It's Time To Invest In Rare Earth Metals : LIT, MCP, AVL, XING, CHGS

Given the turmoil in the Middle East and crisis in Japan, investors have once again run to the safe haven assets of precious metals and oil. In this flight to quality, many higher risk assets are quickly returning to bargain basement levels. One such opportunity is directly correlated with Japan's high tech economy. Despite the fact that long term rare earth metals prices are soaring, stocks in the sector have plummeted on fears that the tsunami would eradicate demand in Japan. However, these fears have provided a long term opportunity for investors before the rare earth crisis intensifies.

Building Blocks of High TechnologyWhile Scandium, Gadolinium and Yttrium don't exactly roll off the tongue, these minerals form the building blocks of high technology. From slick flat panel TV's and cell phones to wind turbines and MRI machines, these strategic metals are finding their ways into our daily lives more and more. Terbium is one of the key ingredients in low-energy CFL light bulbs and it takes roughly one ton of neodymium for every megawatt of generating capacity a wind turbine has. Hybrid cars use up to 25 pounds of these precious metals in their advanced electric motors in order to increase efficiency. Currently, worldwide demand outside of China for rare earths totals about 60,000 tons per year. Chinese Domination
Demand for these materials is only increasing as populations continue to grow. The market value for strategic metals is expected to reach 200,000 tons by 2014, or roughly valued at $2 to $3 billion. Chinese requirements of rare earths are forecasted to exceed supply by 2012. These supply and demand imbalances are a real cause for concern. Mostly due to its incredibly lax environmental policies, China currently produces more than 95% of global supply of rare earths. During the second half of 2010, China slashed export quotas by 72% and for 2011, the first round of export permits saw cuts of 35%. These cuts have caused prices to skyrocket. One ton of neodymium is quickly approaching the $180,000 mark. (more)