U.S. Rare Earths: “This isn’t our first rodeo.”
U.S. Rare Earths, Inc. (OTCBB: UREE), headed by CEO/President Kevin Cassidy, is a mineral exploration, mining and claims acquisition company focused on the identification and acquisition of Rare Earth Elements (REEs). UREE has expanded its areas of interest, which now run to over 25,000 acres of mining claims in Colorado, Idaho and Montana. Management is combining a thorough analysis of historical data – by the United States Geological Survey (USGS), and several other companies – with the application of current technology, in order to both confirm and add to historical findings.
In a recent wide-ranging interview InvestorIntel’s Tracy Weslosky teased out the details of U.S. Rare Earth’s ongoing successes story. She noted that, even in the current difficult financing environment, the company was able to conduct a successful private placement – a vote of confidence by investors in the quality of U.S. Earth’s Management and Exploration teams.
U.S. Rare Earths is coming off a string of notable announcements over the last few months. In an August news release, the results of the 2013 exploration work in Lemhi Pass, Montana were discussed, which “confirmed that the company’s properties have the highest accessible critical rare earth deposit in North America.” (Identified by The Russian Academy of Science.)
Later that same month, UREE announced the appointment of General Tommy Franks, former Commander-in-Chief, United States Central Command, to the Company’s Board of Directors. Of the appointment, General Franks remarked: “I am pleased and excited to join the U.S. Rare Earth Board. Self-sufficiency is key to America’s security. U.S. Rare Earths is dedicated to meeting a recognized need in our current and future economy.” And in a letter to shareholders, Cassidy renewed his company’s pledge to “to create a completely independent American based supply chain solution within the continental United States.”
As the one year REE Leaders Index (Bloomberg Ticker: REEL) illustrates, The Rare Earths sector does not appear to have hit bottom. From a chartist standpoint, one can argue that the rate of decline is decelerating. However, seeing the index print new lows is not encouraging. What is encouraging, however, is that with each decline, the moment of truth – and the establishment of a new and perhaps very powerful countertrend – comes closer.
How to play this situation? If an investor wants to let the index “tip its hand” and establish a tentative new uptrend before taking a position, then one would want to see a rise in the index above, say 347, or even better 410, rising above the June lows and offering an interpretation that perhaps breaking that low in June is now leading to a final washout. Perhaps the last of the weak hands are being deprived of their positions, as contrarians take those same positions in anticipation of better days ahead.
Another possibility, less risky than you might think, is to search out individual stocks in the sector under review, and choose one or more which are holding up better (especially if they are trading above their 200 and 50 day Moving Averages) than the Index itself. (A key caveat here is that when extremes of market Sentiment have a grasp on the entire sector, the tendency is that even the best stocks in that space will be overwhelmed by that sentiment – perhaps in direct opposition to the actual operational strength of the particular company itself.)
But if you can research and choose companies that you believe to be “best of breed” then at the very least, they will often end up being among the first to turn around – sometimes sharply – when renewed buying interest re-enters the sector.
U.S. Rare Earth’s Inc. Weekly (OTCBB: UREE)
In what chartists refer to as a possible “non-confirmation” UREE’s share price has been considerably stronger than might be expected when looking only at the REE composite above. Indeed UREE’s appears to have bottomed over a year ago. The share price is now in the process of establishing higher highs and higher lows, and is trading above both the 50 and the 200 day Moving Averages, on increased volume.
Addressing the success of U.S. Rare Earth’s most recent private placement in an otherwise difficult financing environment, CEO Kevin Cassidy remarked, “This isn’t our first rodeo; you bet on jockeys, not horses.”
If so, then it might be time for investors to “saddle up”.
