Times: “Fears about Chinese supplies of vital rare earth elements have sent the shares of small mining companies soaring, a surge that executives and analysts warn is turning into a bubble.” An index of rare earth company shares produced by Kaiser Bottom-Fish Online, a research service, has risen 12-fold since the end of 2008, and 35 per cent in the past month. The FT noted that “six obscure junior miners, based in the US, Canada and Australia, now have a combined market capitalisation of close to $US7 billion, even though none of them yet mine any rare earths, yet the total value of rare earths traded in a year totals about $US2bn“.
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And now let’s take a local example. At the beginning of last week, Pure Speculation reported thus:
“ANOTHER rare earths mania alert! Shares in Korab Resources closed at 15c on Thursday but were up by 105 per cent in the first five minutes of trade the next morning after Korab reported it had discovered rare earths mineralisation at Rum Jungle in the Northern Territory. However, there was no detail about the composition of these rare earths elements but, hey, who worries about that sort of thing anyway? Certainly not the punters as they leapt into KOR, the stock ending the day up 86.7 per cent on high turnover. If it's rare earths, it must be a winner, right?”
Our wonderment has now been followed by Peter Strachan in his latest weekly bulletin from StockAnalysis. He doesn’t hold back.
“Over the past couple of years, Korab has variously portrayed itself as a gold company, phosphate, uranium, base metals and cobalt (company), more recently as a rare earths company! Whew, how does this company keep up with itself? … Gee, it must be hard to make discoveries like this without doing a bit of drilling or even soil sampling”. There’s plenty more, but we’ll let his subscribers enjoy that.
Strachan also comments on Korab’s Monday announcement. That was the one where the very highest nickel grade from a 102m intersection was just 0.18 per cent nickel and the lowest was 0.01 per cent - but the junior nevertheless saw fit to suggest similarities to the huge Voisey’s Bay nickel deposit in Canada. We think the term “drawing a long bow” probably fits this one.
http://www.theaustralian.com.au/bus...ad-it-here-first/story-e6frg9ex-1225944148371