I think the price of Vein is way under-priced. There are many Forces causing chop to Flake. for example this excellent catch by Ben; Flakers will be subject to China no matter how much they protest too much in my opinion.
Chinese manufacturing expanded the most this year during June, with the closely watched monthly PMI coming in at 51 points. The May result was 50.8 points
ANZ says it is the first time that both the official China PMI and the HSBC reading of Chinese output have come in above 50 points (the expansionary level) since December.
"The rise of both PMIs suggests that the growth momentum has been picking up due to the recent pro-growth policies, including increasing the infrastructure investment and accelerating the budgeted fiscal spending. The rising G3 demand and intra-Asia trade flows have provided positive impetus as well.
In the meantime, the high-frequency data showed that the crude steel output continued to increase in the past two months, consistent with improving sentiment indicators.
"Combining these factors, we believe that China’s GDP growth in Q2 will likely come in above 7.5%, compared with 7.4% in Q1."
I think the Fundamentals are all pointing to a shift from the weaker more spec Flakers to more certain safe harbors exacerbating the market inefficiencies as in the case of TON. I think in my opinion that the imbalance between Flake and Vein is going to throw many things into a spin because it definitely competes with China and is a highly sought after strategic material above all other Graphite.
Technology is driving many things as well as the aging population, I spoke about this on the weekend...
"I think as the Demographic cliff stops everything else we are going to enter an economic downturn never seen before because of the global integration. "Sometimes we stare to long at the door that is closing that we miss the door that is open." (Bell)
The largest generation in history is retiring and taking their money with them.
1/ Life expectancy in the West over the last 100 years has almost doubled from 46 to 80! In emerging nations it has gone from 26 to 70! This drops fertility as a result of longevity. So we have over 45's working and women no longer needing to have 10 children for a few to survive.
2/ The Us birth rates rose 52 % between 46 and 64 and then fell. This created a massive consumption super cycle. Baby boomers are 55 and have to save to 80+ and their saving don't add up! 25% of US population is in this 55 yrs group and spending peaks and falls between 45 and 54 !
3/ The US cannot grow because people are living longer. This applies across the west.
4/ Only people create wealth. Because of the aging population this means growth sectors are the aging population, technology and emerging nations.
5/ China is facing the challenge of allowing the population more control over their government. Most cities and nations have failed in this transition. China is facing a massive property crisis and corruption and unsustainable ventures. Because of the 1 Child policy China's elderly population is exploding without savings. Where is China's middle class? Only 4% of China's workers are earning $20+ a day.
Rich but old - West
Poor but young - India
Poor but Aging - China, Russia
"Metals must redirect its focus; cheap goods for the poor and elderly! Metals must refocus upon the demographics that matter. Focus on the technology, the poor, and the elderly. People have less money but want the lifestyle. Niche markets are where the Metals need to go and all the stimulus packages in the world will only hasten the coming event."
Who is changing?
Who is adapting?
Who is inventing?
During low global growth customers go out of business! Find new customers!
How will metals compete if they go back down to historical levels?
How will companies survive and compete?"
As for Vein and Flake in a imbalance the bubble keeps growing and growing and growing while the other is neglected, mostly for irrational reasons but also because the market likes the safety of a crowd/herd. In an imbalance best practice buys both to reduce risk. This effect drags on the other but also highlights the cream from the rest. I think we could see a number of Flakers suffer and merge and do joint ventures because of this trend if I have it right. I could be wrong and like you Free I try to use logic where ever possible.
I think TONer's need to make the case showing how they are the better leverage of capital compared to their peers especially SYR. (I own a small piece of SYR)
I post this because I am studying TON right now. (Buy enough for 50c and sell at $1 and you will be happy)
Ultimately I think long-termers who like their creature comforts are going to take advantage of the markets complete ignorance of Vein and start acquiring the under-priced Veiners while also holding the Flakers with the best balance sheet picking winners and losers. TON is clearly under-priced but the market is also being very choosey in my opinion.
Anyway thanks Free for your feed back; I thought the same thing as you a while ago.
Kind Regards
PS - DYOR !
TON Price at posting:
40.5¢ Sentiment: None Disclosure: Not Held
(20min delay)