USA Rare Earth: A Magnet for Volatility

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It’s funny, isn’t it? How a company mining the very materials meant to solve problems can, itself, be such a problem for investors. USA Rare Earth (USAR 9.05%) has been doing a little dance this week, a sort of jitterbug of gains and losses, and I’ve been watching it, mostly because my cousin, bless his heart, went all-in on this stock after reading a particularly enthusiastic press release. He’s convinced it’s the future. He also thought Beanie Babies were a sound investment, so I take his optimism with a grain of salt – a large grain, preferably Himalayan pink.

The source of this latest wobble? The White House, naturally. Vice President Vance announced a plan – a trading bloc, aimed at pushing back against China’s dominance in rare earth minerals. The idea is to establish “reference prices” – which sounds terribly sophisticated, until you realize it’s just a fancy way of saying “price floor.” My aunt Mildred, who collects thimbles and understands these things, explained it to me over Thanksgiving. It’s all about leverage, she said, brandishing a miniature porcelain shepherdess. I mostly nodded and tried not to make eye contact.

On the surface, this seems…good for USA Rare Earth. They’re sitting on a pile of these minerals in Oklahoma, and a price floor should, theoretically, protect them. Except, investors are apparently less concerned with theoretical benefits and more concerned with, well, everything else. It’s like offering someone a free umbrella during a hurricane and then being surprised when they ask about flood insurance.

It’s Complicated (Isn’t Everything?)

There are actually two things happening here. First, “Project Vault,” a $12 billion national stockpile of critical minerals. That’s what sent the stock up initially. It’s a comforting thought, I suppose, that the government is preparing for some sort of industrial apocalypse. It also means someone, somewhere, is making a tidy profit off of panic buying. It’s the American way.

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Then comes this trading bloc announcement. It sounds supportive, but investors seem to suspect it could backfire. A price floor might just encourage other countries to find alternative sources, or worse, to flood the market with cheaper materials. It’s a bit like trying to hold back the ocean with a sandcastle. And honestly, I suspect they’re right. The market has a way of punishing good intentions.

I also suspect some investors are simply reconsidering the upside of Project Vault. It’s a lot of money, yes, but a stockpile is, by definition, a temporary measure. Once the vault is full, what then? Does USA Rare Earth become a permanent supplier, or does the government simply move on to the next shiny object?

Don’t Read Too Much Into It (Or Do, If You Like)

So, today’s dip is understandable, especially after Tuesday’s surge. It’s just…a lot of noise. Plans are subject to change, and even the best-laid plans often end up looking ridiculous in retrospect. Remember New Coke? Or Google Glass? Or my cousin’s Beanie Baby collection?

The important thing, as far as I can tell, is that USA Rare Earth still has those minerals. And they’re still planning to start producing magnets later this year. That hasn’t changed. Whether that will be enough to justify the current valuation is another question entirely. I’m not a financial advisor, of course. I just observe things, and occasionally write about them, usually while trying to avoid eye contact with my cousin.

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2026-02-04 23:12