MRT is really crowded today. Think most are preparing for the long holiday on Friday... no seat and no internet means some time for review of my current portfolio positioning review. Today, I'll talk about a rare metals.
If you ever conversed with me, you will know how bullish I am on gold. And well gold prices spiking is a fact, 114% gains for the past 12months. You would have easily doubled your portfolio.
In the field of rare metal commodities, there is however a few other raw metals that fell off the radar. One such metal that I am going to start researching on is Dysprosium.
Most of us would have chanced upon this name if we took chemistry classes seriously, I know for one that my chemistry teacher told me I was a goner for my exams. So if I do type an ill informed statement about the characteristic of the element, do let me know.
To my understanding, Dysprosium is a China dominated market, dominated might be an understatement. 98% of the market belongs to China, and beyond just mining, the challenge lies in refining for next stages in the supply chain.
Now, this might sound like any rare metal problem, lithium has similar issues. Heck, we see in the news every other day how lithium and cobalt mining is causing more environmental damages and loss of human lives due to dangers associated with the mining process. What makes Dysprosium different from Lithium is that it's used in many of the chips, well in a different form. Enter Neodymium, something that when alloyed with Dysprosium, forms the strong magnets that we see in our high "tech" world. From wind turbines to electric vehicles, and practically anything semi conductor as you also find them in lithography.
The production of Neodymium by China is 80% of the world's supply. Now, if both elements are controlled by a single entity and that very entity is faced with tariff, what will she do? Well, she can stop export and tell the world, "in that case, go refine the metals yourself". Sure, US can start ramping up production and refinement, but the much higher costs and lack of machinery makes a long lead time to viable levels of production to support the already crippled demand of semiconductor chips.
My view? Prices of US made chips will indeed go up, but can they continue to push frontiers and technology as they had? Maybe not, the lack of supply the raw materials essential for development is now no longer available. Just like how US tried to cripple China with semiconductor restriction and GPU control, now the dragon fights back by stopping the creation of chips outside of their country. I expect to see a very near term pull back of prices, steep pull back of prices in fact once this money merry go round pops. China on the other hand, hardware tech companies will start to rapidly climb, innovate techniques and catch up with whatever nanometer transistor gate there is now.
$BGF WORLD GOLD "A2" (HKDHGD) ACC(LU0788108826)$ $FRANKLIN GOLD & PRECIOUS METALS "A" (SGD) ACC(LU0498741890)$ $SCHRODER ISF GLOBAL GOLD "A" (SGDHDG) ACC(LU1223083913)$
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