Rare earths stocks are surging once again today, this time on speculation that the U.S. may respond to China?s move to stockpile rare earths resources with a stockpiling effort of its own. China, which controls 95% of the export market for rare earths, has been bolstering its domestic supplies of the materials used in dozens of high-tech gadgets even as it slashes exports, in turn boosting prices.
Rep. Mike Coffman, R-Colo., has introduced a bill that would establish a quasi-government inventory built from U.S. production sources, according to the Wall Street Journal. Investors are cheering the news as the Rare Earths Stocks Index is up 7.2%.
A national defense argument could be made for U.S. stockpiling of rare earths resources because the U.S. consumes about 5% of global rare earths supply for military purposes, the Journal reports. Coffman proposed similar legislation in 2010 that died.
If Coffman?s efforts bear fruit this time around, it could mean a boon for the already hot rare earths sector. Colorado-based Molycorp (MCP), the largest U.S. rare earths miner, is up 7% today and has gained 39% in the past month. Avalon Rare Metals (AVL) is up 5% and Lynas Corporation (LYSCF) and Market Vectors Rare Earth/Strategic Metals ETF (REMX) are both up 1%, but the Index juggernaut today is Rare Element Resources (REE) with a surge of 12%.
Investors can track the Rare Earths Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
LYC Price at posting:
$2.39 Sentiment: LT Buy Disclosure: Held
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