Volatility Reports August 18, 2025

Overlooked but critical bullish base

Quiet Storm: China’s Grip on Critical Minerals

The spotlight on niche themes like rare earths and critical minerals, is not new. The stocks in this class all show climatic peaking action. However, our new bull thesis has a broader pulse: the Shanghai Composite Index—and leveraged vehicles like YINN. Contrary Thinker’s outlook calls for it to outperform Western peers during the next bear (see MarketMap™ weekly for timing update.)

Structural dominance still runs through China’s veins:

Rare Earth Elements:

• Claim: "80% of the world's rare earth minerals" - This is slightly exaggerated. China currently controls around 69-70% of global rare earth production, not 80%.

Gallium and Other Critical Minerals:

• Accurate: China controls 94% of global gallium supply and 83% of germanium.

• Recent Export Restrictions: In December 2024, China banned exports of gallium, germanium, antimony, and superhard materials to the United States.

Impact Assessment:

• Mixed Results So Far: Analysis shows China's export controls on gallium, germanium, and graphite haven't significantly disrupted US supply chains yet, with China's shares of US imports not moving much.

• Alternative Routes: Despite export restrictions, germanium and gallium are still reaching the United States through indirect trade routes.

China's Commercial Leverage Over the USA

Based on the research, China's main areas of commercial leverage include:

Critical Minerals Dominance:

• China accounts for over 95% of the world's production of rare earth processing technology

• Controls 94% of gallium, 83% of germanium, and 56% of antimony globally

• These materials are essential for semiconductors, EVs, wind turbines, and defense equipment

Strategic Export Controls:

• China announced strict export controls on critical minerals amid the tech trade war, posing significant economic and national security risks

• Export restrictions were implemented as direct response to US technology restrictions on China

Supply Chain Vulnerabilities:

• The US remains heavily dependent on Chinese supplies for these critical materials

• These restrictions highlight worries about the dependability of critical mineral supplies

Assessment: While China does have significant leverage through its control of critical minerals.

This gives Chinese equities—and by extension, the Shanghai Composite—structural insulation many Western portfolios lack. For investors seeking to shift capital before a Western bear hits, the narrative isn't just about rare earth ETFs anymore—it’s about steering exposure through China’s broader equity engine.

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USA & China

Here’s a curated list of ETFs that deliver rare-earth or critical mineral exposure—spanning U.S.-listed and China-focused funds:

U.S.-Listed ETFs

• VanEck Rare Earth and Strategic Metals ETF (REMX)
  Focuses on producers, refiners, and recyclers of rare earths and strategic metals—deep exposure to both U.S. and Chinese players. Champions include MP Materials, China Northern Rare Earth, Lynas, Albemarle, and SQM

What is clear from the screen of the list is 90% of them are fully exploited as seen here.

From here it is a wait and watch game plan with a shift in focus