James Dines Predicts Rare Earth Buying Panic Over the Next Five Years

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The following is a partial transcript of Jim Puplava's interview with legendary investor and analyst James Dines. You can listen to the full audio interview or access the full transcript here.

Jim Puplava: Let's move on to rare earth minerals because we see our politicians including those in Europe advocating wind and solar. The two problems I see with both is night time and the persistence of wind, not to mention a few others, but let's talk about it. Most people don't realize the amount of rare earth metals that goes into a wind turbine, that goes into solar panels, that goes into hybrid cars, and we have one country in the world now that monopolizes 95 percent of the world's rare earth minerals. So Germany may talk about going green and getting rid of nuclear but they don't have natural gas, they don't have oil, they may have some wind, they may have solar but they're going to have to get rare earths and, once again, like natural gas and oil, they're going to be dependent on a foreign power for that.

James Dines: Yeah. These rare earths−I was the originally uranium bug but also the original rare earth bug. It was very hard for me to explain to people years ago what they were because it sounds like something exotic. They're not. They're just 17 elements on the periodic table and these oxides−well, the oxidation facet of these elements−are vital in all kinds of things that permeate our society right down to the ones you mentioned, right down to your cell phone in your pocket which makes them able to be so small to tanks and night vision goggles and all kinds of green things. These are the elements of the future and I've led my subscribers into these stocks in order to drink upstream from the herd. I've been on your show from the beginning repeatedly recommending them. I congratulate you for allowing me to discuss that to try to reach the world. It's also true that I've been predicting the coming rare earth buying panic. Well, you know, just this week, as I mentioned already, the Chinese have announced that they might just be cutting off their remaining five percent they're exporting. At some point you're going to see—one of my radical predictions−automobile plants closing down (due to lack of supply).

One of the things I'm not sure is that the closure of some of the automobile plants in Japan after the Fukushima tragedy is the fact that I've wondered whether or not the closing of Japan's automobile factories were entirely due to the tragedy of Fukushima. I think−personally I think that a lot of that is due to the fact that they're running out of rare earths. That prediction I made in my annual forecast issue in January I said that I thought that it would probably happen in Germany first but I'll give you another example. Just this week the glass polishing association in Seattle, Washington announced that they were running out of rare earths. They will no longer be able to polish glass. So you remember the old days if they wanted to etch something on glass they would sandblast it which, of course, leaves it cloudy. The beauty of using cerium, one of the rare earths, is that you can get an actual polish on the glass and that's going to be over. You're not going to be able to get that anymore outside of China or at least not in the near future until we can begin to get production going. So we're just beginning to get to the stage where we're running out of them and we're getting to the buying panic stage. The last Dines Letter on the front page I have a chart of one of the rare earths is neodymium oxide. I've never seen any chart like it. I mean I'm one of the founders of technical analysis. I have never seen a chart this vertical−not only vertical but the gaps between each trade are actually expanding.

That to me is evidence of the coming buying panic we've published on May 22nd, 2009 in the Dines' Letter right on the front page. I think because of things like that it's going to be on the front page headlines. At that point people all around the world are going to start asking what are these rare earths and how do I buy one of those stocks and which stocks should I buy? Well, I spent years studying them before I made the announcement and I've picked what I think are the best ones in the group and they are, of course, leaders and one of them had an announcement just this morning of a large expansion in their reserves. Those are the ones−I'm trying to pick the winners−the ones that will be first to production because I think they'll be the ones that will have the biggest and soonest rises. Eventually there'll be more production in about five years but between now and then we're going to have a terrific buying panic on a level commensurate with a hostile OPEC. Just imagine if OPEC were really hostile, if Venezuela and Iran were having their way and really cutting off our oil. That's the kind of buying panic we're having from out of China.

As you said you know one country is supplying 95 percent of it and right now I want to also talk−I mentioned I just brushed against mass psychology. One more thing I'd like to mention if I may Jim. The mass psychology of stocks as opposed to the actual product is based on the psychology of each type of buyer. The type of person who buys uranium who owns a nuclear facility is different from the guy who buys or invests in a uranium or mining stock. The same is true for rare earths. The people who are buying rare earths and sending them skyward−I just mentioned neodymium oxide−are hysterical trying to get a hold of this stuff but the stocks are fluctuating and they're down now. This is the opportunity to grab these things while they're down. If you miss the opportunity to get in at rock bottom this is the time, your last chance, to load up, to back up the truck.

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About James J Puplava CFP