The year from hell continues for U.S. Rare Earths (OTC: UREE). The company’s stock fell another 19% by the end of trading today. This fall took the company to the lowest it has been since November 2010, succumbing to a dismal $1.01. Considering where the company was only a year ago, reaching a high of $9.00 on July 11, 2011, makes the recent fall from grace all the more startling. Since February 2012, the company has fallen a total of $4.00.
The fall has shocked many industry experts. Typically, a rare earth company is a very stable company, especially today. The fact of the matter is that global warming is a very real issue that is affecting not just the United States, but the world as a whole. This means that the market should be willing to look for alternate resources, or at least be open to change. To put it another way, stocks related to rare earth materials should be much less volatile than what is normally expected.
In a way, U.S. Rare Earths has followed this trend. It has been very consistent, just in the wrong direction. A one-year slide with no bounce back whatsoever is extremely discouraging. In a world that continues to warm, one would hope that a rare earths stock would be moving the other way.
The question remains, “Why?” Why has U.S. Rare Earths slid from penny stock stardom to penny stock despair?
U.S. Rare Earths is a mineral exploration, mining and claims company that is based in Lonoke, AR. The company used to be called Colorado Rare Earths. It holds over 16,000 acres in mining claims for rare earth elements in Colorado, Idaho and Montana. The rare earth elements that the company mines are prevalent in many new 21st century applications such as cell phones, hybrid cars and electric vehicles.
It is not like the company has been hiding in the shade of oil tycoons, waiting for their eventual fall before it can become relevant. On the other hand, U.S. Rare Earths has been busy in the last few months. Consider one of the more recent press releases: On May 22, 2012, U.S. Rare Earths announced that it had staked another claim in Colorado. This additional stake was based on a study done in early 2011. The study found that the region contains numerous rare earths that would add to the already-dense portfolio owned by the company.
Perhaps one of the reasons why the stock of U.S. Rare Earths has fallen so much is because of the newly adopted strategy by the Chinese rare earths industry. As reported by rareearthinvestingnews.com, China has taken a “stock-pile” approach. To put it another way, China has decided to mine all of the metals in the country with the hope of being able to export these minerals to those who need it. So far, China has seen immense success. This, among other things, could be one of the main reasons why U.S. Rare Earths has been falling for the last year.