Rare earth minerals are an integral component of modern technology, including hybrid and electric vehicles, wind turbines and solar panels. Unfortunately, rare earth minerals are highly volatile commodities which may prove challenging for retail investors to invest in successfully.
China currently meets 97% of global rare earth demand and controls 99% of heavy rare earth reserves, such as terbium and dysprosium. To conserve scarce resources, China has even limited exports.
Investment in rare earth metals typically involves stock of companies that extract and produce them, including Freeport-McMoRan and BHP Group that specialize in rare earth production. There are also exchange-traded funds (ETFs) which give investors broad exposure to rare earth mining companies such as VanEck Rare Earth/Strategic Metals ETF (REMX) or Optica Capital Rare Earths and Critical Materials ETF (CRIT).
These funds can provide an ideal diversifier for portfolios consisting predominantly of base or precious metals stocks, with low price volatility and the potential to yield high returns when demand and supply dynamics align correctly. But due to mining stocks often being illiquid and their companies being notoriously secretive, retail investors might be the last ones aware when supply or demand disruptions arise;
Investors seeking rare earths exposure should prioritize large players with strong exploration and production capabilities and proven profitability records over multiple years, such as MP Materials (MP), Rare Element Resources (REEMF), Lynas Rare Earths (LYC), as well as Australia's Lynas Rare Earths. The REMX fund allocates nearly 26% to Chinese stocks due to China's dominant position; however, recent momentum on rare earth policy could make its relevance less relevant in future.
When it comes to investing in rare earth metals, there are two ways you can approach it. Either you can directly invest in companies mining these elements or buy exchange-traded funds (ETFs) offering exposure.
ETFs are traded just like stocks, offering investors access to a diversified basket of investments. For instance, the AuAg Essential Metals fund gives investors exposure to mining companies producing copper, lithium and nickel; such metals may be utilized by green tech and emerging technologies as key building blocks - potentially making this ETF an intriguing addition to any portfolio.
Market Vectors Rare Earth/Strategic Metals ETF (REMX) provides direct exposure to rare earths. This ETF tracks the performance of companies engaged in the exploration, extraction, processing and sales of rare earth and strategic metals - such as Molycorp, Lynas and Avalon - involved with this sector.
Rare earth investments may seem alluring, yet these commodities pose their own set of risks. First and foremost, they aren't as closely correlated to other investments, causing additional volatility within your portfolio. Furthermore, mining these metals has an environmental impact - so unless purchasing directly from their source it might be wiser to go with companies who recycle these precious metals instead.
http://theglobe.net/the_worlds_most_visited_web_pages_492.html
Rare earth elements are utilized in numerous modern technologies, including batteries for hybrid and electric vehicles, catalytic converters, televisions and computers. Their use continues to expand as nations strive to reduce air quality pollution while decreasing fossil fuel dependence. Investors can capitalize on these trends by investing in companies mining or processing rare earth elements; although physical rare earths may not always be available due to illiquid markets; one solution may be investing in rare earth metals mutual funds instead.
These funds are professionally managed, offering exposure to mining companies that produce rare earths. By diversifying your portfolio with rare earth funds, investing can potentially increase long-term return potential.
VanEck Rare Earth/Strategic Metals ETF (REMX) provides investors with an excellent way to gain exposure to rare earths. It tracks companies that specialize in production, processing and transportation of rare earth minerals like neodymium, cerium and ytterbium. Although China holds 26% weighting within this ETF due to being its predominant rare earth producer, that risk is partly offset with 50% combined Australian/U.S. stocks weightings.
Other rare earth mutual funds include AuAg Essential Metals Fund and AuAg Precious Green Fund, both providing exposure to mining companies that extract these metals. Both funds offer low correlations with other assets and could make an attractive addition to a diversified portfolio.
As the global economy transitions towards green economic growth, rare earth metals will play a pivotal role. From lasers, LED lights and computers to wind turbines and electric vehicles; as well as national security applications like radar technology, jet engines and missile defense systems; their influence is expanding every day.
As demand for metals continues to increase, investors have various means of taking a position in this long-term trend. Both VanEck Green Metals ETF (GMET) and the VanEck Rare Earth/Strategic Metals ETF (REMX) provide access to companies involved in producing, refining or recycling rare earth elements.
Mining these materials can be dangerous. Prices can spike unexpectedly if supply is interrupted, and extraction processes can have serious environmental repercussions. Plus, investing in one miner may not remain profitable over time.
Some investors are turning toward companies that recycle rare earth metals as an investment vehicle. American Resources Corp (AREC) and Purdue University have formed an alliance to recycle neodymium from end-of-life magnets into high-purity neodymium for green energy and electric vehicle applications, while Metal Tech Recycling Corp (MTRX) and Geomega Resources (GOMRF) both reprocess rare earth elements from spent magnets - meaning their stocks offer much greater price stability compared with mining companies.