Well, and we also love you — of course. Just wanted to make sure you know that on this lovely Valentine’s Day.
We are inundated every day with email ads that our loyal readers forward on to us, and we appreciate every one — we want to know who’s promising you 1,000% returns, or who’s promoting the next company that they say will change the world and give you life-changing profits. That’s what we do.
But our thirst for the new ideas, and the urge to sniff out the new teasers, sometimes leads us to forget that the pushiest and most successful ads are probably ones we covered months ago, when the publishers were just starting to test them out … and before they had been mass-mailed to every single investor in America.
So today I’m checking in on a few ads that folks are asking about like crazy … but which are definitely not “new”.
The first one is from Byron King for his Energy & Scarcity Investor — the basic pitch of the ad is that there’s an electronics manufacturer who’s going to introduce a groundbreaking product in the next few months that will shake the whole industry, and herald the beginning of the graphene revolution.
So the pitch is tied to Samsung’s years-long effort to develop flexibile OLED screens that can be built into new handheld, foldable or rollable products — like a smart phone or tablet that rolls up or folds to fit more easily into a pocket, or a screen that wraps around the front and back of a device. And they are trying to build these, though it’s not necessarily graphene that’s making these things possible — at least, not yet. Samsung has been showing prototypes and promising big breakthroughs in these kinds of flexible plastic screens for several years now, and it does indeed look like they’re going to actually have a product out sometime this year.
Which might capture folks’ attention, it’s hard to say with consumer products — it will certainly have the cool factor, but we’ll have to see what it is and gauge consumer reaction before we have any idea whether or not it will actually solve a problem or create a need for buyers and become more than a cool niche gadget.
It’s also possible that graphene as an investment theme will get a bump from any such exciting next-generation product introduction — even though graphene probably won’t play a role in the first flex screens. Graphene is still mostly in the research labs when it comes to next generation chips or displays or other products, though it’s widely expected to revolutionize electronics and other industries over the coming decades.
But, as we’ve said many, many times over the last two years regarding the several graphite stocks that have have parabolic moves based on spiking graphite prices and hyping graphene ads, graphene seems very unlikely to have a big price impact on graphite in the next few years. Most graphite is used for steelmaking and industrial lubrication purposes, and the fastest-growing cutting-edge demand for graphite is not from thin-film graphene producrs but from lithium-ion battery makers (Li-ion batteries require more graphite than they do lithium). Graphene is a great story, but graphene products, though they may eventually create incremental demand for the highest quality natural graphite, are not going to be a commodity story … if graphene changes the world, the lion’s share of the wealth will be created from those who create the graphene most efficiently and design products that most effectively use graphene, not from the miners who dig up large flake graphite from underground. I think the polysilicon corollary is useful to remember — graphene is often touted as a replacement for silicon, with computer chips made from graphene in the years ahead, and silicon did indeed change the world. But I suspect that most of the wealth from the silicon revolution flowed through Intel and Texas Instruments and the other companies that created silicon chips — not from the chemical companies and refiners who turned silica into polysilicon wafers. Or from the companies that dug up the world’s purest silica to use in this pursuit.
That doesn’t mean that graphite miners can’t be profitable, of course, but they’re all hurting now — lowering steel demand from China and a weak economy in Europe and perhaps slower-than-hoped adoption of electric cars (and their big lithium batteries) have meant a lot more to graphite prices than has the future promise of graphene. So all of the graphite companies that we see pitched with some regularity spiked in 2011 and early 2012 when graphite prices were peaking, and collapsed in the second half of last year when graphite prices fell markedly. Most of them are not actually producing graphite, and some are years from doing so, but they are, like any junior miners, very sensitive to the price action of the commodity they’re trying to extract.
Byron King’s pick is still Focus Graphite, which has done a better job than most of tying its story not just to the Lac Knife graphite deposit but to “advanced” graphite uses and high-technology graphite research, including investing in processing and refining techniques — their ticker is FMS in Canada and FCSMF on the pink sheets. The stock caught fire a few months after they went public in 2010, thanks partly to the fact that they got a lot of attention from Byron King and other pundits, but has been very volatile and is far off its highs and still gradually declining these days. We first wrote in detail about this one back in June of 2011, when Focus Metals (as it was then called) was priced around a dollar a share and carried a $56 million market capitalization. Since then they’ve sold a lot of shares (as is common and seen the price spike up a few times, but the stock is now below 70 cents (thanks to the additional shares sold, the market cap is up to over $70 million despite the 30% drop in per-share prices). We wrote about it again when this latest teaser campaign from King got revved up, in September of last year, you can see that updated note here if you like. Focus is still working at infill drilling of Lac Knife and also getting more data for their rare earths project, though that is likely even further off as an actual producing project.
There’s a good interview here about the graphite market in general, worth perusing if you’re speculating in the junior graphite names — it’s a complicated business with opaque pricing, tight producer/consumer relationships, and lots of different grades that are tailored to different products. I’d bet that we’ll see some more graphite bubbles form as news flow dictates, which will probably help to drive up the shares of the juniors again at some point, but there’s a lot of speculation that goes into any assessment of the eventual value of these companies. The other junior miners that are frequently touted and recommended have been Flinders Resources (FDR.V FLNDF) restarting an old mine in Sweden, Northern Graphite (NGC.V NGPHF) trying to jump-start a long-known resource and turn it into a mine in Ontario, and Syrah Resources (trades only in Australia, at SYR) with its massive resource in Mozambique. Syrah also posts a reasonably overview of the graphite market on their website here, though it looks like the data is from a year ago when graphite prices were still sky-high.
The three most-touted graphite companies, Flinders, Focus and Northern, have market caps between roughly $35-70 million and all have share prices that are about a third of their highs — Focus is the only one that’s been publicly traded for more than a year. And thanks to the graphite hype of last year (which is apparently continuing into this year), there are plenty of startups and switchovers coming on the scene as well, just like we saw with the rare earths mania a year or two before — so the next hyped graphite stock might be someone with a new resource that they’re just starting to drill, or a uranium or iron or gold miner that’s just realized that the graphite project next door is more appealing to the market. Junior miners are almost all suffering and desperate for capital these days, so if they think that changing their name from “Joe Blow’s Iron Exploration” to “Joe Blow’s Graphite Super Deposit” will help them pay their bills you better believe they’ll do just that. If you want to trade the bubbles that will probably continue to ebb and flow in graphite and rare earths, enjoy but be watchful — stop losses don’t always work that well for stocks that can easily rise or fall 20% in a day.
King also touts two other super materials — vanadium for next-generation batteries, and beryllium for critical needs like oil drilling equipment. Those appear to still be the same pitches he’s made consistently for quite some time as well, the vanadium one is American Vanadium (AVC.V AVCVF), which has held up pretty well since this latest teaser campaign started back in September, and IBC Advanced Alloys (IB.V IAALF), which King also started re-teasing back in September and which has had a remarkable collapse over the last year or so from about a dollar down to 16 cents. IBC Advanced Alloys is a good reminder that even teensy tiny companies can get smaller, they’ve gone from an almost microscopic $40+ million market cap down to a ridiculous market capitalization now of about $5 million. The small can indeed always get smaller, and when you see press releases about tiny companies doing “private placements” of a million or two or three million dollars, as we’ve seen from lots of junior resource-related companies, that’s a bit of a red flag that they have some close-to-desperate need for cash and are so beaten down that they can’t (or don’t want to) do the larger financing deal that they probably need.
So yes, King’s still touting Focus Graphite, American Vanadium and IBC Advanced Alloys, and when you look at companies like these you can often use the story to justify, with a straight face, a price that’s either 200% higher or 80% lower than the current share price. That makes me nervous, and I don’t feel like buying any of ’em.
The other teaser lots of folks are asking about is from Dr. David Eifrig over at Stansberry’s Retirement Millionaire — he’s still telling us that you can say “five magic words” to your bank teller and walk away with a handful of free silver. And in fact, in the six months since this ad started running this is probably the most asked-about ad out there … and yes, the joke that the five magic words should be “give me all your money” and be accompanied by a finger menacingly shoved through your jacket pocket has been made more than once.
But it is, as we wrote at the time this ad started to run, sort of true … though it depends on luck and your willingness to invest your time. The spiel on that one, if you’d like the short version, is that there’s a top-secret kind of coin that’s silver but it almost never used in daily commerce, so some banks are sitting on rolls that include these coins and they don’t pay attention to them.
The reality is that the pitch is for half dollars, so the idea is that you can walk in and say, “do you have half dollars?” to your local bank teller and “buy” as many of them as they’ll sell you — it’s “free”, because you’re just handing over money to get the same amount of money, and if you’re lucky there will be some part-silver half dollars in those rolls, half dollars that are worth far more than their face value.
Many people, and probably all bank tellers, know about the 90% silver circulating coinage that was minted until 1965, and which is widely traded as junk silver based on the silver content, so you can almost never find those in circulation anymore. But the half dollars have a sneaky little slightly-less-well-known run from 1965-1970 when the coins were minted in 40% silver, and it’s those coins that you might have a snowball’s chance in Florida of finding in the average bank.
Those half dollars, thanks to their silver content, have a melt value of $4.50, so you get a “profit” of $4 for each one of those you find. I’d guess you’d be best off in bank branches with new employees or rural areas or, if you get lucky, with bank branches that might have customer-rolled half dollars that someone brought in and haven’t been searched yet … but whether the odds of you finding a few part-silver coins are 1 in 100 or 1 in 5 probably depends on the bank, your area, and luck. So if you’ve got time, feel free to spend it searching and sifting through coins — since they are regular circulating currency, all you have to lose is your time and gas money (unless someone snuck a few quarters or slugs in those rolls, in which case you’ll be down a bit). I’d say this has far more chance of providing a reasonable return on your time commitment than the penny-sifting teaser we covered more recently, but it’s the kind of thing I’d much rather con my children into doing than do myself.
The other two ad campaigns that are choking our readers’ inboxes are from the Motley Fool — there’s the one about how the television industry is dying, which we wrote about when they started teasing it as “Television 2.0: The War for your Living Room.” That teased Disney (DIS), Discovery (DISCA) and Scripps (SNI) as the winners because they’re big content owners, two of which (Discovery and Disney) have done quite well since we covered this one in October.
And the other one is the “Dear China, it’s over” pitch that they’ve reworded a few times but which is all about how 3D Printing will be the death of China’s manufacturing dominance. That same theme has been mined by several of the newsletter publishers, of course, almost all of them pitching either Stratasys (SSYS) or 3D Systems (DDD) or both (as the Fool is) and I even suggested the stocks last Summer (I also suggested taking profits in January).
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We covered that Fool pitch when it started, about a year ago, and those stocks are up huge. For what it’s worth, Citron Research also came out with a strongly worded smackdown for 3D Systems just today, arguing that it’s a bubble and even singling out the Fool for a misleading description of the business and the prospects. I think Citron has exaggerated on their side of the argument a bit as well (they’re a short research firm, their job is to convince you to sell the stock), but though I’ve enjoyed the growth of the stocks over the last year (vicariously enjoyed them, that is — I haven’t owned them), I can’t justify the current share prices for these stocks … I think they’ll be changing the world, sure, but I expect that change will come quite a bit more slowly and gradually than the current valuations and investor growth expectations are indicating.
So there’s a little trip down memory lane for you — and a nice and easy way for your friendly neighborhood Gumshoe to answer the dozens of questions I’m getting about both of these teaser campaigns. Got any other favorite teaser ads that are driving you crazy? Send ’em along to us at ILoveStockSpam@gmail.com and we’ll do our best to work ’em out for you — or re-share the answers if they’re teasers that have come back from a long slumber. Thanks!