Rare Earth Comeback?

[Click on the picture above to watch Murray analyse some rare earth stocks that have started to climb sharply over the past few weeks. He will help you to learn how to use technical analysis to spot companies that are due to recover from sharp falls.]

Rare earths went through the roof in 2011, creating a short-lived spike in a lot of rare earth related stocks. That rally fell back to Earth with a thud, and rare earth stocks have all suffered a huge correction in their prices over the last few years with a few false starts all being snuffed out.

So, it is a brave person that puts his/her head above the parapet and calls a turning point in these stocks. But there are green shoots appearing in the sector from a technically important zone in most of the stocks. Fidelity turned up as a 5% shareholder in a little rare earth hopeful recently and perhaps that is the reason for the spurt of buying in the sector over the past few weeks.

FREE report: Why ‘Nano Metal’ could soon be Australia’s most valuable export.

I show you what the code of that stock is and show you several stocks in the sector with viable projects that have all seen strong buying interest in the past month or so.

Rare earths and in particular NdPr (Neodymium & Praseodymium) are used in electric vehicle batteries and wind turbines, with demand expected to steadily increase over the next few decades. The market is projected to double in volume by 2025 with an approximately 50% price increase over the same period.

Many of the rare earth stocks on the ASX have been pummelled to the point where an investment in them could be seen as a call option without expiry. It is a high-risk area of the market to look at, but with a long enough time horizon and with some due diligence on the various projects, there should be a few stocks worth investing in that make it into production and get rerated a lot higher by the market.


Murray Dawes,
Editor, Alpha Wave Trader

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Murray Dawes is the Editor of Pivot Trader and contributing Editor at Money Morning. He was one of five, from 5,000 applicants, chosen for a graduate position with the Swiss Banking Corporation — now part of banking giant UBS. The bosses quickly cottoned on to his potential and pushed him up the ranks as a futures broker on the floors of the Sydney Futures Exchange. Murray later broke out on his own and developed custom trading systems to trade leveraged financial instruments like futures. Due to his success, Murray became the ‘hired gun’ trader for Australia’s rich and famous. Today, Murray runs a trading service through Fat Tail Investment Research to help everyday Aussie investors use his advanced trading methods.

Money Morning Australia