Iron ore price bubble
Iron Ore Price Bubble
Those who anticipated price bubbles made huge profits. But the key word is ANTECIPATE
Therefore, the relevant question is “What is the NEXT price bubble?”
If you dream of profiting from the next price bubble, you should take a closer look at iron ore, which is the mineral used to make steel
After 3 years working in metals and mining for Goldman Sacks, I realized some characteristics that lead to price bubble in commodities
I will give one example of metals that are already experiencing a price bubble and from there I will show that the iron ore industry has a VERY similar industry dynamics
Here is the example:
Do you remember the last two rows on the bottom of the periodic table. Those elements are named rare earth metals
The rare metals industry
1. Is concentrated: 80% of World’s supply of Rare earth metals used to come from a single mine in China
2. Has supply constraints: In last December, the Chinese government decided to stop exporting those metals. What happened?
Practical results:
Rare earth metals prices soared more than 1000% in a few months; farms that worth a few thousand dollars now worth SEVERAL million dollars because of the rare earth metal
Similarly, the iron ore industry
1. Is concentrated: 3 big iron ore miners control 80% supply capacity
2. Has supply constraints: The big three control virtually all the expansion in supply
Therefore, the suppliers in iron ore industry will make more profits if they reduce supply, in a very similar way to that witnessed in the rare earth metals
Iron ore prices are poised to skyrocket. It is going to be a bubble. So buy early, buy now
Bullets
The Rare earth metals industry
First: Is concentrated: 80% of World’s supply of Rare earth metals used to come from a single mine in China
Second: Has supply constraints: In last December, the Chinese government decided to stop exporting those metals.
Similarly, the iron ore industry
First: Is concentrated: 3 big iron
Those who anticipated price bubbles made huge profits. But the key word is ANTECIPATE
Therefore, the relevant question is “What is the NEXT price bubble?”
If you dream of profiting from the next price bubble, you should take a closer look at iron ore, which is the mineral used to make steel
After 3 years working in metals and mining for Goldman Sacks, I realized some characteristics that lead to price bubble in commodities
I will give one example of metals that are already experiencing a price bubble and from there I will show that the iron ore industry has a VERY similar industry dynamics
Here is the example:
Do you remember the last two rows on the bottom of the periodic table. Those elements are named rare earth metals
The rare metals industry
1. Is concentrated: 80% of World’s supply of Rare earth metals used to come from a single mine in China
2. Has supply constraints: In last December, the Chinese government decided to stop exporting those metals. What happened?
Practical results:
Rare earth metals prices soared more than 1000% in a few months; farms that worth a few thousand dollars now worth SEVERAL million dollars because of the rare earth metal
Similarly, the iron ore industry
1. Is concentrated: 3 big iron ore miners control 80% supply capacity
2. Has supply constraints: The big three control virtually all the expansion in supply
Therefore, the suppliers in iron ore industry will make more profits if they reduce supply, in a very similar way to that witnessed in the rare earth metals
Iron ore prices are poised to skyrocket. It is going to be a bubble. So buy early, buy now
Bullets
The Rare earth metals industry
First: Is concentrated: 80% of World’s supply of Rare earth metals used to come from a single mine in China
Second: Has supply constraints: In last December, the Chinese government decided to stop exporting those metals.
Similarly, the iron ore industry
First: Is concentrated: 3 big iron