In recent months, there has been a lot of discussion about the importance of amplifying the domestic production and supply chains for rare earths in the United States. Given that China maintains a significant hold over the global market, the U.S. looking to increase its own rare earths presence makes a good deal of sense.
Advisors and investors may be looking at these developments and consider investing in ex-China rare earths due to geopolitical tailwinds. However, doing so would only be half the story: rare earths are also very much in high demand right now.
See More: Reworking the Rare Earths Supply Chain With Sprott’s REXC
Three Sectors that Need Rare Earths to Thrive
While there are many, many different use cases for these materials, many of the primary applications tend to fall into three buckets. To start, rare earth materials are highly difficult to substitute in the construction of a number of different products of the defense sector. This includes aircraft, missiles, ammunition, anti-missile defense, drones, tanks, and much more. And given the ongoing conflict in the Middle East, it’s likely that the defense sector, and many products that require rare earth materials, will remain in high demand.
The defense sector isn’t the only one which rare earths provide a critical role for. Rare earths are employed in the construction of a variety of different things in the technology sector, including electric vehicles, robotics, and consumer electronics. Crucially, the ongoing AI buildout is largely reliant on rare earths, both for data center construction and for semiconductor manufacturing. With AI demand likely not slowing down any time soon, this may prove to be a fortuitous tailwind for rare earths.
Last, but certainly not least: rare earths also have a crucial role to play in the energy sector. Rare earths are used to construct components within nuclear power plants, grid systems, and wind turbines. The energy sector is obviously an essential one, and already there is a growing demand to amplify output in order to match the ongoing AI buildout. Again, this is yet another tailwind that can work in favor of rare earth materials.
REXC: Fostering Rare Earths Exposure Outside of China
The Sprott Rare Earths Ex-China ETF (REXC) can help investors and advisors acquire focused access in the rare earths industry. Notably, REXC is the only ETF available that offers a distinct focus on this specific industry.
See More: Sprott Launches REXC: The First Ex-China Rare Earths ETF
True to its name, REXC invests in companies that are operating outside of China. This allows the fund to tap into federal policy working in favor of domestic production and supply chains, while seeking favorable tailwinds across the three different sectors.
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The Sprott Rare Earths Ex-China ETF is new and has limited operating history.
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