If you have any interest in turning a small amount of money into a large amount of money… This may be the most important message you'll ever read.
Over the last few years we've all heard about Gold boom. As the price of Gold more than quadrupled many investors and hedge funds racked up enviable gains.
But, what the wise man does at first the fool does in the end. With Gold at $1,700/ounce I believe the ship has long since sailed and today's "Gold Bugs" could be in for a shock.
That's why Gold isn't what you'll hear most smart investors talking about today.
The John Paulson's of this world are now talking about one thing: Graphite
What's getting the worlds top money managers interested in graphite? Many low priced graphite stocks have boomed recently sending shares soaring.
Who ever has heard of Montezuma Mining? They’re a small, diversified outfit with an interest in graphite. Recently they stated, “With demand for graphite heating up, Montezuma has picked a good time to realize the value of its graphite asset, while retaining exposure to the project in the long term.”
From its low to its subsequent high, it went from two cents to 36 cents. That would turn $5,000 into $90,000. If you’d put in $15,000 you could have walked away with $270,000.
Why are Graphite Shares Soaring?
And that isn't the only example. Far from it, I've compiled a list of graphite stocks with the low and subsequent high adjusted for splits:
• UP 5.1 times -- Graphite One Resources -- 7 cents a share to 36 cents. $7,500 turns into $38,571
• UP 11 times -- Buxton Resources -- 3 cents a share to 34 cents. $7,500 turns into $84,999
• UP 9.4 times -- Graftech International -- $2.85 to $26.00. $7,500 turns into $68,421
• UP 21 times -- Zoltek -- $2.20 to $46.00. $7,500 turns into $159,818
• UP 17 times -- Montezuma Mining -- 2 cents to 36 cents. $7,500 turns into $135,000
• UP 6.4 times -- SGL Carbon -- $7.25 to $47.00. $7,500 turns into $48,620
• UP 7.4 times -- China Carbon Graphite Group -- 44 cents to $3.25. $7,500 turns into $55,397
• UP 4.1 times -- Northern Graphite -- 80 cents to $3.30. $7,500 turns into $30,750
These graphite stocks are rocketing in anticipation of a graphite boom. Just listen to what market authorities have to say about graphite:
Reuters says "Demand for graphite is expected to surge. That's a tempting imbalance many investors might find hard to resist."
The Street says it is key to lithium batteries: They state, “There is actually 10 times more graphite than lithium inside a lithium-ion battery.”
Cannacord Research says "Graphite - Time to sharpen your pencils. Prices are up and some would suggest to the moon."
Technology Metals Research says the boom is just starting: “Graphite is one of the quintessential wonder materials of today that will only become more important moving forward.”
The Gold Report says it’s an area to make money in: “Graphite is one of the few spaces where savvy investors can make money.”
Focus Metals calls it an explosion it's so big: They report, “China regards graphite as a critical material for the future—the response has been an explosion of interest and new growth…”
Reuters reveals that fortunes are being made: They write, “Shares of companies involved in graphite –a once obscure segment of the mining industry have soared…”
You'll Need to Understand This:
When you're analyzing the price of a commodity it all comes down to supply and demand.
Think about it this way; why are waterfront homes so expensive? Because supply is restricted naturally and demand is high for obvious reasons.
This combination of high demand and low supply leads to a very high price level.
When analyzing commodities the logic is exactly the same. Analysts look at current and expected demand and they look at current and expected supply.
The Supply/Demand Imbalance in Graphite...
First let's take a look at supply.
Put simply, the supply of graphite is being forcibly restricted by China.
China already controls 69% of Graphite production. In the past they've been willing to export the graphite they didn't need.
But recently China has stopped exporting their graphite and instead started BUYING up all the graphite they can.
China knows they'll need a lot of graphite to supply their industrializing economy and see control of this vital resource as a strategic advantage.
The International Resource Journal recently revealed the Chinese stranglehold that will drive prices higher: “You’ll see the Chinese authorities continue to tighten the rein around graphite and keep more of it for their own uses.”
Reuters says China can’t be trusted to share graphite: They state, “Prices rose last year in part because of concerns that China, which controls 70% of global supply, will choke off exports as it did with rare earth metals.”
The Street says governments are getting nervous—as they should: They write, “Government bodies are taking notice of just how crucial secure supplies of graphite are.”
China is Forcibly Restricting Supply
And what about demand?
Demand is already towering above available supply. This is clearly shown in the rise in price of Graphite over the past decade. (Remember, when demand is greater than supply the price rises).
Graphite has already risen in price from $500 to $3,000! But unlike Gold, demand is widely expected to continue rising.
Experts believe green initiatives like li-ion batteries, fuel cells, solar energy, semi conductors and nuclear energy could use more graphite than all current uses combined.
That's not to mention graphite is a key component in many of the now top selling products in the world: smart phones (think apple, android, blackberry), tablet computers (think ipad, kindle), electric & hybrid vehicles (think tesla motors, toyota prius).
So here's the situation: Demand is expected to double or more and supply is being purposefully held down by China.
What Will Happen?
I believe the only thing that can happen is the price of graphite will rocket.
That's why tomorrow I'll be picking the only graphite company whose shares haven't yet rocketed into the stratosphere.
In the words of Peter Lynch, I believe this one could be a ten-bagger!
DON'T miss it.
P.S. I'll be sending you my pick pre-market. In case it gets lost in cyberspace I'll also be uploading it here: