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Dear Readers,

Have you ever heard of the term ‘better late than never”?

It’s arguably the very best term of phrase to use when describing the reaction across Western governments to this.
Source – Financial Times

I find the whole thing ironic, as it seems the west in particular have gladly walked blind into this ‘trap’ for over 30 years now.

Now more than ever though, with the world constantly being told that our future will be shaped by the AI revolution, the widespread adoption of electric vehicles and the push for more clean energy, these rare earth minerals are vital.

Because without them none of the above will ever happen. However, behind the ongoing tariffs, trade wars, and export controls, there is a silver lining here.

Because the longer these machinations go on, the more opportunities you can have to play it. Which I shall show you in a moment.

So, what exactly is going on?

From the above article.

The Trump administration now seems to have realised that in the game of trade poker with China, it is Beijing that has the ace up its sleeve.

This month, the US extended the 90-day truce in its trade war with China for another three months. As a result, China currently has more favourable tariff rates with the US than Switzerland or India.

Beijing’s ace is its near monopoly on the production of rare earths and other critical minerals that provide vital inputs to western industry and the US military.

At the substantial cost to their natural environment, given the pollution that refining these minerals causes, China has placed itself at the centre of rare earths supply globally. No nation on earth can come close to replacing what they provide.

And because our elected officials have decided that widespread adoption of artificial intelligence must now be regarded as a race to win, this has produced a very specific set-up.

Which is where we take up the story now.

Who always chickens out?

It only took two whole days past the April 2nd ‘Liberation Day’ tariff announcements from Trump for China to basically say “Check, and mate”. In retaliation, China put the clamps on rare earth exports.

The effect was immediate.

European and US car makers were affected, with the CEO of Ford admitting the shortage of rare earths used to produce magnets had forced the company to shut down factories.

Cue the first instance of the TACO trade (Trump Always Chickens Out) and Trump relenting and asking the Chinese directly to lift the ban, which then lifted markets.

The result was a truce between the two countries regarding tariffs.

This was a power play between the two most powerful nations on the planet over control of a vital resource. It was also a show of who really has the power here.  It’s not the United States. How could it be when its opponent is responsible for 70% of rare earth and 90% of rare earth processing?

That dependence on an opponent has finally led to the US and western countries to act, after decades of inaction.

There are signs of increased urgency in Washington and Brussels. When Trump recently announced a framework for a peace deal between Rwanda and the Democratic Republic of Congo, he stated “We’re getting, for the United States… a lot of the mineral rights…as part of it.” He also put pressure on Ukraine to hand over mineral rights, in return for US support.

Along with gaining ‘rights’ (in other words, capturing the economic rents of other countries) we also see the highly unusual direct investment by the US government into American rare earth producers.

See the following headline on this subject.
Source – Financial Times

The Pentagon is now buying large tranches of common stock in companies such as MP Materials. To ensure critical supply chains, they are also negotiating offtake agreements which guarantee the purchase of all magnets for 10 years.

Folks, I must tell you – this news is seismic. Rarely do you see the worlds strongest country so overtly interfere in the price discovery of one of the world’s most important commodity markets like this.

What is has done however is create a set-up that professional traders are absolutely taking advantage of. The good news though is that you can also join in here! Here is why.

First, the fundamental point: the US government is placing a hard floor on prices of rare earths. This is to stop the (inevitable) Chinese retaliatory tactic of flooding the market with excess supply to force prices down.

This means we have another supported market for these rare earth minerals. One that is immune from market fluctuations because there is a (large) buyer of last resort.

Professional traders in the market instantly recognised what this meant. They knew this was bullish for the share price of rare earth producers.

Let’s bring up a chart of a company that’s made the news recently, the Australian rare earth producer Lynas (ASX – LYC).
Source – Optuma

Let’s apply one of our tools (borrowed from W D Gann, a legendary Wall Street trader in the early 20th century) to analyse what’s going on here.

To see the opportunity that was coming out of all of this, let’s wind back to the start of 2023.

As you can see from the chart above, prices ranged between A$6 and A$8 for over two years (see the price action within the green channel).

This was potentially a channel of accumulation when smart investors were slowly buying up stock.

This accumulation lasted about two years.

Now, we are talking about this with the benefit of hindsight. How do we know that the stock was being accumulated? The clue is in the right side of the chart, as we moved into 2025. We see a series of higher lows (green arrows) – forming a rising wedge.

That is a sign, potentially, that something important is about to happen because the price is now not being permitted to go back to the previous lows before the stock is being bought up again. This is a bullish sign.

The chart below shows what happened next.
Source – Optuma
After the accumulation came the explosion upwards, out of the green rectangle.

Note the breakout bars, the retest of former highs for support, then buyers piling on once the Pentagon made its announcement concerning investment into MP Materials.

Can you see how the chart makes it look like the market knew something important was coming in advance of the news?

After two years of accumulation and six months of higher lows we got the all-important news. Here is how this US government’s intervention has affected the stock market.

The agreement with MP Materials was announced July 11th – that was your cue to bring up your chart. If all you did was read the news, you’d be completely unaware the market had already prepared for such news to break.

By reviewing the chart you’d have worked out earlier this year that this was a stock you should been interested in adding to your own watchlist.

The chat – if interpreted correctly – can tell you what’s about to happen.

And if you know that, you can use it to your investment advantage.

But executing this sort of investing profitably is not easy. It requires skill to identify the set up, and then to correctly trade it, manage your entry, reduce your risk and so on.

My point here is this; are you aware of this method of trading? If not, I believe you should learn it.

Becoming our newest member of the Boom Bust Bulletin can help. Previous (and future) editions have covered (and will cover) this method of trading. It is arguably one of the best ways to trade the real estate cycle.

History tells us this cycle will end like all others that preceded it; with brand new money (credit) moving into speculative activities, like the stock market. Only I didn’t think that the main driver of it would be the US government.

They have now brought into select rare earth companies as well as AI companies such as Intel, and they are now mulling direct investments into defence companies.
Source – CNBC
Folks, this is a genuine trend now. Read the news, then open a chart. If the correct technical pattern emerges, then you can trade it profitably.

If you don’t know how to do that safely, I know where you can learn it.

Sign up now.
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team

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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.