Once again, the rare earth companies are exploding higher today, thanks to a big media push from MolyCorp. Before you get excited though…
There are really good reasons to be sceptical of the mainstream thinking.
This presentation from economist Ed Dolan provides the best, most-concise explanation of the issue that we’ve seen.
It basically comes down to this:
- Yes, China does control 95% of rare earth production.
- But that’s mainly because it has the loosest environmental regulations. They are in abundance all around the world.
- Rare earths aren’t really that rare… they’re more prevalent than gold.
- And demand over the long-run is elastic. Companies are in fact finding alternatives to them.
So before you jump into the rare earth ETF to ride the bubble, at least get some background.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.