why goldman report is important

First let me say if you have the steel and time horizon of a Warren Buffet, then this report has little value to you. Most of us as emotional human beings have a strong aversion to enduring financial pain over extended periods of many months.

The Goldman Sachs report is actually two reports. One is an industry overview and the other is the analyst buy reco on LYC.

The industry report makes the point that its not too late to invest in rare earths. It also is quite clear they state the market should return to balance in 2013. While not mutually exclusive, most people don?t box themselves in with so little room to maneuver. To me the second statement does mean it's probably too late to invest in REEs. Interestingly they are very wrong on the the market returning to balance in 2013. Its just not credible the market could return to balance before 2014 and much more likely it would be back in balance in2015 or even 2016.

So either Goldman thinks they know something or someone from investment banking prompted investment research to write the report in some way that would be perfectly legal of course. I have no idea which.

The second point is that that Goldman Sachs knows very well the situation in Malaysia. Certainly they have the resources to meet with Malaysian officials that no one on this board does and to reach cabinet level officials a lot easier than most other investment bankers.

This buy reco is a gift for them if it turns out Malaysia is only a one month affair, and a nightmare if it drags on. In such a high profile recommendation I find it hard to believe they don?t feel they know that Malaysia will not drag on beyond the one month. They have no reason to accept the embarrassment to themselves three weeks from now if they are wrong, nor do they have an incentive to screw some of their clients for the benefit of others.

Clearly they put the overview report together and glossed over some of the issues and put it out with internal inconsistencies. However it doesn?t matter what the industry outlook says if you think you know the outcome of a governmental decision whose uncertainty has taken the stock down from $2.60 to $2.00.

So while an explanation of the inconsistencies in the overview is only 50% favorable to investors, the timing of the buy recommendation overides the considerations in the overview report. Their recommendation of the stock in the face of the coming decision in Malaysia this month, suggests strongly to me that yesterday was THE most advantageous time to buy and that's what I did.