After closing at more than $31 last Monday, shares of rare earth stock USA Rare Earth (USAR 8.36%) closed lower on each subsequent day of the week. And the trend doesn't seem likely to reverse its trajectory today with optimism rising over the weekend that the United States and China would reach an agreement regarding China's rare earth exports.
As of 11:54 a.m. ET, shares of USA Rare Earth are down 11%.
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A framework has rare earth investors frazzled
U.S. officials signaled yesterday that a framework had been reached for a deal with China that addresses American tariffs on steel and Chinese rare earths export restriction, according to Reuters. As a result of the discussions, China seems prepared to delay the implementation of controls on rare earth exports for one year.
NASDAQ: USAR
Key Data Points
Investors have bid U.S.-based rare earth stocks higher recently amid growing speculation that China, the global leader in rare earths production, would restrict its exports of highly sought after minerals.
Should investors click the buy button with the bottom falling out of USA Rare Earth stock?
News that the U.S. has reached a tentative agreement with China regarding rare earths is coming to the chagrin of USA Rare Earth investors, contributing to the mining stock's sharp decline today. To dismiss the stock on the news from the weekend seems shortsighted, though.
Developing a rare earth magnet production facility in Oklahoma, USA Rare Earth has the potential to help the U.S. shore up its domestic supply of rare earths. Whether China has export controls in place or not certainly won't deter the company from proceeding with its development plans, and with these minerals remaining in high demand for the foreseeable future, USA Rare Earth stock remains a great opportunity for those comfortable with the risks associated with its development of the magnet production facility.
