BB's Stock Haven

[beerput]

CGHS>>On Tuesday March 22, 2011, 3:42 pm

Shares of China GengSheng Minerals (AMEX:CHGS) are skyrocketing over 48% higher after positive news from rare earth metal leader Molycorp, Inc . ( NYSE:MCP ).

Molycorp’s CEO announced the company’s revenues are in fact rising, proving to skeptics that rare earth metal companies are more than just momentum stocks.

Moreover, pricing and inventories are moving into a very favorable state . Prices are escalating beyond $100,000 a ton — up 9 times from last year. Global supply is also shrinking as China ( NYSE:FXI ) has restricted exports.

China GengSheng Minerals (AMEX:CHGS) manufactures monolithic refractory products and industrial ceramic products. The Company also manufactures fracture proppant products. All of these products have been in high demand as emerging markets ( NYSE:EEM ) continue to build out. Now that Japan ( NYSE:EWJ ) will need to rebuild for years, demand for these rare elements will only increase.

For the long term, the question is not whether investors should own rare earth stocks, it’s a matter of whether the prices are right. With an artificial cap on supply, now might be too high a risk of exports are allowed to increase again.