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!