As the world's two largest economies, the United States and China have always had a complicated relationship. However, recent tensions between the two nations have reached unprecedented heights – with trade wars, military standoffs, and verbal sparring becoming commonplace. While this may seem like cause for concern for most investors, those invested in rare earth stocks can see a golden opportunity emerge from these tensions. In this blog post, we'll take a closer look at why rare earths are so important to both countries and how investing in them could be an incredibly lucrative move in today's volatile market environment.
SourceMoneyGuru-https://www.mgkx.com/4300.html
Introduction: Escalating Conflict Between the U.S. and China
Since the early 2000s, China has been the world’s largest producer of rare earth minerals, which are critical components in a wide range of industries and technologies, including defense, renewable energy, and consumer electronics. In response to an American trade complaint, in 2010 Beijing began to limit exports of rare earths, resulting in a dramatic increase in global prices and worries about a potential international shortage. The United States Rare Earths Policy Act of 2012 called for the development of domestic rare earth production to reduce dependency on China.SourceMoneyGuru-https://www.mgkx.com/4300.html
In recent years, tensions between the United States and China have escalated over a number of issues, including trade, intellectual property theft, and Chinese militarization in the South China Sea. These tensions have led some American officials and commentators to call for a more confrontational approach towards China.SourceMoneyGuru-https://www.mgkx.com/4300.html
The Trump administration has taken a number of steps that are seen as escalating the conflict between the United States and China. In March 2018, President Trump imposed tariffs on imported steel and aluminum from a number of countries, including China. In June 2018, the Trump administration imposed tariffs on $50 billion worth of Chinese goods in response to what it sees as unfair Chinese trade practices. The Chinese government responded by imposing tariffs on $34 billion worth of American goods. In September 2018, the Trump administration imposed tariffs on an additional $200 billion worth of Chinese imports; China responded with tariffs on $60 billion worth of American imports.SourceMoneyGuru-https://www.mgkx.com/4300.html
The escalating trade war between the United States and China has caused concern among businesses and consumers in both countries. American companies have been hit with increased costs due to the tariffs, while Chinese businesses are losing access to the valuable American market. Consumers in both countries have had to pay more for goods as a result of the tariffs.SourceMoneyGuru-https://www.mgkx.com/4300.html
Going forward, it is unclear whether these tensions will be resolved through negotiation or if they will continue to escalate into a full-blown trade war. Both sides are deeply entrenched in their positions and unwilling to back down, leading some commentators to fear that a resolution may not be possible. It remains to be seen how this escalating conflict between the United States and China will play out in the months ahead.SourceMoneyGuru-https://www.mgkx.com/4300.html
What are Rare Earth Metals?
Rare earth metals are a set of 17 chemical elements in the periodic table, specifically the 15 lanthanides plus scandium and yttrium. Lanthanum, praseodymium, and neodymium are often collectively referred to as heavy rare earths, while the lighter rare earths include cerium, europium, gadolinium etc.SourceMoneyGuru-https://www.mgkx.com/4300.html
The term “rare earth” is a misnomer; while they are not especially abundant in the Earth’s crust (comparable to cobalt or molybdenum), they are relatively plentiful compared to many other materials. They are however dispersed and not often found concentrated in ore bodies. In addition, extracting and separating rare earth elements from each other is notoriously difficult and costly, which contributes to their scarcity.SourceMoneyGuru-https://www.mgkx.com/4300.html
Rare earth metals have a wide range of uses. They are used in phones (e.g., neodymium magnets in earphones), computers (e.g., hard drives), clean energy (e.g., wind turbines), cars (e.g., hybrid vehicles), medical equipment (e.g., MRI machines), and more. The unique properties of rare earth metals – such as being strong yet lightweight – make them indispensable for many applications that we rely on today.SourceMoneyGuru-https://www.mgkx.com/4300.html
China is currently the world’s largest producer of rare earth metals, with its dominance stemming from two main factors: geological endowment and low labor costs.SourceMoneyGuru-https://www.mgkx.com/4300.html
What is Behind this Tension and Why is it Beneficial for Rare Earth Investors?
As the world's two largest economies, it's not surprising that the US and China have a strained relationship. The US-China trade war has been well-documented, with each country slapping tariffs on billions of dollars' worth of goods. But the tension goes beyond trade, with the two countries fights over issues like intellectual property theft, military expansion in the South China Sea, and human rights abuses.SourceMoneyGuru-https://www.mgkx.com/4300.html
So why is this tension beneficial for rare earth investors? Because as these two superpowers butt heads, they are increasingly relying on their own domestic sources of rare earths. And that means there is a growing market for rare earth stocks.SourceMoneyGuru-https://www.mgkx.com/4300.html
China is by far the largest producer of rare earths, accounting for about 85% of global output. But it has been slow to open up its reserves to foreign investment. That's starting to change though, as Beijing looks to shore up its domestic supply chain in light of the trade war. Meanwhile, the US has just a handful of rare earth mines, and is heavily reliant on imports from China.SourceMoneyGuru-https://www.mgkx.com/4300.html
The Trump administration has made it a priority to reduce this dependence, and has been working to revive rare earth mining in the US. There is a huge opportunity for companies that can get into this space early and establish themselves as reliable suppliers outside of China. So if you're looking for a way to profit from the US-China tensions, investing in rare earth stocks is a great place to start.SourceMoneyGuru-https://www.mgkx.com/4300.html
The Current State of the Rare Earth Market
There is no doubt that the U.S.-China trade war has led to increased tensions between the two countries. The conflict has escalated in recent months, with both sides imposing tariffs on each other's goods. However, this may actually be a good thing for investors in rare earth stocks.SourceMoneyGuru-https://www.mgkx.com/4300.html
The current state of the rare earth market is one of uncertainty. Prices for rare earth metals have been volatile in recent years, and it is difficult to predict where they will go in the future. However, there are a few factors that could lead to higher prices for rare earths.SourceMoneyGuru-https://www.mgkx.com/4300.html
First, the U.S.-China trade war has led to an increase in demand for rare earths from China. This is because Chinese companies are using more rare earths in order to produce goods for export to the United States. As a result, prices for rare earths have risen in China.SourceMoneyGuru-https://www.mgkx.com/4300.html
Second, the Trump administration has placed restrictions on Chinese imports of rare earths. This has led to a decrease in supply of rare earths available to buyers in the United States. As a result, prices for rare earths have risen in the United States as well.SourceMoneyGuru-https://www.mgkx.com/4300.html
Third, there is increasing concern about the environmental impact of mining and refining rare earths. This has led some buyers to prefer to purchase recycled or responsibly sourced rare earths rather than new ones. This has put upward pressure on prices for recycled and responsibly sourced rare earths.SourceMoneyGuru-https://www.mgkx.com/4300.html
Overall, the current state of the rare earth market is one of uncertainty. However, the factors mentioned above could lead to higher prices for rare earths in the near future. This could be a good opportunity for investors in rare earth stocks.SourceMoneyGuru-https://www.mgkx.com/4300.html
Pros and Cons of Investing in Rare Earth Stocks
When it comes to investing in rare earth stocks, there are a number of factors to consider. Here we take a look at some of the pros and cons associated with investing in these types of stocks.
On the plus side, rare earth stocks tend to be relatively undervalued compared to other types of stocks. This means that there is potential for substantial capital gains if the market for rare earths picks up. Additionally, many rare earth stocks also offer exposure to a number of other valuable commodities, such as uranium and thorium.
However, there are also some risks to consider before investing in rare earth stocks. Firstly, the sector is still relatively new and immature, meaning that it may be more volatile than other markets. Secondly, many of the companies involved in the rare earth industry are based in China, which could pose geopolitical risks.
How to Pick Winning Rare Earth Stocks
The trade war between the U.S. and China has been escalating for over a year now, with no end in sight. This tit-for-tat conflict has led to tariffs on billions of dollars’ worth of goods from both countries. The U.S. has targeted Chinese products that range from construction materials to consumer electronics. In response, China has placed tariffs on American soybeans, pork, and automobiles.
The Trump administration recently took Things a Step Further by declaring a national emergency over the “threat” posed by Huawei Technologies Co Ltd, one of China’s leading tech companies. The U.S. government then put Huawei on a blacklist that prevented it from doing business with American firms. Google quickly followed suit, suspending Huawei’s access to Android updates.
This ratcheting up of tensions between the world’s two largest economies creates an opportunity for investors in rare earth stocks. Rare earth metals are a group of 17 elements that are essential for many high-tech applications, including smartphone batteries, magnets in electric vehicles, and missile guidance systems.China controls about 80% of the world’s supply of rare earth metals, so any disruption to Chinese exports would cause havoc in global markets and send prices soaring.
Here are some tips for picking winning rare earth stocks:
1) Look for companies with exposure to multiple rare earth metals: While China may control the vast majority of global supply, there are other countries that produce rare earth metals like the United States, Russia, and Australia. Look for companies that have a diverse exposure to various rare earth metals in order to protect your investments against price fluctuations.
2) Invest in companies with technological know-how: Rare earth processing is a complex process, so it’s important to look for companies with expertise in this area. Companies with extensive experience and technological capabilities will be better positioned to take advantage of any price increases due to the trade dispute.
3) Diversify across multiple stocks: Rare earths are a small sector of the stock market so it’s important to diversify across multiple stocks in order to spread out risk factors.
4) Follow news and rumors related to trade tensions: The escalation of trade tensions between China and the U.S. has had a significant impact on rare earth prices over the past year. Following news and rumors related to this conflict can give investors an edge when deciding when to buy or sell their positions in rare earth stocks.
Conclusion
As the tension between the US and China continues to rise, investors should stay up-to-date on current events in order to identify potential opportunities for rare earth stock investments. While it is impossible to predict what might happen in a conflict, investors can take advantage of any arising trends or market fluctuations due to increasing political tensions. Investing wisely in rare earth stocks at this unprecedented time has the potential of yielding significant returns if done properly and with careful consideration. Ultimately, only time will tell how these events unfold, but armed with knowledge and vigilance, there is no telling how much profit one could make from these geopolitical shifts around the world involving the US and China.
