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The Pentagon just released an encouraging report that says that The West is making progress in breaking the Chinese Monopoly on heavy rare earths.  The U.S. Department of Defense is hoping to build a domestic rare earth supply chain that can provide the rare earths for the military and industrial sector.  Prices are basing indicating that the market believes that additional supplies of rare earths will come online.  These critical rare earths are important for some of the top soaring stocks such as Apple, Tesla, Vestas, Raytheon, GM and Boeing.

It is time for our subscribers to closely watch the rare earth sector as the U.S. flies B-52 bombers into disputed zones with China.  Escalating tensions may have major implications on the price of rare earth oxides in the West.  China controls 99% of heavy rare earth production which is critical for the West’s latest military technologies.

The dispute is over islands in the East China Sea which is owned by Japan.  China and Japan have been seeing rising escalations for several years which has caused major spikes in rare earth prices as the West feels China’s chokehold on these critical high tech elements.

The Chinese-Japanese tensions are rising which could trigger a spike in rare earth prices as China cuts back exports.  Over the past two decades China has monopolized a group of metals that is critical in the latest military technologies such as stealth helicopters and guided missiles.  China just announced that they will cut back on heavy rare earth exports in 2014.

Watch Ucore Rare Metals (UURAF) which controls the heavy rare earth Bokan Deposit in Alaska.  The company has made many technical advancements in 2013 on the highest grade heavy rare earth deposit in the United States.  They are working closely with the U.S. Department of Defense to advance this project.  I have been to the property in 2011 and seen the tens of millions of dollars of work that has advanced this asset to the feasibility stage.

Ucore Rare Metals (UCU.V or UURAF) has made several accomplishments during a very difficult resource market in 2013.  Ucore published a Preliminary Economic Assessment (PEA) earlier this year which showed attractive economics despite lower rare earth prices.  The company is confident that the strategic heavies are beginning to turn higher and demand will grow over time.  The PEA showed a lower Capex and shorter timeline to get into production versus many of their peers.

In addition, the Alaska State Legislature voted unanimously to move Ucore’s Bokan Project ahead.  The State of Alaska has the financial strength to help advance this project.  Look for funding developments from the State in the near future as they are very supportive of this project.  Ucore is using state of the art mining technologies  to improve mining efficiency and economics.  Ucore has recently submitted its Plan of Operations and received permits to place a mining camp on Bokan and allow infield drilling, condemnation drilling and other mining activities.

Recently, Ucore announced a significant resource update which was the result of $12 million worth of expenditures.  They also added a new board member who has significant financial and legal expertise. We may see tax loss selling this December and Ucore may hit four year lows as investors look to take losses.  It may be prudent to use this as a discount opportunity to purchase shares at multi-year lows.

I expect a major move higher as the dispute with China escalates in 2014.  Despite all these major technical advancements in Ucore, investors like you and me can pick up arguably the most important and highest grade U.S. heavy rare earth deposit for a fraction of what is was worth in 2011 at four year lows.

The increasing tension between The West represented by Japan and China is increasing over the supply of critical rare earths and minerals.  It has become such a crisis that the U.S. Department of Defense is assisting with the metallurgy for this small rare earth junioIr in Alaska who controls the highest grade heavy rare earth asset in the United States.  The focus is on advancing the asset to production as the Department of Defense published a report in 2012, which said the heavy rare earths were vital for the success of our military.  United States technology and military equipment can’t risk not having a secure supply.

Currently the U.S. is dependent on many imported minerals despite having a domestic abundance.  For many years I told you to look for strong interest from the U.S. government to advance a domestic heavy rare earth mine which can provide the material for stealth aircrafts and cruise missiles.  The U.S. and Japan can not rely just on China.  At any moment they can shut the exports and play hard ball.  The West better have a backup plan which is stockpiling the metal and at the same time advancing potential heavy rare earth assets into production.

Listen to my recent interview with Ucore CEO Jim Mckenzie below. We discuss all the major advancements in 2013.


For more information on Ucore contact Mr. Jim McKenzie, President and Chief Executive Officer at: (902) 482-5214.

Disclosure: Jeb Handwerger owns UURAF and the company is a sponsor on my website.


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Gold Stocks: The Great Contrarian Trade Of 2014?
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Resource Investor
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The Market Oracle
Japanese Silver Moves Up; US Gold Bullion Weakens
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Trade the Newsroom
Gold Prices To Struggle On Higher Interest Rates, U.S. Dollar
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IAMGOLD Says Price Of Gold Is Too Low For A Dividend
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Gold and silver are moving higher as the record short position begins to unwind.  Look for a powerful move and double bottom in gold and silver as demand is soaring in Asia and huge short positions are being covered in the West.  When the majors are buying projects at a high premium like in early 2011, when Newmont bought our recommendation Fronteer Gold  for top dollar that will once again be a time to be careful and raise cash.

For right now, investors are ignoring undervalued situations such as International Tower Hill Mines (THM) which owns one of the best deposits in North America with over 20 million ounces of gold.  But they may not ignore THM for much longer especially if gold turns higher.  I have learned that the stories hated during a declining gold price become the largest gainers when the price moves higher.

The long term trend in gold remains higher and this correction may provide opportunities for precious metals investors to gain exposure to highly leveraged vehicles to the gold price.  International Tower Hill Mines is like an option on the gold price with no decaying time value or expiration.  THM’s Livengood Asset is one of the largest undeveloped deposits in the world still 100% controlled by a junior.  It could produce massive amounts of gold annually.  Hundreds of millions of dollars have been spent on this asset with 792 drill holes yet investors can purchase the company for around a $40 million market cap way below its book value.  One must remember that current resources are only on 1 sq mile of a 75 mile land package.  I believe there may be additional high grade zones like Money Knob on the property.

The project is located in a gold district which has mined precious metals since 1914 and the State of Alaska especially this region is incredibly supportive of this asset.  Livengood coming into production over the next decade could provide thousands of jobs for the region and could really boost the economy in nearby Fairbanks.  I have been blessed to be able to visit the property.

It is located just off an all season highway.  I have known some of the key technical people for several years and they are high caliber with strong moral ethics.  They have the experience in permitting and starting up some of the top mines in Alaska such as Pogo and Ft. Knox which are cash cows for Teck Cominco and Kinross.

THM released their feasibility study in one of the worst gold mining markets in history. The study showed that they will not be economic until $1500, however if gold should go higher the leverage to the price of gold is extremely impressive. The mine is massive and could produce over 500,000 ounces of gold per year if gold moves above $1500.

With an advanced NI 43-101 feasibility study the management who previously built major Alaskan Mines such as Pogo and Ft. Knox, Tower Hill could attract strategic partners to advance this project. The company is also actively exploring other mine configurations to bring the Capex and cash costs down. It is important to remember that International Tower Hill Mines sports a market cap of around $40 million and has spent over $250 million advancing this project through feasibility. That sounds like a bargain to me.

Listen to a recent interview with the CEO of International Tower Hill Mines Corp Don Ewigleben below.

Disclosure:Author is long THM and the company is a sponsor on website.


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Wall Street Journal (blog)
Gold Bullion "Selling Now Done", Growing Bearishness "Good News for Bugs"
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Financial Express
Gold price settles up Rs 163 in futures trade
Zee News
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Gold's Price in 'Flux' Until Taper Timeline Gets Clearer
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