We can usually count on Dr. Kent Moors to come up with a bombastic big-picture tease for his latest favorite energy stock, and this one’s no different — though it’s less an energy stock and more a steel-industry stock.
The spiel for his Energy Inner Circle ($2,000/yr) tells us that this “dull gray powder” is critical to skyscrapers, jet engines, modern highways, power plants, hydroelectric dams, etc. etc. … and that “our strategic reserves of this gray powder are just about zero.”
And apparently there’s yet another catalyst coming… here’s a taste of the ad:
“Today, worldwide production of this mysterious powder is about 80,000 tons per year.
“Without a single additional ounce available anywhere.
“But on November 1, a new law called GBT-1499 will trigger a potential 40,000-ton shortage in supply.
“This 40,000-ton shortfall is half of what can be produced today.
“And it’s set to trigger a massive disruption in the global energy market, on par with the oil embargo of 1973….
“The price of this mysterious gray powder could hit the stratosphere.
“Today, a single pound of this powder sells for $18.50.
“But starting on November 1, prices could rise to as much as $182.
“A few years back, a much smaller shortfall of this gray powder – a mere 8,100 tons – sent prices soaring 881%.”
What else does he tell us? That this powder doesn’t trade on any commodity exchange, so you need him to tell you “how to get in on the action” … and that there are some massive demand drivers — he notes that Boeing’s Dreamliner, for example, uses “up to 22,000 pounds of this mysterious powder” and that Ford uses 6,000 pounds a day.
So with demand increasing and supply dropping, Dr. Moors thinks we have an opportunity to turn $1,000 into $29,940 “starting on November 1.”
And yes, he does eventually spill the beans and disclose that he’s talking about vanadium… which is indeed used in very small amounts to strengthen steel.
And yes, China is expected to demand a lot more vanadium in the future because of its new building code enforcement, which will reportedly require vanadium-reinforced rebar for future construction (I haven’t examined the original law, and I don’t know how strictly it will be enforced or if there are non-vanadium alternatives that could be used, but the vanadium demand story because of this rule change is widely reported).
Vanadium has also started to become an energy story in recent years, thanks to the appeal and possible future growth of vanadium flow batteries — and that is sucking up some of the production of the highest quality/highest purity vanadium… but vanadium is still very much a steel story at this point when it comes to real demand, and pretty much all steel stories right now begin and end with China — no one else is building new cities and infrastructure at anywhere close to the rate of the Chinese government, and those skyscrapers and bridges and dams are the marginal demand for steel in the world, which creates the demand for iron ore and vanadium and nickel and everything else that goes into making that steel. That’s why the bull/bear cycles for most metals have gotten so wild and volatile this century, the pricing for most metals was on an extremely long “keeping up with inflation” trend for decades before becoming whipsawed by bubble/bust China stories over the past 15 years or so.
So be careful what you wish for when you build your company’s production capacity because of “Chinese demand,” sometimes that demand isn’t as obvious and predictable as you thought.
But that’s not the point — we’re looking for a vanadium stock here, what else does Kent Moors tell us about his favorite secret stock pick? More from the ad:
“… current worldwide vanadium production is just 80,000 tons per year.
“Less than 1/10th of what China will need every single year!Are you getting our free Daily Update
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“And production isn’t likely to go up any time soon.
“In fact, the most promising U.S. source of this critical mineral won’t come online until at least 2021.
“And even if every new mine works out, there STILL won’t be enough vanadium to meet booming demand.”
That “most promising U.S. source” reference is almost certainly to Prophecy Development (PCY.TO, PRPCF), though that doesn’t seem to be the stock he’s touting — Prophecy is looking to develop the Gibellini Vanadium Project in Nevada, which looks pretty appealing based on the preliminary economic analysis they released a few months ago but, of course, is not yet permitted or financed (which means even 2021 would be quite optimistic). They might find it easier to get financing thanks to rising vanadium prices, or could be bought out at some point, but Moors is primarily teasing someone else, an actual vanadium producer.
“By conservative estimates, vanadium prices could go up 300%… 400%… even 500%.
“But my number one vanadium play could do even better.
“For example, when vanadium prices rose 513%, this one play went up 2,164%….”
And then the hints get dropped about th