The rare earth metal stocks such as Molycorp (MCP) and Rare Element Resources (REE) have received much attention of late due to the parabolic runs on concerns that China is hoarding these rare earth metals. While these miners have to yet produce rare earth metals, they are running on pure speculation. Now comes word that Van Eck is launching a Rare Earth Metals ETF (REMX) tomorrow on the NYSE. Will this mark a top to the rare metal momentum? Time will tell, but it seems to be a good contrary indicator to the bull run.
The Rare Earth Metals ETF seeks to track the Market Vectors Rare Earth/Strategic Metals Index which is currently comprised of 24 companies with a market capitalization of at least $150 million. To the right is a list straight from the Van Eck website as of Oct 27th. As you can see, there are a few that are from rare earth metal pure plays such as US based Titanium Metals (TIE) and RTI International (RTI) and many have yet produce an ounce of rare earth metals including top holding Lynas Corp which isn’t expected to begin production until late next year.
Despite the speculative nature of just about every rare earth mining company outside of China (yes you could argue that the China miners are even more speculative!) this is a highly unique niche focused ETF which the market needs more of. With the need for rare earth metals expected to continue to explode in the coming years, it should garner lots of attention now and in the years to come. If nothing else, it’s a great way to diversify, spreading your risk around within a very volatile and speculative sector.