Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Gas Up with MLP’s (by BKudla)

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By nature, I am a trend guy.  I spent most of my corporate career looking at the future and divining trends.  I invest/trade the same way.  In the energy field, this country has only two good, domestic options in its energy future; natural gas and nuclear.  Nuclear has reached recognition stage and is now catching a bid, and I wrote on its bright future in prior posts.

 

Natural gas is still trying to balance supply and demand, and prices continue to fall on average. I view this as a cyclical problem and have already positioned myself accordingly with SJT and LINE.  Why? Contrary to popular media opinion, the Northern Hemisphere is in a cooling trend, this pressures stockpiles, Natural gas can be converted to Ag Chemicals which is going to start a major buying move as farmers have underapplied fertilizers to save money, now yields are suffering, a weak dollar will make oil less attractive against domestic Natural Gas, and the clean energy movement will force companies and utilities to move to natural gas.

 

Linn energy has already Tripled from my itial purchase price because they are astute hedgers and have more oil in their mix.  San Juan Basin is an American pure play, mostly Natural gas producer and is slowly rising every month.  A third player I am watching and now will start buying is PVX, Provident Energy out of Canada.  They produce and ship liquid natural gas. I like the chart, and it is looking at breaking out again. 

 

These MLP's pay between 6.5%-9.4% monthly distributed dividends, so I get paid on these while I await gas prices to catch a bid.

 

I buy a little each month (LINE have a full position) as the RSI7 comes off the bottom.

www.arum-geld-gold.blogspot.com

 

Rare Earth – A Long Term Investment

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Rare earths are a group of at least 15 elements within the Lanthanide series (see Wikipedia for a good overview: http://en.wikipedia.org/wiki/Rare_earth_element).   These elements are relatively abundant in the earth's soil but are found in higher concentrations in certain locations.  For those of you who like chemistry – I’ve highlighted them in yellow:

Rare earth periodic table 

Demand.  The use of rare earth elements in modern technology has increased dramatically over the past years.  Rare earth elements are now incorporated into environmentally-friendly technologies (e.g. compact fluorescent lighting, hybrid cars, etc.), new digital devices (iPods, iPads, disk drives, etc.) and various military/industrial applications.

REU 

Supply.  China controls 95% of the global rare earths market, with 45% of the global supply coming from China’s Baiyun Obo mine in Inner Mongolia.  In recent years, the Chinese government has shuttered a number of other rare earth mining operations and imposed a range of export restrictions on rare earths, with the aim of ensuring domestic supply is sufficient to meet expected domestic demand (or for monopolistic control- you decide).

Given the tightness of supply and the belief that new demand has recently strained that supply, there is growing concern that the world may soon face a shortage of the rare earths.

Bubble?  The Investopedia article (linked below) notes that “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.” 

My current favorite stock on this space is Lynas Corporation www.lynascorp.com (see the ZH article, below)- I believe them to be significantly undervalued medium-to-long term.  Lynas trades under the symbols (LYSCF) for the common, and (LYSDY) for the depository receipts. 

Lynas5yr 

July to October this year looks a little too exponential for my taste, so I’ll be waiting for a significant pullback. 

In addition, I’m also watching a rare earth ETF that began trading today: (REMX) from http://www.vaneck.com/funds/REMX.aspx.  I like the weighting:

REMX 

I might go with my eggs in the same basket philosophy and consider REMX when that time comes.

Further reading:

http://www.bloomberg.com/news/2010-10-22/rare-earth-in-blackberry-to-prius-underscores-alarm-over-supply.html

http://www.bloomberg.com/news/2010-10-21/rare-earth-contention-in-u-s-japan-overlooks-china-s-2006-policy-signal.html

http://www.bloomberg.com/news/2010-10-21/molycorp-lynas-may-add-to-gains-as-china-restricts-supply-of-rare-earths.html

http://stocks.investopedia.com/stock-analysis/2010/5-Could-Be-Bubbles-Waiting-To-Burst-CRM-VMW-CTXS-LOGM1020.aspx?partner=YahooSA

http://www.zerohedge.com/article/sorting-through-chaff-lynas-best-rare-earth-play

Chart on UNG (by Mike Paulenoff)

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This morning's up-gap open in the U.S. Natural Gas Fund ETF (NYSE: UNG) could be a very significant, constructive signal after yesterday's new low, followed by an upside reversal from an extremely oversold condition. So far, the less than 24-hour upmove in the UNG from an all-time new low at 5.20 to today's intraday high at 5.48 (+5.4%) has the "right look" of the conclusion of a bearish wedge pattern and the initiation of a new recovery uptrend period.

Of course, the UNG has very heavy lifting directly ahead if it is to provide technical confirmation of a significant upside reversal — namely, continued strength that hurdles and sustains above 5.70 and then 6.05 for starters. That said, any whiff of some unforeseen bullish fundamental factor, like a bigger than expected inventory drawdown, has the potential to terrify the entrenched short positions.

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Originally published on MPTrader.com.