Build Your Dreams

[Aberhound]

The trouble with rare earths is that the quantities are minute and the processing technology is not readily available to the miners. As technology advances the rate of increase in the value of the rare metals and rare earths has been almost logarithmic vs. arithmetic for materials like precious or base metals. This should continue as more high value uses for these materials are discovered and China increasingly restricts the export of these valuable materials. The rare earth market also suffers from inequality of knowledge and lack of knowledge. Miners no doubt are selling rare earths and rare metals along with their other metals (which they are paid for) and don't get paid anything for the rare earths and rare metals by the refiners who have better knowledge. Miners who aren't paid for the rare earths and rare metals are wasteful. One miner admitted that for years he was using his "waste" material which likely had good concentrations of rare metals to spread on his roads so his vehicles had better traction on the ice. It is probably now the most expensive road in the province!

 

Perhaps the rate of increase is sufficient to make it worthwhile to purchase and store the material as a retirement investment. By the time we retire presumably technology would have advanced sufficiently both to improve the availability of the processing technology and value of the stored material.

 

A Buffett style limited partnership would be a good way to spread the risk of such a plan. BC would be a good location because BC has the 2nd greatest concentration of these earths and metals after China and because under the Canadian constitution the provinces have the right to secure the supplies of natural resources which means that the federal government cannot seize these materials like Roosevelt seized the gold in the US (so long as the province chooses to exercise its jurisdiction). For instance, there is an excellent gold/silver fund based in Alberta for this very reason with many US investors (CEF on the TSX).

 

A clever bank officer could take advantage of the tax free banking zone in Vancouver and set up a metal bank like those in Switzerland to store the rare metals. If someone can figure out a way to have the value of the metals in the stored material proven by assay in a manner so that it qualifies as reserves for the bank the bank may be willing to pay the LP a share of the profit earned from fractional reserve banking. Bank reserves that increase in value on an almost logarithmic scale in a tax free zone should permit the bank to be unusually profitable while being less risky.

 

Aberhound