AI, Defense, & More: The Case for Investing in Rare Earths

Advisors and investors who have been keeping an eye on recent headlines are likely aware that rare earths are becoming increasingly valuable for countries across the globe. After all, countries like the United States are looking to decouple from China’s dominant position in the rare earth industry by investing in new critical mineral and battery projects. Key Takeaways: - Rare earths are already offering a strong opportunity set due to geopolitical tensions, but the advantages go far beyond politics. - Manufacturing key products in sectors like energy, artificial intelligence, and defense requires these materials. This creates potent long-term demand. - Investors can gain targeted access to ex-China rare earths through the Sprott Rare Earths Ex-China ETF (REXC). That being said, do ex-China rare earths warrant concentrated investment within their portfolios right now? Would this investment be more of a geopolitical play, or are there other factors that folks should be considering? Fortunately, there are plenty of long-term growth factors that can work in favor of rare earths. Rare earths have plenty of industrial applications, which are applicable across a variety of different sectors. As one example, rare earths are currently very necessary for the AI buildout. Rare earths are being utilized in the manufacturing of semiconductors, powerful magnets, amplifiers, and other components. Since AI growth isn’t slated to slow down any time soon, this can be a significant demand driver for rare earths. See More: Don’t Overlook Silver’s Potential Amid the New Gold Rally Applications Beyond Artificial Intelligence Furthermore, the energy sector also uses rare earths. This includes applications within nuclear energy, wind turbines, and more. And considering how energy companies are likewise benefitting from AI momentum, demand for rare earths by this sector will likely not slow as well. Beyond AI and energy, rare earths are a crucial material for the defense sector. They are used in the manufacturing of drones, missile guidance systems, night vision goggles, and much, much more. Given the state of geopolitics at the moment, defense spending isn’t likely to slow any time soon. Tackling the Ex-China Rare Earth Opportunity with REXC Those looking to take advantage of what rare earths have to offer may want to take a look at the Sprott Rare Earths Ex-China ETF (REXC). REXC is a compelling fund from the Sprott team that focuses its investments towards companies domiciled outside of China and the United States. This approach lets the fund tackle opportunities within both geopolitcs and manufacturing. As countries continue to amplify their supply chains to decouple from China, REXC can benefit. Meanwhile, the menagerie of sectors that need rare earths to manufacture key goods and components could help keep demand up in the long-term. For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub. Disclosures An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below. Past performance is no guarantee of future results. One cannot invest directly in an index. Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance. The Sprott Rare Earths Ex-China ETF is new and have limited operating history. Sunrise Energy Metals is one of the holdings of the Fund. It is referenced for illustrative purposes only in connection with a recent publicly announced financing commitment and was not selected based on performance, contribution to Fund returns, or investment merit. Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi. Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM, SGDJ, SLVR, GBUG, METL, and REXC Physical Bullion Funds: PHYS, PSLV, CEF, and SPPP. Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal.