05/03/11 Baltimore, Maryland – In the midst of the longest commodity boom since 1997 (see below), the hottest commodities right now are, alas, without a corresponding ETF.
Nor can sophisticated investors trade it in the futures market. But there is a way you can still make money in what appears to be an aggressive uptrend:
The blue line represents the price of neodymium – used in everything from portable headphones to hybrid cars. The red is samarium – an essential metal for precision-guided missiles.
Both are rare earth elements – under the tidy production grip of our friends in China. You’ll recall China slashed rare earth export quotas 35% at the start of this year… on top of a 40% cut six months earlier. World prices for many of these minerals have doubled in 2011… on top of a fourfold increase last year.
New developments make it look as if this trend is with us to stay…
As we’ve been detailing, one after another, attempts to break the Chinese stranglehold are smacking head-on into obstacle
- Lynas, an Australian firm, and a former Byron King favorite, attempted to open the world’s largest rare earth refinery in Malaysia but ran headlong into stubborn regulators. An operating permit is being withheld as protesters raise alarms about the rare earth ore’s radioactive contamination – which is naturally occurring, and low level. Approval has been delayed six months
- Toyota’s running into its own regulatory roadblocks trying to partner up with companies to mine and refine rare earths in Vietnam. The deal was announced last fall, but now production won’t get under way till 2013
- In Japan, Dowa Holding’s attempts to recycle rare earths from old electronics is proving more difficult than first thought. Its factory is up and running, recycling 19 metals – but no rare earths.
The Chinese have even upped the ante again too. As of April 1, new taxes on rare earth miners were imposed. What used to cost producer 50 cents per kilogram of refined product now costs $8.
Addison Wiggin
for The Daily Reckoning
Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
More empirical research on the effect of the ante can help arise new key points on this topic. Well done…again. Congratulations again on a good job Addison.