Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
Ruble Takedown Exposes Cracks in Putin’s Defense - 20th Dec 14
Oil Drilling Our Way Into Oblivion - 20th Dec 14
Stocks Bull Market Resumes - 20th Dec 14
Gold And Silver Nothing Is Ever As It Seems And No Respite For PMs - 20th Dec 14
What Are Technical Indicators Saying About the Stock Market? - 20th Dec 14
Here’s How You Can Still Make 27% With Apple Even if You Buy Now - 20th Dec 14
Gold Stocks to Shine in 2015 - 19th Dec 14
Why Alibaba Stock Shares Are a Screaming Buy - 19th Dec 14
China, Dollar, Japan, Europe Burning Questions for 2015 - 19th Dec 14
U.S. Economy is in a Sweet Spot! - 19th Dec 14
US Dollar and the Gold Fairy Tale - 19th Dec 14
Show Me The Money (Flow)! Tracking Money-Flow Through Value Shifts In Stock Markets - 19th Dec 14
The Commodities Market Is Not Dying, It’s Just Hibernating - 19th Dec 14
The Price Of Gold And The Art Of War - 18th Dec 14
Euro Succumbs to ECB QE Expectations and FOMC - 18th Dec 14
John Williams: A Downhill Run for the U.S. Dollar in 2015 - 18th Dec 14
Outrage at Taliban Islamic Fundamentalists Massacre of 132 Pakistani School Children in the Name of God - 18th Dec 14
How Inflation Changes Retirement Benefit Choices - 17th Dec 14
The Real Reason It's Tough to Beat the Stock Market - 17th Dec 14
Russian Currency Crisis and Debt Defaults Could Create Contagion in West - 17th Dec 14
How to Profit From Russia's Stock Market Crash - 17th Dec 14
Russia Crisis - If You Put Your Money in the Bank Will You Get it Back? - 17th Dec 14
Crude Oil Price Crash, U.S. Employment and Economic Growth - 17th Dec 14
Opposing Forces At Play In Gold and Silver Precious Metals Complex - 17th Dec 14
Wall Street Will Always Find An Excuse For Not Raising U.S. Interest Rates - 17th Dec 14
Torture, Terror And Elite Schizophrenia In The UK - 16th Dec 14
Eurozone Conflict Will Bring a Major Stocks Buying Opportunity - 16th Dec 14
Viewing Russia From the Inside - 16th Dec 14
Gold and Silver Stocks Bottom - Are We There Yet? - 16th Dec 14
The Financial Industry Pigmen Win Again - 16th Dec 14
Crude Oil Price Epic Blowout - 16th Dec 14
Asian Stocks Markets: Sand In The Gears Of The Bull Market - 16th Dec 14
U.S. Dollar Trend Forecast 2015 - Video - 16th Dec 14
Silver Price Bottom? - 15th Dec 14
Gold Price Base Building Bullish Pattern - 15th Dec 14
Stock Market Probable Pop-n-Crash Today - 15th Dec 14
Stock Market Time for a Bounce - 15th Dec 14
Stock Market Euphoria: The Mother of All Ponzi Schemes - 15th Dec 14
Gold - The Weight of Time as Trend - 15th Dec 14
U.S. Dollar Collapse? USD Index Trend Forecast 2015 - 14th Dec 14
The Rushing Stocks Bear Market and How to Prepare - 14th Dec 14
Gold and Silver Dreaming of a White Christmas - 14th Dec 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Dramatic Stock Market Selloff

Commodity Stocks Risk On Rally: Rare Earth And Uranium Miners Outperforming

Commodities / Resources Investing Dec 19, 2012 - 04:02 AM GMT

By: Jeb_Handwerger

Commodities          For months, we have been highlighting to our readers that China’s economy is beginning to pick up which could positively influence commodity prices.  The fears of a slowdown were overblown.

China’s stock markets (FXI) have been rallying since early September because speculation is rising that the newly chosen Communist Party may boost the economy.  The China 25 index fund (FXI) is approaching a major 52 week high breakout.




This may be impacting iron ore and industrial metal prices which have moved higher as Chinese industries may be beginning to aggressively stockpile ahead of 2013.

Uranium and rare earth miners are outperforming gold miners by at least 13 percentage points over the past month.  This may be forecasting a risk on rally as investors speculate that China, Japan and the emerging economies are bottoming.

Uranium miners (URA) are rebounding gapping above the 50 day moving average as China starts construction on new reactors and as Japan announces a pro-nuclear party, whose goal is to use additional stimulus to weaken the Yen.  This past month they are up over 12%.

Rare earth miners (REMX) are showing increased insider buying and must be watched as the Chinese are cutting down on exports and curbing production.  Keep your eyes on the heavy rare earth miners located in favorable geopolitical settings with low costs to get into operation.  The rare earth miner ETF is up close to 9% this past month.

Graphite is another key area which must be watched as China produces over 80% of the world’s supply.   China uses a lot of graphite in steel making and may not be able to supply the world for much longer.  China produces over 80 per of the world’s graphite supply. 

There have been pundits fearing a China slowdown but the charts are showing otherwise.  China may be rapidly acquiring natural resources during the quiet end of the year market to secure commodity supply in expectation of a major state funded stimulus. 

 Attention must be paid to this renewed interest in ferro alloy, copper (COPX), rare earth (REMX) and uranium miners (URA) during a quiet Year End market dominated by Fiscal Cliff news which has diverted the focus away from these undervalued sectors which are stealthily rebounding impressively.

China is investing in infrastructure projects and has been stimulating the economy in 2012 and may increase that in 2012.  China now dominates the steel making industry and accounts for more than 60% of world demand.  They have also become a net importer of many industrial metals for their own domestic economy.

The media tends to sell doom and gloom about the global economy and especially the oversold commodity sector (DBC).  They highlight that the major commodity producers have already begun to cut production.  This may be indicating to our contrarian antennae that the bottom has been reached in these commodities as mines shutdown putting pressure on available supply.  India, the third largest exporter of iron ore has cut back considerably this past year, which may cause a near term deficit.

The global printing of money started by an open ended QE3 and culminating with unemployment targets by the Fed is beginning to cause a flight into risk on assets as investors are realizing paper currencies are losing value and are looking into real undervalued industrial metal assets such as uranium (URA), copper (JJC), graphite and rare earths (REMC) many of which are trading at a fraction of the value it was before the credit crisis in 2007.

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

By Jeb Handwerger

Disclosure: I am long GLD, SLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

http://goldstocktrades.com

© 2012 Copyright Jeb Handwerger- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014