Critical Metal Shortage Pushes the "Mining Stock of the Year" Into Overdrive...
By Andrew Mickey
I can’t say this too many times: The tungsten market is getting ridiculously tight. Something has got to give. Since tungsten has no replacement, the price has got to give.
Imagine if gold prices soared 200% in three months. What would happen to those boring old gold stocks? They’d soar. Well, that’s exactly what happened the last time the tungsten market grew this tight. The supply/demand situation is downright grim.
But you don’t have to take my word for it. Let’s take a look at what the Japanese are up to. Since Japan is a very resource-poor nation and has to import all of its resources, the country likes to hold a very large stockpile of essential minerals.
According to legislation passed in 1983, Japan officially aims to hold enough key minerals and resources to keep its industries running for at least 60 days. It’s just an insurance policy against catastrophe, but Japan is having a lot of trouble keeping its reserve base up.
Japan’s metal reserve, which is similar to the U.S. Strategic Petroleum Reserve, except it’s for metal, is nowhere near that 60-day target. In fact, the reserve base has fallen 42% below the country’s goal and it now only has about a 38-day supply of tungsten and a few metals that are absolutely essential to industry.
The only solution is to go on the open market and buy up more. However, China, far and away the world’s largest tungsten producer, isn’t helping its neighbor to the east one bit. Just a few weeks ago, China initiated a tax on all exported tungsten in order to ensure that more of it stays within the country to meet its own booming demand.
But this is just the start. Major companies like General Motors and specialty metals powerhouse Allegheny Technologies (ATI:NYSE) have already entered into long-term tungsten contracts to ensure they don’t get left out when there’s not enough to go around. This is the kind of shortage we’re about to be facing here.
My No. 1 tungsten play is already starting to attract a lot of attention, and there are only more gains to come as the rest of the world catches on. It’s still not too late to get in on the stock that could be the “mining stock of the year.” Learn more here.
That’s all for now,
Andrew Mickey
Founder, Small-Cap Commodity Prospector
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