In the latest episode of Zephyr's Adjusted for Risk Podcast, hosted by Ryan Nauman from Zephyr, we dive into the intriguing world of rare earth metals with industry expert Andrew Musgraves, Senior Product Manager at VanEck. This insightful conversation sheds light on the role these critical elements play in modern technology, their impact on investment portfolios, and the geopolitical and economic factors influencing their market dynamics.

Introduction to Rare Earth Metals

In 2025, the remarkable performance of gold has cast a spotlight on commodities, real assets, and precious metals. Among these, rare earth metals have gained increased attention as they are crucial for many consumer tech products we use daily. Unlike the more familiar precious metals like gold and silver, rare earth metals serve predominantly industrial purposes.

Andrew Musgraves, our distinguished guest, shares his expertise on these essential elements, noting their significant role in national security, energy transition, and advanced technology sectors. VanEck, where Andrew has carved a notable career, has been a pioneer in resource equities, including rare earth metals, for decades.

Understanding Rare Earth, Strategic, and Precious Metals

Ryan Nauman initiates the discussion by distinguishing between precious, strategic, and rare earth metals. While precious metals like gold and silver are traditionally seen as a store of wealth or an inflation hedge, rare earth metals are indispensable for their industrial applications. These include components for wind turbines, electric vehicles, and high-tech consumer electronics such as smartphones and flat-screen TVs.

Investment Rationale and Market Dynamics

Andrew explains that investing in rare earth metals is more of a thematic investment approach, focusing on technologies and sectors such as national defense and energy transition. Although the market for rare earths operates with minimal correlation to precious metals, it complements a broader resource equity allocation, providing diversification and hedging against geopolitical risks.

Andrew emphasizes that the rare earth market is driven by supply and demand dynamics. Demand stems from sectors like clean energy and aerospace, while supply is primarily dominated by China, which controls a significant portion of the global rare earth production and processing capabilities. This centralization allows China to leverage rare earth metals as geopolitical currency, influencing global market prices.

The Global Push for Diversification

To mitigate reliance on China, countries like the US and European nations are actively investing in domestic rare earth supply chains. In the US, initiatives include partnerships between the Department of Defense and companies like MP Materials to establish a domestic supply chain. Simultaneously, European countries are developing regulatory frameworks to support domestic production of strategic metals.

Portfolio Considerations

For investors considering rare earth metals, Andrew highlights their potential as a portfolio diversifier. Weighing the high volatility typical of this asset class, advisors are advised to maintain a strategic allocation within a real assets sleeve, approximating one to two percent of an overall equity portfolio.

Accessing Rare Earth Investments

Given the lack of a robust futures market for rare earth metals, equities remain the primary access point. VanEck offers a specialized ETF—REMX—providing exposure to companies involved in rare earth and strategic metals production, which are designed to align with industry growth and investment themes.

Conclusion

Andrew Musgraves concludes with a reminder of the resource-rich content available on VanEck's website, offering further insights into rare earth investments. As nations continue to innovate in clean energy and technology, rare earth metals remain pivotal not only to societal advancements but also as a compelling component of investment strategy.

This thought-provoking discussion with Andrew Musgraves on the Adjusted for Risk Podcast highlights the importance of rare earth metals in today’s economy and their unique position within investment portfolios. For financial advisors and investors seeking to diversify their holdings and tap into the industrial technology revolution, rare earth metals present a promising opportunity.