BLOG: Bubble Debate on Investment Opportunities in Critical and Strategic Metals Panel Debate in DC

“Canada is China with resources, less 1.27 billion people than us (Americans)…fortunately for us…we need to recognize Canada’s resources.” – Jack Lifton, Chairman Critical & Strategic Metals Conference in Washington, DC

For starters I would like to thank Jack Lifton and the Infocast coordinators Lorelei Leslie and Sara Niss for inviting me to participate in the panel: Investment Opportunities in Critical and Strategic Metals. The colleagues on this panel have substantial reputations and included Dudley Kingsnorth, John Kaiser and Dr. Philippa Malmgren.

Excerpt from my presentation: I am delighted to have the opportunity to discuss investment opportunities in the public markets for rare metals and rare earth metals. Please note that I do not providing any investment advice and will not be making any forward looking statements beyond a hypothetical discussion surrounding both the challenges and potential solutions as we look to achieve the goal of education so that the investment audience builds the knowledge to invest. Ultimately my conclusion is that there is a significant opportunity for investment here, but only with education and knowledge should one invest.

Here are the brass tacks as I see them:

Q: Are we in a critical metals bubble?

A: Duh. When an idiot at an investment show tells me he is a CEO of an exploration company with cash and would like to buy a few acres outside of Thor Lake so he can claim he runs a rare earth company – we have a bubble. While I appreciate John Kaiser’s comments and respect deeply his opinions that the property valuations lend credibility to existing share prices and that these companies are finally receiving the respect that they deserve…well, another guy here told me that he is tracking over 100 companies claiming to have rare metals and rare earths – with 1 new company a day citing a find towards capitalizing on media: we have a bubble. With this said, the top players – the ones with significant “form” or the right geological combo of rares offer value – and I believe that they will continue to see uptick potential in spite of this market confusion

Q: Is it over?
A: No.

What I will proceed to do is examine the role of media in the build-up of this rocket investor interest. For the record there is nothing rare about rare earths, but there is with the concentrate of Light Rare Earth Elements to Heavy Rare Earth Elements (HREE), the value may be for instance in a company when the concentration of Heavy Rare Earths to Light Rare Earths is over the standard 1-2%...plus it is indeed rare for anyone to know how to apply an effective valuation on many of these companies.Investors need tools they understand. Brilliant senior analyst come forward please because you have the chance to be our ‘technology rock’ star?

Is this a bubble? Are we at the top? Let’s start with the evidence of confusion…because at the end of this road is an opportunity for investment.

It is evident that this may single-handedly be the most confusing industry sector that I have been involved in. I cannot get 2 analysts to agree on the information, never mind nail them down on coverage; the investment audience asks conflicting questions and the media can’t tell the story the same way twice. What separates this exploration and mining industry from others is that there is a seemingly unending interest from media and taking advantage of this cycle towards securing investment opportunities is what I would like to discuss.

Here are the critical challenges:

• Rare Earth Metals are a confusing industry sector for the investment audience. For starters there is nothing “rare” about rare earth metals…
• Investors need the tools to evaluate these investment opportunities
• Content vs. Form: valuation measures content when it’s the form that drives productivity and economics – (presently many are applying valuations on content, when its the form that the metals comes in ie. the breakdown -- that constitutes the value, economics etc.)

IMPACT OF MEDIA: Would like to reference how the weekend that we rolled out DealFlow Rare Metals on CNBC World and Dines announced his buy recommendations in this sector – well, all hell broke loose and several companies rose 50%+ that Monday and haven’t looked back yet. Never mind the well timed report from China released from LYNAS, the NY Times and CNBC media…dare I credit our RareMetalBlog we created in January whose unique visitor stats have multiplied five-fold in the last 3 months for being a part of this machine? RareMetalBlog’s onset intention was to be a source of information and in part, to help us keep ourselves educated on the often contradictory opinions and information. Thank you quarterback editors Ian London and Gareth Hatch, who I might add are both here today.

The difference between my presentation and everyone else in the street is that I will talk about the burgeoning green energy and clean tech day traders and how this is the first sector in the exploration and mining sector to make a crossover appeal to this investment audience: and they, my friends – are embracing this sector: they like energy self-dependence - we all do.

Dr. Phillippa Malmgren then did a brilliant presentation and overview on the markets that smoked mine. Highpoints of her presentation included the fact that volatility will become a component in every investment decision. She also referenced how her clients, who include Sovran funds; perceive inflation as the rising challenge and will be seeking hard assets as they move away from, cash. She saw an ongoing commodity rally with companies who have production plans towards revenue and have not overextended themselves in debt as the ideal investment opportunity.