“Beware, be wary,” said King. “It is a minefield, even for people who know a little bit about what’s going on.”
The rare earths sector is notoriously opaque, but it’s seeing increased investor interest this year due to the trade war between the US and China.
Speaking at the Sprott Natural Resource Symposium, Byron King, editor of Whiskey & Gunpowder at Agora Financial, said that, although the market can be difficult to understand, there are opportunities available for investors who are willing to put in the research.
“This is a tough sector, a lot of people have lost a lot of money,” he said on the sidelines of the show. “Beware, be wary. It is a minefield, even for people who know a little bit about what’s going on … It is a very tough field to wrap your arms around.”
King suggested that those who want to get into the space focus on companies that have weathered the recent tough times in the industry.
“I would rather have people coming in who’ve been in the business for years, who have a track record — they raised money during the tough times, they kept their science going, they kept their engineering going, they kept their ideas flowing, they kept their contacts going,” he explained.
“Beware of any of these quick, ‘just add water’ kind of projects. Don’t go near them until they’ve been pretty scrubbed by people who have been following the industry. Stick with some of the names that have been around for awhile.”
Speaking about how investors can hone in on good stocks, King suggested that it’s important to look at the technologies that companies are pursuing.
“We’re going to see several, I’ll call them North American, ideas really come to the forefront in terms of — these are small companies, but small companies with really great ideas, really great intellectual property, and we’re going to see some very novel thinking in terms of where we’re going to get our rare earths.”
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.