The Rare Earth Gold Rush: How the US-China Deal Could Supercharge Your Portfolio

The US-China trade deal finalized in London this June isn't just a temporary truce—it's a seismic shift in the global battle for control of critical minerals and tech dominance. For investors, this agreement opens a window of opportunity to profit from the rare earth and semiconductor sectors, but it also carries risks that demand caution. Let's break down the moves, the momentum, and where to strike.

The Rare Earths Play: A Race Against Time

The deal's most immediate impact is China's promise to restart rare earth exports to the US—ending a shortage that crippled automakers like Ford and Volkswagen. But here's the catch: China's six-month export license system gives it a chokehold. If tensions flare again, Beijing can tighten the taps.

The silver lining? This deal forces the US to accelerate its “domestic production or die” strategy. Companies like MP Materials (MP)—the only US rare earth miner with end-to-end processing—stand to gain. Their California and Texas facilities, backed by $1.25 billion in government loans, are now mission-critical.

Actionable Idea: Buy MP on dips. But don't stop there—look at Albemarle (ALB), a lithium giant now expanding into rare earth separation, and NioCorp Developments (NCB), which aims to produce neodymium and dysprosium in Nebraska. These companies are building the infrastructure to break China's stranglehold.

Semiconductors: A Truce, Not a Ceasefire

The deal's semiconductor provisions are murkier. The US kept export controls on advanced chip technology, aiming to slow China's AI and military advancements. But by easing restrictions on software like Nvidia's (NVDA) AI tools, the US opened a door for revenue—a win for US tech giants.

Why This Matters: China's hunger for semiconductors isn't going away. Firms with foundry capacity (Taiwan's TSMC) or chip design tools (ASML Holding (ASML), Lam Research (LRCX)) will profit as global demand soars. The US-China pact creates a “licensed” path for US firms to sell to China—provided they don't violate export rules.

The Hidden Risk: China's Leverage and the Clock

Don't mistake this deal for peace. China's dominance in rare earth processing—90% of global magnet production—means it can still weaponize supplies. Meanwhile, US projects like Australia's Eneabba refinery (a $1.25 billion bet) won't scale up until 2027.

The Catch: If China delays licenses or escalates tensions over Taiwan or tech espionage, rare earth prices could spike again—hurting automakers and pushing stocks like Ford (F) lower.

Investment Themes to Act On Now

1. Rare Earth Miners & Processors: MP, ALB, NCB. These are the “miners of the future.”
2. Semiconductor Equipment: ASML, LRCX, KLA Corp (KLAC). They're the unsung heroes of chip manufacturing.
3. Diversification Plays: Invest in Australia (Liontown Resources) or Saudi Arabia's rare earth projects via partnerships with US firms.

Cramer's Bottom Line

This deal is a “buy the dip” moment for rare earth and semiconductor stocks—but keep one eye on the geopolitical horizon. China's grip on supply chains isn't broken yet, and the next trade war could start tomorrow. Aggressively invest in the companies building alternatives, but hedge with puts on automakers or tech stocks if you're bold. The rare earth gold rush is here—just don't get buried by the next explosion.

Stay Hungry, Stay Foolish.