Iron Ore Price Bubble Essay Example

Iron Ore Price Bubble Essay Example Iron Ore Price Bubble Essay Iron Ore Price Bubble Essay Those who anticipated price bubbles made huge profits. But the key word is ANTECIPATE Therefore, the relevant question is What is the NEXT price bubble? If you dream of profiting from the next price bubble, you should take a closer look at iron ore, which is the mineral used to make steel After 3 years working in metals and mining for Goldman Sacks, I realized some characteristics that lead to price bubble in commodities I will give one example of metals that are already experiencing a price ubble and from there I will show that the iron ore industry has a VERY similar industry dynamics Here is the example: Do you remember the last two rows on the bottom of the periodic table. Those elements are named rare earth metals The rare metals industry 1. Is concentrated: 80% of Worlds supply of Rare earth metals used to come from a single mine in China 2. Has supply constraints: In last December, the Chinese government decided to stop exporting those metals. What happened? Practical results: Rare earth metals prices soared more than 1000% in a few months; farms that worth a few thousand dollars now worth SEVERAL million dollars because of the rare earth metal Similarly, the iron ore industry 1. Is concentrated: 3 big iron ore miners control 80% supply capacity 2. Has supply constraints: The big three control virtually all the expansion in supply Therefore, the suppliers in iron ore industry will make more profits if they reduce supply, in a very similar way to that witnessed in the rare earth metals Iron ore prices are poised to skyrocket. It is going to be a bubble. So buy early, buy now Bullets The Rare earth metals industry First: Is concentrated: 80% of Worlds supply of Rare earth metals used to come from a single mine in China Second: Has supply constraints: In last December, the Chinese government decided to stop exporting those metals. Similarly, the iron ore industry First: Is concentrated: 3 big iron ore miners control 80% supply capacity Second: Has supply constraints: The big three control virtually all the expansion in supply Iron ore price bubble By chofanephilly