Rare Earths: Why Markets Hinge on These 17 Metals

Modern economies rely on a small group of metals called rare earth elements that most investors rarely think about—at least until something goes wrong. These metals play a critical role in many of the most important technologies of our time, from smartphones and fighter jets to advanced cancer treatments and electric vehicles.

What's challenging is that rare earth supply chains are unusually geographically concentrated, and refinement, processing, and recycling is particularly difficult. As a result, supply constraints can quickly morph into crises, creating serious delays—or worse—for entire industries with direct economic and market influence.

Governments and companies worldwide are pushing to secure lasting supplies of these elements, but for investors, monitoring the rare earth metals market is a logical step, given their outsized market impact. Directly investing in rare earth metals can be a challenge, however, as there's no centralized rare earth metals market like there is for commodities like gold or oil. In this article, we'll do a deep dive into why financial markets often hinge on rare earths, how to monitor the market for these metals, and the limited ways investors can gain exposure and potentially hedge supply disruption risks.

Rare earth elements (REEs) are a group of 17 metallic elements that share similar properties and are almost always found together in nature. Despite their names, these silvery-white, soft, heavy metals are relatively abundant in various regions worldwide. However, they're rarely found in concentrated deposits, and they're difficult to separate and refine into usable forms.

REEs are valued for their unique magnetic, optical, and catalytic properties. These characteristics make them difficult, if not impossible, to replace in the production of many modern technologies. Many REEs are essential for making powerful magnets, advanced metal alloys, precise optical lenses, and state-of-the-art electronics like electric motors and lasers.

The table below outlines each rare earth element and highlights where they're commonly used in modern technologies and industries, demonstrating just how reliant modern economies are on these metals.

Rare earth elements represent a tiny fraction of global commodities markets, but their economic and market impact is immense. These 17 metals play a critical role in many burgeoning and geopolitically important industries, including electric vehicles, renewable energy systems, semiconductors, defense applications, and more. In many cases, they represent a small share of the product or technology's total cost but are still essential to performance, meaning supply shortages or disruptions can have extreme economic and market impacts.

When access to rare earths becomes an issue, companies face higher costs, delays in production, and potential product redesigns. This can affect earnings and valuations across multiple sectors of the market. In 2025, for example, China's temporary export restrictions on key rare earth elements left automakers worldwide scrambling to find alternative sources, even forcing some to temporarily halt production lines.

Rare earths are also a hot button issue in geopolitics, impacting trade policies and burgeoning markets—like AI and automation. Efforts to diversify and fortify supply chains are likely to shape global trade as well as corporate and fiscal spending trends for years to come. That's why understanding the role rare earths play in modern economies is crucial for investors looking to better assess risks and market opportunities.

It's crucial that investors monitor the rare earth metals market not only because they're so widely used and critical to various industries, but because rare earth supply chains are highly concentrated, leaving them vulnerable to disruption from trade tensions, policy shifts, and operational issues.

China has dominated the rare earth mining business for decades. And while there has been a push to diversify global supply chains, in 2024 the country still accounted for nearly 70% of rare earth metal production via mining. This dominance forces many developed and developing nations to import most of their rare earth metals. The United States, for example, imported 70% of its rare earth compounds and metals from China between 2020 and 2023, according to the USGS.

The extent of this concentration becomes clearer when looking at rare earth mining data. The chart below, showing 2024 data, highlights how only a small number of countries continue to dominate global rare earth output.

Governments worldwide, particularly in developed markets like the United States, Canada, and Europe have accelerated their efforts to diversify rare earth supply chains, framing the issue as both an economic and national security issue. They've made efforts to do this through trade policy and stockpiling and by identifying new reserves that could expand domestic production capacity.

Reserves are critical for future rare earth supply chains. In mining terms, reserves are geological deposits containing rare earth elements that are considered economically viable to mine. Known rare earth reserves, however, remain concentrated just like mining and refining capacity, with China dominating the global market.

For investors with an interest in how rare earth metals impact markets—or for those invested in companies that rely on these elements—monitoring the market means watching signals rather than headline prices alone. Consider the following tips:

• Follow geopolitics and trade policy. Rare earths are highly sensitive to export controls, tariffs, and diplomatic tensions due to their concentrated supply chain. Government policy announcements related to mining permits, processing incentives, or technology exports can influence the market just as much as demand. Developments in China, the United States, and the European Union are closely watched due to their outsized roles in production, refining, and consumption of rare earths.
• Track prices (with caution) as well as supply, demand, and trade flow. Tracking the spot prices of rare earth metals is more difficult than other commodities. This is mainly because there aren't single, transparent benchmarks for rare earth pricing. However, many rare earth metal spot prices can be tracked (but not traded) at the Shanghai Metals Market, an independent supplier of metals market intelligence. Just be aware that the data may be region-specific and volatile. Beyond prices, it can be useful to track reports put out by the United States Geological Survey, which cover the worldwide supply, demand, and trade flow of these commodities.
• Monitor industry equity indexes. Consider watching indexes that track the overall performance of companies involved in producing, refining, and recycling rare earths and other strategic metals and minerals. These indexes may provide a gauge of market sentiment and may also reflect supply, demand, and policy trends.
• Watch for demand and substitution trends. Demand from key sectors of the global economy—such as electric vehicles, wind energy, and advanced electronics—drives long-term rare earth metal market trends. Consider monitoring the earnings of companies in these sectors for signs of current and future demand trends. At the same time, it can be useful to keep track of efforts to develop substitutes for rare earths, which could reduce overall demand for these elements.

Unlike oil or gold, it's impossible to directly invest in rare earth metals through commodity markets. There are no widely used futures contracts, and most investors can't physically buy and store the metals. As a result, exposure typically comes through companies tied to the rare earth supply chain. Consider the following ways to gain exposure to rare earths:

• Equity funds tied to the market. There are equity exchange-traded funds (ETFs) that track the performance of companies with exposure to rare earth metals. Typically, these are firms involved in producing, refining, and recycling. Rare earths ETFs can potentially provide diversified exposure to the rare earth investing theme, but it's important to remember that the performance of these funds is influenced by factors like earnings, capital spending, valuations, and market sentiment, rather than just rare earth metal prices.
• Individual stocks with direct rare earth exposure. Investors can buy shares of companies that mine, refine, or recycle rare earths—both domestically and internationally. However, many of these companies may not derive the majority of their revenues from their rare earth businesses, so traders may have to dig deep to identify companies with significant exposure. It's also possible that rare earth price shifts won't materially impact company performance.

In practice, gaining exposure to rare earths can be difficult. Retail investors are largely limited to either ETFs or individual stocks that operate in the market. This leaves them exposed to company execution risk, government policy decisions, and broader stock market conditions, rather than simply supply and demand for rare earth metals themselves. For investors looking to get exposure to rare earth metals, it's critical to set realistic expectations based on these limitations.

Ultimately, while rare earth metals may be a niche corner of the global economy, their impact is anything but small. For investors, following developments in this space can help provide context for broader trends in manufacturing, clean energy, and national security, even if direct investment options are limited. Monitoring government policy chances, supply disruptions, and corporate activity can offer early signals about where risks and opportunities may develop in markets moving forward.