Rare Earth Stocks are Looking Hotter than Salma Hayek in a Bikini

Rare earth stocks are looking good this week.  

This, thanks to trade war escalations that have non-Chinese rare earth producers looking hotter than Salma Hayek in a bikini.

Especially when you consider that the global auto industry is almost completely reliant on a steady supply of rare earths from China.  Make no mistake: China’s got the world by the short hairs when it comes to rare earth metals. 

If you don’t know, rare earth metals are required for a variety of auto components, including: 

• Lights
• Power Steering
• Throttle bodies
• Alternators
• Automatic Transmissions

This is particularly worrisome for electric car manufacturers, by the way, which require about twice the amount of rare earth metals than internal combustion vehicle manufacturers.  

6 Rare Earth Stocks to Watch

As if China’s EV sector wasn’t already gobbling up global market share at an incredibly rapid rate, restricting rare earth exports puts the Middle Kingdom’s strongest EV companies in a position to further dominate.

Of course, it doesn’t really matter whether it’s EVs or internal combustion.  Without rare earth metals, vehicle manufacturing comes to a screeching halt. 

As reported in Reuters, the head of a trade group representing some of the biggest car brands in the US, sent a letter to the Trump administration, warning of catastrophic results if trade negotiations regarding rare earth metals weren’t worked out soon. 

“Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras,” the Alliance for Automotive Innovation wrote the Trump administration.

The letter, which also was signed by MEMA, The Vehicle Suppliers Association, added that, without those essential automotive components, it would only be a matter of time before U.S. vehicle factories are disrupted.

“In severe cases, this could include the need for reduced production volumes or even a shutdown of vehicle assembly lines,” the groups said.

Indeed, trade wars have consequences.  Especially when those who start them believe they have more leverage than they actually do.

Of course, when it comes to investing, crisis always equals opportunity.  And this is especially true for rare earth producers outside of China.  Even the ones that are years away from even starting production.  Here are a few to keep an eye on in the coming weeks …

• MP Materials (NYSE: MP)
• Aclara Resources (TSX: ARA)
• Energy Fuels, Inc. (NYSE: UUUU)
• Mkango Resources (TSXV: MKA)
• NioCorp Developments (NASDAQ: NB)
• Ucore Rare Metals (TSXV: UCU)

And as I mentioned earlier, this headache for US and European automakers is only going to increase the value of Chinese EV makers, including …

• BYD (OTCBB: BYDDY)
• NIO (NYSE: NIO)
• XPeng (NYSE: XPEV)
• Li Auto (NASDAQ: LI)

Invest accordingly. 

Jeff

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