Rare Earths Miners: A Bullish Call, a 30% Rally
Last July, Elliott waves called for a rally in this ETF after an “intermediate-term consolidation”
by Bob Stokes
Updated: January 20, 2022
Rare earth elements are a group of seventeen chemical elements that occur together in the periodic table.
In the industrial world, they are used in cell phones, computers, televisions, automobiles, jets and many other products -- so they are highly prized and the demand for them has rapidly grown in the past sixty years, starting with the advent of color television.
China accounts for about 60% of the world's rare earths with the U.S. at just over 12%.
And yes, "there's an ETF for that," as the saying goes. Indeed, there's more than one ETF that tracks stocks of mining companies that specialize in rare minerals, and our July 2021 Global Market Perspective focused on one of these ETFs.
That issue of the Global Market Perspective showed the price pattern of the VanEck Vectors Rare Earths/Strategic Metals ETF, REMX, a fund that "tracks the overall performance of publicly traded companies primarily engaged in mining, refining and manufacturing of rare earth/strategic metals" (CNBC).
Last July, our forecast said:
[Rare earths miners] may offer an intermediate-term opportunity.
Fast forward to this chart and commentary from our January 2022 Global Market Perspective:
The VanEck Vectors Rare Earths/Strategic Metals ETF appears to be completing another intermediate-term consolidation... The ETF recently found support.
The updated commentary also included Elliott wave analysis, which is available to Global Market Perspective subscribers in the current, January issue.
The point in showing the chart is that, indeed, the opportunity that the July 2021 Global Market Perspective mentioned did pan out. By now, REMX had climbed in value by nearly 30%. And, as of this writing, it is trading even higher.
Even so, a Jan. 14 Reuters article says:
A bipartisan piece of legislation introduced in the U.S. Senate on [Jan. 14] would force defense contractors to stop buying rare earths from China by 2026...
Is this bad news for rare earths exchange-traded funds? Well, keep in mind that Elliott Wave International's review of history strongly suggests that news and events do not drive financial markets. Rather, the real driver is investor psychology, as reflected by the Elliott wave model.
Get our Elliott wave analysis of REMX, along with other ETFs -- and the main stock indexes in the Asian-Pacific, Europe and the U.S.
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Many of the 50-plus worldwide financial markets it covers are at pivotal junctures -- in other words, their chart patterns show price trends that are likely on the verge of an abrupt and dramatic change.
Get ready to avoid risks and embrace opportunities in 2022 -- a year which our analysts expect to be historic.
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