The New Precious Metals!
We may be headed for war. A resource war.
But it won’t be over oil, or spices, or water or any of the other things that previous wars have been fought over. No, the next war is more likely to be over rare-earth elements (REEs).
Unless you’re a geologist, you may not recognize them by name:
Holmium … Scandium … Promethium … Neodymium (you may have seen magnets made of this last one in your local hardware store).
But REEs are not earths. They’re metals.
And they’re not actually rare. They just don’t tend to accumulate in one place like the famous Comstock Lode of silver or the Homestake Lode of gold.
Which makes them difficult and expensive to extract in large quantities.
What makes these elements so valuable is they’re used in virtually every important electronic technology sweeping through the world right now …
The smartphone you have in your pocket, for example, contains no fewer than eight rare-earth elements …
… while each F-35 fighter jet has about half a ton of them.
And demand is rising rapidly. The global REE industry is expected to nearly double from $8.1 billion in 2018 to $14.4 billion in 2025.
The problem? China has a VICE GRIP on the world’s supply.
The problem is compounded by the fact that most raw ore ends up in China anyway … for processing!
The U.S. currently relies on China for 80% of its rare-earth imports. That became a major issue after former President Trump started a trade war in 2017 … and Beijing threatened to cut its exports.
China is increasingly using its rare-earth stranglehold as a geopolitical weapon. In a punitive move against Japan, for instance, China reduced its rare-earth exports by 40%.
The sad thing is the U.S. was the world’s top producer of rare-earths up until the 1990s when China flooded the market.
The U.S. has 1.4 million tons in known reserves of rare-earths in California alone, in one of the largest rare-earth deposits in the world.
So, while we’re starting from behind, we can catch up.
Last year, the U.S. introduced two critical metals acts: the Onshoring Rare-Earths (ORE) Act of 2020 and the American Critical Minerals Exploration and Innovation Act.
The ORE Act covers six key critical materials — rare-earths, scandium, lithium, cobalt, graphite and manganese. It supports buyers of rare-earths and miners from U.S. deposits only. It does this with tax deductions of up to 200% of the cost paid by buyers of U.S.-produced rare-earths and outright grants of up to $10 million to miners.
The American Critical Minerals Exploration and Innovation Act, meanwhile, streamlined the permitting processes for mine development.
Plus, the National Defense Authorization Act (NDAA) directs most Pentagon systems to use rare-earth metals that have been mined and refined outside of China within five years and dictates that the federal government gives preference to U.S. suppliers of these materials in government acquisitions.
Finally, in December 2020, Congress passed (and former President Trump signed) a $2.3 trillion pandemic aid and spending package. What the heck does that have to do with rare-earths?
Well, tucked away in the 5,593-page bill was more than $800 million to fund rare-earth and strategic minerals research.
The new administration has pledged to continue supporting exploration of rare-earths and other critical minerals.
So, with increasing demand …
And limited supply…
You have a classic formula for making money!
How much money?
Just look at this chart for one of my best picks …
As you can see, the VanEck Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX) is defying gravity, up more than 40% since the beginning of the year despite a recent pullback.
That’s more than double the return of the SPDR S&P Metals & Mining ETF (NYSE: XME), and it leaves the S&P 500 itself in the dust.
With this ETF, you get the upside and exposure of a reemerging industry with limited downside risk from a single project running into complications.
And don’t worry about the pullback. Nothing travels in a straight line. Heck, if you don’t own REMX yet, it’s a buying opportunity.
But for even more potential upside, my new report, “The New Precious Metals,” gives you the scoop on three mining companies on the leading edge of the rare-earth revolution …
Company 1 is the only current pure play for North American REE mining.
While it’s still forced to send ore to China for processing (for now), it’s going to be the biggest immediate benefactor from the U.S. grants (the Department of Defense recently awarded $9.6 million to this company to help develop its California mine).
Company 2 is actually a U.S. uranium miner.
But it’s been approached by several entities (including the U.S. government) to process monazite sands. Monazite contains both uranium and rare-earth minerals.
Company 3 is a global miner of industrial metals. It just started up a new processing plant to extract high purity scandium oxide from the waste streams of titanium dioxide production.
Scandium’s applications include solid oxide fuel cells, lasers, lighting products and as a component of high-performance alloys.
Output is expected to ramp up to three tons of product annually (about 20% of the current global market), not counting future modules that could increase capacity even more.
Rare-earths are a sleeping giant because they’re the backbone for the technology driving the biggest megatrends ahead.
If the past is any prediction, there is massive 200%+ upside!
All the best,