The Rare Earth Darling That Collapsed Without Warning

Editor's note: America's rare earth problem is getting harder to ignore. Marc Chaikin, founder of our corporate affiliate Chaikin Analytics, says geopolitics and shifting markets have created a fast-moving cycle of booms and painful busts. In this issue – adapted from the free Chaikin PowerFeed daily e-letter – Marc explains the wild ride of America's sole rare earth miner's stock this year... and what it says about market volatility.

America has a lingering problem with a certain group of materials...

Geopolitics thrust them into the spotlight in 2025. And we can't hide from the truth any longer.

As you might have guessed by now, I'm talking about rare earth elements. We just don't produce enough to meet our own demand.

In April, we mentioned that China produces roughly 60% of rare earth elements... and processes about 90% of them.

But in the months after that, the markets dramatically changed. That left America's supply of rare earths at an existential crossroads.

For a short period, that created a huge opportunity for America's only rare earth elements miner. But if you bought the company's stock at the wrong time, it could have wrecked your portfolio...

Since April, the trade war with China has evolved... Talk about the federal government funding rare earth companies started circulating... And a select few stocks benefited from this tension...

The biggest focus was on MP Materials (MP).

The company owns the Mountain Pass rare earth mine in California. It contains some of the highest concentrations of rare earth elements of any mine in the world.

So it makes sense that MP Materials was poised to benefit from this trend...

On July 10, the company announced that it had entered into a massive, "transformational" partnership with the U.S. Department of Defense.

The previous day, MP Materials' stock had closed at $30.03 per share. On July 18, shares closed at $63.22.

That's a more than 110% gain in less than two weeks.

MP Materials' stock continued its growth slowly until tensions with China reached a boiling point.

On October 9, China implemented export controls on rare earth materials. These controls were vast. And they showed just how much diplomatic force China was willing to use.

These tailwinds boosted MP Materials to a peak of $98.65 per share on October 14. The stock had soared a staggering 228% since the day before the Department of Defense contract was announced.

That also marked a more than 500% gain since the start of the year.

Folks, this type of surge is simply incredible. But the intense growth wave lasted a few short months...

Betting on MP Materials at the Wrong Time Could Have Cost You Dearly

The government decided not to make any further investments in MP Materials. And negotiations with China eased tensions.

MP Materials' stock started sliding... hard. In less than a month after its October high, the stock had fallen by 47%.

That's a painful wipeout in such a short time frame.

Today, MP Materials sits more than 40% below that October high. And it has traded mostly sideways for the past month.

The chart below shows the stock's movement this year...

Don't get me wrong... The stock is still up about 270% since the beginning of this year. But it didn't get much attention until tensions with China escalated.

So there's a good chance you wouldn't have heard of MP Materials before the rally was already underway.

Like I said, America simply needs to produce more rare earths...

But the story behind MP Materials' stock points to another trend...

With Dramatic Booms, We're Also Seeing Dramatic Busts

It feels like the markets are moving faster than ever. We're seeing incredible booms... but also incredible busts. And beloved stocks have the potential to fall hard – and fast.

Sure, you could have multiplied your wealth with MP Materials if you bought at the right time...

But if you didn't buy before the Department of Defense contract announcement in July, you likely missed out on a huge share of the gains.

And if you piled into the stock in mid-October amid the massive run-up... you would have paid a steep price.

Longtime readers know that I created the Power Gauge to prevent investors from taking big losses like that.

The Power Gauge is the key set of tools we use at Chaikin Analytics. It combines several investment fundamentals and technicals to produce a simple, actionable rating – ranging from "very bullish" to "very bearish."

And as we look ahead to 2026, it's critical to avoid these kinds of fast, brutal sell-offs.

That's why, on Tuesday, December 16, I'm going on camera for a big announcement...

It all has to do with a huge prediction for the markets in 2026... and ensuring that investors have the right tools to avoid short-term, dramatic moves to the downside.

Folks, it's critical to know when to sell in the short term – for the highest potential gains and lowest potential losses...

As MP Materials proved this year, getting the timing wrong – and holding on for too long – can lead to a big wipeout.

Good investing,

Marc Chaikin

Editor's note: Marc Chaikin predicted the 2020 and 2022 market crashes. Now, he's sharing a critical warning for 2026 – and if he's right, hundreds of stocks could face violent "flash crashes." That's why he's unveiling a new way to see which stocks to dump... while giving you chances to lock in triple-digit gains. By Tuesday, learn how to protect yourself before the worst days arrive.