Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22
AI Tech Stocks Current State, Is AMAZON a Dying Tech Giant? - 20th June 22
Gold/Gold miners fundamental checkup - 20th June 22
Personal Finance Tips: How To Get Out Of A Tough Financial Situation - 20th June 22
UK House Prices Relative to GDP Growth - 19th June 22
Will Global Markets Be Pushed Deeper Into Crisis Event By The US Fed? - 19th June 22
Useful Things You Need To Know About Tweezer Top Candlestick Pattern - 19th June 22
UK House Prices Real Terms Sustainable Trend - 17th June 22
Why I’m buying the “new” value stocks… - 17th June 22
Optimize Benefits from R&D in Software Product Development with an R&D Tax Credit Software - 17th June 22
Want To Save On Your Business Energy? Here Are Some Helpful Tips - 17th June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Rare Earth Prices Soaring: Will Miners Play Catch Up?

Commodities / Metals & Mining Mar 09, 2011 - 04:17 AM GMT

By: Jeb_Handwerger

Commodities

Best Financial Markets Analysis ArticleThe Middle East Turmoil has created a sell off in equities and a run to the safe haven assets of precious metals and oil. Even though rare earth prices are soaring, many investors have overlooked a key sector which has pulled back providing a bargain opportunity before the rare earth crisis intensifies.


U.S. House Rep Mike Coffman from Colorado, joined by 28 Republicans and Democrats in the U.S. House of Representatives sent a letter to the U.S. Trade Representative, demanding he file a complaint with the World Trade Organization against China's export reduction policies of rare earths.

Coffman wrote, "...Rare earths are critical to U.S. national security. Currently, the world is nearly 100 percent reliant on Chinese exports ..." Coffman continued in his letter, "While our nation must act to correct our domestic rare earth supply chain problem, we must also recognize that the lack of a level playing field...is harmful."

Coffman mentioned that the United States must act to correct the domestic rare earth supply. Even though there are a few heavy rare earth deposits in North America, there is no separation facility outside China. This facility is crucial in extracting the valuable metal. Avalon Rare Metals (AVL) may be the first to bring separation capabilities, but that is not until 2016. That is still more than four years away so alternative solutions must be addressed. The costs of heavy rare earth oxides are soaring as China cracks down on illegal smugglers and reduces export quotas.

China has made a valid argument that there are rare earth reserves outside of China, that are not being utilized. Although the U.S. may put pressure on China through the WTO, it will only have weight if the U.S. is able to show progress with their own current production capabilities. Foreign governments have come to rely solely on China for key heavy rare earths. Although China provides more than 97% percent of the global supply of rare-earth minerals, its reserves are one-third of the global total. This shows the inaction of our elected officials who have been more concerned bailing out failed banks rather than securing a supply of precious heavy rare earths needed for our most crucial defense technologies. An industry we developed was outsourced to China, putting a foreign nation in the drivers seat.

The recent meeting with the Governor of Alaska, Molycorp (MCP) with the highest levels of the Federal Government shows us hope that leaders are becoming truly aware of how crucial a domestic supply of certain heavy rare earths are to the most innovative and cutting edge technologies. Now we must see if any action comes out from these meetings to assist and fast track our key deposits. There are very few quality assets in the United States that have heavy rare earths used in the magnets of hybrid engines and guided missiles. There are very limited investment options for U.S. investors.

This is not just iPads and iPhones which may be affected. From the tone of the letter and the recent urgency in Washington makes me surmise that there are many technologies requiring heavy rare earths, which may be top secret and classified that are crucial to the U.S. survival. These recent events and legislators expressing that the rare earth shortage is critical to U.S. National Security makes me believe this crisis is far greater than we can imagine.

Yesterday, Japan and South Korea invested $1.8 billion in a Brazilian mining group that is the largest producer of niobium. Niobium is used to make a hard lightweight steel that is increasingly being used to make vehicles more fuel efficient and lighter. Japan and South Korea are seeing soaring prices and are concerned about future cuts from China. Niobium is crucial for these countries to provide the lightest and strongest cars. Outside of Brazil is Iamgold's (IAG) Niobec Mine in Quebec and Avalon's (AVL) Nechalacho Mine which ranks as the third largest niobium deposit in the world. I would not be surprised if we see further investments into this sectors as the shares have significantly underperformed the soaring prices of rare earths.

The Rare Earth Etf (REMX) looks ready for a potential breakout from an inverse head and shoulder pattern. I expect that the mining shares will outperform once again and this etf should go into new all time highs. Look for a breakout through $26 on heavy volume to confirm the next upward leg for rare earth stocks. Look for industry consolidation and monitor this crucial sector which may be overlooked by investors at the moment.

I invite you to partake in my Free 30 day Daily Intelligence Reports on key companies in this rapidly developing sector at http://goldstocktrades.com/premium-service-trial

By Jeb Handwerger

http://goldstocktrades.com

© 2011 Copyright Jeb Handwerger- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in