This chart was found at the very end of a presentation from Rare Element Resources, and in our view it undermines the whole idea that China is going to use up all of its own rare earth metals, and cut off the world.
As you can see, China’s supply clearly exceeds domestic demand, and is expected to do so for a long time. Thus there really is no incentive for them to choke off the world. And of course it’s the “CHINA IS CHOKING OFF THE WORLD” headlines that are driving stocks like Rare Elements Resources and MolyCorp, and every two-bit penny stock with the word “rare” in its name.
Add in the supply in the rest of the world, and there shouldn’t be too many problems.