Keep an eye on rare earth trades, like the Van Eck Vectors Rare Earth ETF (REMX).
At the moment, China controls 80% of all rare earth metals used in the United States, which means we’re incredibly reliant on their supply. Without it, key industries – robotics, 5G, solar panels, your iPhones, electric vehicles, and other civil and military technologies – suffer.
In fact, without enough supply we can’t make electric vehicles, iPhones, iPads, F-35 jets, Patriot missiles, and a host of other products that must have rare earths. For example, up to 27% of rare earths are used in the production of neo-magnets, which are absolutely essential in all electric vehicles. Apple for example uses several rare earths in all of its products – including neodymium, praseodymium, and dysprosium.
But with tensions mounting with China, they could easily restrict the supply we need.
For example, in recent weeks, China threatened to sanction firms including Lockheed Martin, Boeing Defense, Raytheon as well as individuals and entities that are involved in arms sales to Taiwan. “It sends a clear signal that China’s decision-making won’t be disturbed by the US and any acts that have undermined China’s sovereignty, security and development interests are bound to face serious consequences, analysts said,” as noted by Global Times.
Then, just days ago, President Trump banned Americans from investing in Chinese companies that may be owned or controlled by the U.S. military.
“Smartphone maker Huawei and Hikvision, one of the world’s largest manufacturers and suppliers of video surveillance equipment, are among the blacklisted companies. Some of the other companies listed, including China Telecom and China Mobile, trade on the New York Stock Exchange,” as noted by CNN.
Unfortunately, this isn’t the first time China has threatened such action.
Each time a threat is made to restrict rare earth, prices and related stocks explode higher.