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Play Molycorp If You Expect Fed Policy to Change

NEW YORK (TheStreet) -- While Molycorp (MCP) suffers along with its brethren miners of copper, silver, gold, and just about any other commodity but oil, help is most likely on the way from the Federal Reserve.

Analysis forwarded about the impact of the recent World Trade Organization ruling against China regarding its hoarding of rare earths elements at the expense of Europe, the U.S., Japan, S. Korea and other industrial countries won't affect the way China does business in this space, as chemistry veteran Jack Lifton of Technology Metals Research points out to Chemistry World.

However, it serves as a sideshow to the real firepower behind Molycorp's potential for a rising stock price, in our opinion -- future Fed monetary policy. We believe that a coming surprise change in Fed policy is the proverbial elephant in the room that will greatly affect not only Molycorp but all miners of commodities this year.

Though Fed monetary policy has always influenced the behavior of market participants since its inception of 1913, we strongly believe the Fed has been the increasingly insidious primary driver behind the concurrent rise in some asset markets and the fall of others since Fed chief Paul Volker.

The role the Fed now plays during the post-2008 crash no longer can be considered as one of a handful of factors influencing decisions of business, investors and households. It has become the predominant factor in how capital is allocated and who wins and loses in the game of today's neo-Keynesian dogma.

Since the market crash of 2008, the fear of a global deflationary collapse cratered equities, commodities, precious metals, bond yields, housing prices and global GDP growth estimates. We all know the extraordinary response that nearly all central banks deployed to buoy asset prices and restore a modicum of confidence back to investors and consumers that the world wasn't coming to an abrupt end.

More than five years later from the collapse of Lehman Brothers, the effects of Federal Open Market Committee policy of "quantitative easing" "QE," "tapering" of QE and permanent open market operations to support equities prices, lift bond prices and contain commodities prices have enriched every stockholder save mining investors.

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