Recent media coverage of rare earth elements has caused questions to arise regarding possible investment opportunities. First of all, it is important to understand what these elements are. The periodic table lists the 16 elements more commonly known as the “rare earth” materials. These elements are relatively plentiful in the earth’s crust and derive their “rare” description from the fact that they are not well concentrated making them more challenging to mine. They are used in a wide-range of technologies including lasers, magnets, fiber-optic telecommunication cables, and batteries.
The United States has been a major producer of them for many years and only recently became dependent on imports from China. Companies such as Molycorp (MCP) are stepping up U.S. operations to address this import concern and growing demand.
For those science-minded investors, the elements are: La-lanthanum, Ce-cerium, Pr-praseodymium, Nd-neodymium, Pm-promethium, Sm-samarium, Eu-europium, Gd-gadolinium, Tb-terbium, Dy-dysprosium, Ho-holmium, Er-erbium, Tm-thulium, Yb-ytterbium, Lu-lutetium, and Y-yttrium.
Mining companies pose a variety of risks to investors and generally fall outside of my recommendations for individual stock holdings; therefore, I will not be making any adjustments to investment recommendations specific to REE but welcome further discussion about them.
Important disclosure: Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
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