Ongoing discounting becomes a vicious spiral that absorbs all stakeholders. While customers wait for a sale announcement to even visit a store or its website, employees expect discounts to compensate for poor internal choices and weak efforts. The strategy is simply not sustainable.
This may very well be a turning point for the commodities market. As many investors exit commodities and some altogether abandon hard-assets-only strategies, there are others with a growth appetite for just that. What might be a natural resource disaster for some is turning out to be a perfect storm for others.
In April 2012, when the company increased its reserves by 36% at its Mountain Pass mine in California, research analysts enthusiastically hailed the mine as now having potential to last “a little beyond forever.” Molycorp’s stock peaked at $79.16 in May 2011.