GEM and Rare EarthGold is good, but . . .
However far-fetched this scenario of one country controlling the price of gold may seem, this is exactly what is happening for Rare Earth Elements (REEs). For all the hyperventilation that is happening by investors over the rising price of gold, in the last several months the price increase of a basket of REEs has outperformed gold by leaps and bounds.
According to Metal-Pages.com, price increases for REEs range from Europium, which increased from $485 per kilogram in January 2010 to $590 per kilo in August – a 22 percent increase to Dysprosium, which went up 144 percent from $117.25 to $286.50 over the same period, to Cerium, which increased from $4.15 a kilo to $33.00 over the first seven months of 2010, which is a staggering 695 percent increase.
Of the 17 elements considered Rare Earth Elements, prices have increased an average of 300 percent this year alone.
It is worth noting that while termed “rare,” these elements are not precious metals and are mined in considerably larger quantities than precious metals such as gold. The most expensive Rare Earth metal by weight is Dysprosium at a current value as of September of $305 per kilogram. Gold by comparison is $42,000 per kilo.
While continued global uncertainty has continued to fuel the upward surge of gold prices, the inevitable economic recovery and stability in equity and bond markets will surely put a damper on that ascent. Conversely, economic recovery is only going to increase demand for Rare Earth Elements and with it the basket price for all 17 elements.
Investors who have marveled at the strength of gold may well look at the potential of Rare Earth metals and conclude rare is better than precious.
GEM is in a unique position to have large tonnage of Rare Earths and also a very large holding in Uranium and a great gold and diamond property. Could easily see two dollars in coming months.