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Player Avatar TSIF (99.96) Submitted: 2/2/2011 5:28:18 PM : Underperform Start Price: $6.19 AVL Score: +0.61

Here we go again, most of the equities that ran ramped in late December and the first three weeks of January before correcting are on a tear again with no real reason. It's not just rare earths. SHZ, HDY, REE, AVL, etc.

If you're going to speculate then I hope your timing is good. If you're going to "play" rare earths, then play the ones that have a chance to produce into the demand in the next two years, before the market saturates again. MCP, currently overvalued has a chance as does Lynas. I own Lynas. Avalon has no real chance of income in the next two years and by then who knows how much China will be shipping and MCP/Lynas will be ramping up. While demand may continue to rise, the best of the long term contracts will be signed. There are the subtlies of heavy/lighter rare earths, but Avalon in 2011 is not the play. My last pitch a few weeks ago before the "correction". Do be aware that I'd had this one flagged from the slight uptick early in the week. The run on the rare metal plays and other suspects may run this up another 10-15% or it may turn and tumble sooner.

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Avalon Rare Metals is another Rare Earth exploratory miner that got well ahead of itself. I agree a few of the Rare Earth Miners who can get production in the next year will have some good upside. Fears of limits placed by China on Rare Earth and their outright snubbing of Japan, the biggest user, will cause those quicker to market to get some guaranteed contracts even if the speculation dies down. The increase in market supply will result in a glut which will then cause miners who come on line after the contracts are signed to have to deal with depressed prices. Some may not even find it profitable to complete the mine opening. The rare earths game is a balance between what China does in the long run and which company's will benefit from those who want to become more independent from China, even at a premium. Avalon Rare Metals is not in the mix.

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Member Avatar StocksForLimits (< 20) Submitted: 2/17/2011 11:34:02 AM
Recs: 0

TSIF ... I just checked and there's options on this. The momentum has really pushed it up but I agree with you (we're both down over 30% but I'm confident that'll turn eventually ... ?)... They are way down the road as far as having any product to peddle. Might pick up a couple long dated puts as a pure gamble against the momentum crowd.

Member Avatar TSIF (99.96) Submitted: 2/17/2011 5:35:25 PM
Recs: 0

This one has surprising staying power. I saw thier ads on Bloomburg several times recently. I'm more confident on this one that it will normalize than many other picks that I'm underwater on, the question is when and how high it can go. Speculation is one of the worse kinds of traits to try to bet against. Thanks for the tips that they have options. I hadn't looked. I usually have one or maybe two options active at any given time. When they work, they really pan out, when they don't then I just write them off. There is absolutely, (he says, knowing that if he ususual "absolute" in a sentence against an equity that he's doomed it will go the other way), way China will let other REE's get off to a decent start. The demand will be handled by the first online and then they (China) will dump if needed to drive out other competition. I'm not an REE basher per say. I hold some Lynas right now, but that's the only play I've found attractive. Good luck!

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