Saturday, August 4, 2007

Focus On Long Term Prospective

It is just unreal that SWC suffered another 7.66% drop after having been beaten down from $16.47 to $9.27 due to heavy shorting by certain hedge funds. SWC will release Q2 earnings on monday Aug6 after market close, or tuesday before market open. We should see a great reversal and a big rally coming.

The drop on Friday happened mostly in the last hour, with low trade volume. Unlike previous sessions, there was little indication of any deliberate hammering of the stock. The low volume drop was mainly due to lack of sellers, and even more lack of buyers here due to marketplace uncertainty. SWC price recovered nicely in after hour, which is encouraging. This article on Financial Sense made good points that now is the time to buy, not time to sell.

But let's focus on long term prospective. I explained before that SWC's future depends on the metals it sale, palladium and platinum. If the metals will do great in the future, then SWC will be a great stock to own. I also tried to explain why I am so sure that the future of palladium will be even more bullish. Let me summarize the points here:

0.PGM metals are first and foremost catalysts in lots of vitally important chemical reactions critical to a nation's survival and prosperity. Without PGM catalysts, oil refinery becomes impossible and you will have no gasoline to drive your car, and no airplane fuel to fly your F-22 jet fighter. Without PGM you can not produce synthetic fiber material that is used in the textile industry, 75% of the world's population will have to go naked for lack of clothings. Without PGM catalysts, production of fertilizers becomes impossible. The agriculture will collapse and 90% of the world population will die for lack of food. A modern nation can not be without these critical metals, regardless of the price. Few countries produce PGM metals. Countries that doesn't produce PGM, like China, India, Japan, will have to hoard PGM metals, or may already started to do so, when they realize how important these metals are. Read this article which criticize the Bush Administration for allowing a critical stake of SWC be sold to Russians cheap.

1. Russian stockpile dump and strong investment demand. Russians are dumping their stockpile of palladium, accumulated during Soviet Era, at a fast pace of 1.8M to 2M ounces a year. Because of the Russian dumping, virtually ALL analysts believe that the palladium market is over-supplied, and that palladium price should plummet uncontrolably. Instead palladium price rallied and near tripled from the 2003 low of $145 an ounce. This chart shows a suddem boom of investment interest in palladium starting in the second half of 2003. One or a few big players suddenly sees a great investment opportunity in palladium, and started load up all the ounces the Russians sell. Clearly this secret player is determined for a really long term gain, unswayed by any temporary market up or down. All the Russian palladiums are being hoarded by and not sold to industry users. What this player sees that we do not see? For one thing we know Russians will eventually run out of their stockpile(and Pretty soon, too!). There will be a shortage by then;For another we know several emerging new applications that will make palladium HUGE. Smart money saw the potential before any one else and they are betting big time on palladium, and probably for very good reasons.

2.Fuel Cell applications. Fuel cell is a hot topic today. Every one talks about fuel cell and the exciting prospective of wide usage. But few realize that fuel cells use platinum and palladium for catalyst, and palladium is used to store and purify hydrogen. You can not make fuel cell without palladium, period. Fuel cells are making big move into the portable device market, like cell phones. Imagine a cell phone that can go months without recharging? It's becoming reality very soon and will make a huge debut, maybe later this year. It must consume lots of palladium. But the real biggie is hydrogen fuel cell battery powered vehicle, several big auto makers put many billions of dollars into fuel cell vehicle research and it is coming into reality fast. I do not know how the world can supply enough platinum and palladium to make all the fuel cell vehicles? But I guess auto makers are betting on the possibility that technology may one day reduce the amount of PGM metals used per fuel cell, and that skyrocketing price of the PGM metal may stimulate exploration activity so people go dig more PGM mines to satisfy the demand.

3.Palladium jewelry demand. Palladium jewelry is booming. There is a revolution going on that people suddenly discover palladium to be such an awesome metal suitable for making jewelries. It's more affordable than platinum, more durable and rigid than gold, less heavy than platinum so bigger pieces can be made. Jewelry makers instantly fall in love with this metal. Read Mr. Platinum becomes Mr. Palladium!

4.The real huge thing for palladium, I call thermal nuclear explosion, is cold fusion!!! I only recently became aware that cold fusion MUST use palladium due to the metal's affinity to hydrogen and deutrium atoms. Cold fusion was first discovered by two scientists and it shocked the whole world when they announced it in 1989. Most scientists were skeptical and they were quick to dismissed and discredit the research when other research groups had a hard time duplicating the experimental results. But they believed the results were real and continued the research after being kicked out. Over the years hundreds of research groups around the world were finally able to duplicate the experiments, and verified that the cold fusion results are absolutely real although they are difficult to be repeated reliably. Interests are picking up, several startup companies are aiming to release commercial products soon, like D2Fusion. And even the American Physical Society arranged separate sessions dedicated to cold fusion, during recent annual meetings. Even some Nobel prize winners are convinced of cold fusion and call for research funds to study the subject.

Cold fusion is huge, once commercialized, cold fusion will provide virtually limitless energy and possibly put an end to the looming energy crisis caused by depletion of fossil fuels. It could easily drive the palladium price up to thousand times that of the price of gold, and it will still be cheap when cold fusion provide you with the tremendous amount of energy.

Where would SWC stock price be if cold fusion becomes a reality? They will be rich enough to send a private science exploration team and beat NASA to reach the Mars first and search for new palladim mines on the new planet!!!

Buy SWC on monday while it is still dirt cheap. And hold the shares tight. This is something HUGE that you must hold for long term gain! Somebody knows it's huge. The some body who loaded up ever ounces of palladium that the Russians are too stupid to sell so cheaply. The somebody who relentlessly knock SWC price down so you are forced to sell and so they can load your shares. Don't be fooled. SWC has a very bright future!

7 comments:

Tim said...

No end in sight for the POS -- I sold mine today, the trading gods are not happy with this one. I am lucky didn't have too many shares otherwise a 30% decline since I bought--next time I ll use my better judgement and stops!! More to come probably

JJ2000426 said...

Tim:

I am sorry you become the statistics of the victims that big boys want you to become. They want to shake you out so they can either unwind their short positon, or load up more cheap shares. You probably sold at the rock bottom. Earnings will be released monday evening and it will be great.

You really need to see the big picture of palladium bull, and see where we are going. I can't tell you where the bottom is. But I can tell you, as far as future stock price of SWC, sky is not even the limit! I hope you spend time read through everything I say on this blog, and then decide if you want to load back your shares on monday. If you don't buy back on monday, you will, in a few weeks or a few months. But you will pay much higher.

I currently own enough SWC shares to buy a whole brand new house. I would never put such a big stake in one single stock if I am not firmly convinced of the palladium super bullish outlook.

Calex said...

The last three months of selling in SWC has nearly cut the stock price in half, but I continue to see the selling as overdone. Even if they miss earnings and deliver bearish surprises in the call, I think SWC will hold up over the next six months. Bad news would probably send the stock lower, but probably not for very long. As beat up as this stock issue is, its destined to revert to the industry mean. I think there is probably at least 15% of upside to come this year, if not much more. If you are correct and they release a bang-up quarter this week, the stock will definitely soar.

Cold fusion (LENR) is interesting. There have been many experiments with multiple instances of positive power density results, but there is still a ton of debate and confusion. The science used to perform the experiments is basic and there are abundant resources of heavy water in the Earth's oceans. This will aid the commercialization of LENR as a power source when that time comes. However, although the science behind the experiments is simple, the results cannot be explained with any known theories in chemistry or thermodynamics. There is definitely a reaction, but no one really knows why or how. Commercialization of LENR is probably 10-20 years away, but it does have great potential. I think demand from the auto industry and possible supply constraints via the Russian stockpile distribution will have a much greater effect on the price of palladium over the next three years.

I remain cautiously optimistic as earnings approach early this week.

JJ2000426 said...

Regarding cold fusion, any one with decent science train should know that under existing theory framework cold fusion is just impossible. So one would automatically become a skepticist to begin with until he/she is convinced by observed experiment results. I have not seen the experiments myself, but the fact that hundreds of skeptical scientists became convinced and became enthusiastic in cold fusion research, tells me something.

Cold fusion experiments are hard to conduct because it involves real nuclear reactions. Such reaction will release tremedous amount of energy which probably concentrate within some very small spots. The intensive heat may destroy the crystal structure and prevent the experimental effect from continuing.

They did observe some partially melted palladium electrode. At melting point of 1100 degrees centigrade, it's got to take some very intense concentrated heat to partially melt the metal. That must be nuclear energy.

I agree that cold fusion should really be some long term factor. Short term, we already have enough stuff to believe in a bullish prospective of palladium.

JJ2000426 said...

Some dlalaa meantioned "To better understand Norilsk's original acquisition of SWC and how the Bush Administration fits into the picture, Google "the Carlyle Group and Stillwater Mining". This will tell you the story and it will help you better understand the real deal."

Here is what I find:
Aug. 9, 2004: Stillwater Mining by Tess Ellis.

Oct. 5, 2004: Still selling us out for fun and profit by Tess Ellis.

Nov. 16, 2004: The Bush-Putin-Gold Connection

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