the graphite bubble...the australian newspaper, page-2

Graphite bubble

SINCE March last year, we seem to have been blessedly free of market bubbles.

The first decade of this century has seen plenty of such events: the dotcom nonsense, uranium, phosphate, rare earths, lithium, West African gold stocks and Mongolia. Then there was nickel at $US50,000 a tonne (against $US18,900 now).

Tony Locantro sees this present quiet period as reminiscent of 2001-02, during which investors licked their internet/telco wounds (remember all those explorers who threw themselves at the latest hi-tech fads?)

But this greed-abatement period can't last, so the adviser turned fund manager through his Locantro Capital has begun looking for the next bubble. The recent 52 per cent pop in the share price at Archer Exploration (AXE) suggests graphite could be the next cab off the bubble rank.

Stocks have been performing strongly in Canada, too.

Locantro sees graphite following a pattern similar to the lithium bubble of a few years ago and has noted an upsurge in blog traffic flogging this new story, and reminds us that the much in demand lithium-ion battery contains more graphite than lithium.

Coincidentally, on Thursday Hudson Resources (HRS) increased its holdings in Archer to 14.2 per cent. It cited the latter's manganese and other mineral targets, but there is no doubt its graphite project results are driving Archer's price. Hudson is an unusual beast -- a company that primarily invests in other resource stocks. It will be hoping Archer can add a little zing to that portfolio. While, over the past 12 months, its 31 per cent of Tiaro Coal (TCM) has performed well, shares in Australian Bauxite (ABZ), of which it holds 55 per cent, and Sovereign Gold Co (SOC) -- a 52 per cent stake -- have both lost ground