These Companies Are Receiving “Free” Gold from the Government

By Frank Curzio, editor, Small Stock Specialist (Original Link)

More people are buying electronic devices today than any other time in history.

These electronic devices include mobile phones, personal computers, and tablets. Last year, consumers purchased more than 2 billion “gadgets.” That was a 30% increase from 2010. And most experts predict massive growth in electronic devices well into the future.

This electronic device revolution is great news for Apple. The tech giant sells millions of its signature iPhones and iPads every month. But there is a fundamental problem few people are talking about…

Every two years, consumers replace these devices with new ones. In other words, by 2014, the 2 billion devices sold last year will likely end up in the garbage.

In the past, most old electronic devices made their way into landfills. However, there are just too many electronic products being thrown out these days. Not only are these landfills becoming overcrowded, but some metals inside these electronic devices can also harm the environment.

In the past two years, 12 states have passed recycling laws. Instead of simply throwing these electronic devices away, you must now take them to recycling plants. More states are expected to follow, as landfills are piling up with this “e-waste.”

Only about 20% of electronics are recycled now. Based on new regulation, this number is expected to surge over the next five to 10 years. Instead of being dumped in landfills, most of these old devices will be shipped directly to recyclers.

That’s going to create a windfall…

Recycling used to be a tough business. Margins were small. But all these scrapped gadgets contain expensive metals… like gold, silver, copper, and platinum.

On the surface, each individual phone contains just a tiny fraction of these metals. Not enough for any of us to make big money…

However, 1 million cell phones (what some companies recycle in a year) contain over 35,000 pounds of copper, 770 pounds of gold, 75 pounds of silver, and 33 pounds of palladium – according to the Clean Air Council. Circuit boards (found in computers) contain four times as much gold and twice as much copper as cell phones.

In essence, with their new regulations, state governments are handing away free gold, silver, and copper to recycling companies.

According to one United Nations Task Force, the amount of ore recycling companies will receive “is in the order of 40 million tons, which is enough to fill a line of dump-trucks stretching halfway around the globe.”

At current market prices, that’s roughly $95 billion worth of precious metal – which is about to flood into this small industry.

One of the largest electronic recycling companies in North America is OmniSource. It’s owned by Steel Dynamics (STLD), a company I recommended in my Small Stock Specialist newsletter. We are up 30% on the stock in six months. I still see huge gains ahead.

There are other recycling companies I expect will benefit from this trend. Most have market caps below $2 billion – and are trading at cheap valuations.

Based on new regulations and huge demand for electronic products, recycling companies should make a killing on this trend for years… and even decades.
Good investing,

Frank Curzio

Editor’s note: Frank Curzio just published a special report on the “e-waste” crisis for his Small Stock Specialist readers. He identified two small-cap stocks right in the middle of this massive trend. Both are dirt-cheap and insiders are buying. Frank expects huge gains from these companies inside of 18 months. Learn more about the Small Stock Specialist here.

— The Stock Enthusiast