Rare Earth Metals Will Spike Higher in 2010

Rare earth metals had a bumpy ride during 2009. After years in relative obscurity, the investment community suddenly discovered the potential returns from rare earths after the little-known metals were cast into the spotlight by reports that China might restrict exports and cause prices to move much higher. Several rare earth metal explorers watched their share prices double in a matter of weeks and some put in gains of over 400%.

Even if China continued exporting at current rates, demand is rapidly outpacing supply and many are predicting a 40,000 tonne annual shortfall by 2015.
Rare earth metals have significant importance not only to new technologies such as the iPhone and flat screen TVs, but also to clean energy applications like electric car batteries, wind turbines and low energy bulbs. But even more critical as far as Western governments are concerned is their use in high-tech strategic military and defense weaponry. Guided missiles and other precision weapons, for example, rely on rare earth metals and magnets to help direct their course.

With insatiable consumer demand for high tech gadgets, clean energy mandates from countries around the globe and out-of-control military spending, it seems likely that demand will only increase as supplies are threatened. This is the recipe for much higher prices in rare earth metals and the companies that mine them.

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