Van Eck launched a new ETF seeking to capitalize on the headlines surrounding concerns over a controversial China quota restriction (embargo) on Rare Earth metals out of China. There are several such metals that are needed for high tech industries and applications ranging from weaponry to GPS systems and without these metals, both technological and military progress and supply could be brought to a screeching halt. While China claims there’s no embargo, their restrictions on exports of these materials have driven the prices for certain metals into the stratosphere – up close to 1000% in some cases. As such, the timing couldn’t be better for the launch of an ETF seeking to capitalize on further price increases. The combination of headline hype coupled with the cache of alternative investments for the masses has gotten the attention of the retail investor. The problem is, there are only a few select companies that could even be considered a remote pure-play on Rare Earth Metals. I listened in on a Bloomberg interview last night with a Van Eck representative and they did qualify that the fund also holds non-pureplay companies, and hence the name “Market Vectors Rare Earth/Strategic Metals ETF”.
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