MP News 'Like Semi-Nationalization'
Friday, 8/01/2025 09:01
Welcome to the strategic future of critical commodities...
I AM MOVED to write this article because what started out in 2023 as theory in NFTRH, is now reality,
says Gary Tanashian in his Notes from the Rabbit Hole.
Especially so, given the administration and party in political power.
While there have been many instances of benefit to the US critical materials mining industry since Trump took the White House, July drove home the point as news regarding MP Materials (MP), also highlighted in 2023 as a key player in a future new reality, has in essence been semi-nationalized and prioritized by the US government as a closed-loop producer and processor of critical commodities.
In this case, Rare Earth Elements.
Reuters, 10 July:
"MP Materials unveiled a multibillion-Dollar deal with the US government on Thursday to boost output of rare earth magnets and help loosen China's grip on the materials used to build weapons, electric vehicles and many electronics.
"Under the deal, which sent MP's shares up nearly 50%, the US Department of Defense (DoD) will become the largest shareholder in Las Vegas-based MP, making it Washington's most high-profile investment to date in the critical minerals sector."
On the announcement noted above, MP was up 44% on massive volume. As to the chart, the stock did not establish an uptrend until Q4, 2024. It rode that uptrend until recently breaking upward into its current "future is now" status.
While I have traded MP, mostly successfully since 2023, I did not hold the stock until the day before this explosion. There is a lesson here.
While I had advised in NFTRH the weekend before that I was looking to buy the pullback/flag, I almost did not buy it back. Luckily, I decided not to be miserly to try to catch every nickel, adding it just above support. The self-loathing I'd have today had I not bought it back would have been substantial.
So the lesson is that in the current macro it is best to identify the main themes and trends and make like Old Turkey (from Reminiscences Of A Stock Operator) and sit tight. You can trade yourself right out of a major opportunity.
While MP has issued big time news, there are other critical commodity producers and prospectors out there. They require patience, but in light of the MP news, maybe not as much patience as might have been expected.
It's a global war and strategic asset-grab. First visualized in 2023, but amid the current US political environment and its effects on the global political environment, the future is now. That future extends beyond REE into other critical (to varying degrees) commodities and resources like Copper, Uranium, Nickel, Platinum/Palladium (PGM) and even, potentially, Thorium.
If interested, it is time to be studying up on which companies are the most viable in each of those areas, whether they be in production, development or exploration. As for PGM, I prefer to simply buy the metals. But the real levered gains will be in finding the right companies prospecting for and producing these materials. Proof? Well, simply look at MP.
Note: The above is not the writing of a perma-tout, parroting "commodity super cycle" til the cows come home. I believe in managing the markets we have, not the markets we want.
So while there are still caveats to the idea of a new multi-year commodity bull (hint: watch the Silver/Gold ratio, because silver's commodity-like aspects relative to gold can give that ratio 'early indication' status), you can believe that this article is written by someone who simply wants to be right, no matter the macro backdrop.
As to that notion, I do believe that subject to one more potential macro liquidity problem, the future is now.
While I think an interim liquidity crisis is more likely than not (acting as the trigger to future inflationary Fed policy), it is not a sure thing and a new critical commodity bull may well have already started.
Our current positioning is the product of doing quality top-down macro work before deciding on sectors and individual equities.
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