Dire Straits: This ETF Is a Must-Watch As Rare Earths Become the Real Boondoggle of the Iran War

That ain’t working, that’s the way you do it! 

Let me tell ya, them guys ain’t dumb.

Just a couple of iconic lines from 1985’s hit song “Money For Nothing” by the band Dire Straits. And apparently, the guys who weren’t dumb, much to the chagrin of those of us in the Western hemisphere and elsewhere, are the guys who used their ace in the hole to stoke chaos in the global energy market.

Iran, by turning the Strait of Hormuz into something between a toll road and a bridge under repair, has put the markets on hold. Until that is resolved, not much else seems to matter when it comes to price movement. And it is a pan-market situation, not simply confined to commodity prices. 

The initial phase of the conflict in the Middle East was defined by a frantic rush into energy and defense, but as the situation drags on into a perceived boondoggle, the narrative is shifting toward the critical materials that power the modern world. The VanEck Rare Earth and Strategic Metals ETF (REMX) has become a focal point for investors realizing that the war isn't just about oil flowing through a physical channel but about the long-term security of the elements required for high-tech weaponry and the global energy transition.

All Eyes on Rare Earth Metals

The world watches naval blockades. But the real pressure began to build in the supply chains for lithium, cobalt, and neodymium, which are almost entirely controlled by a handful of geopolitical rivals who are increasingly emboldened by the current chaos.

The primary issue for REMX and the rare earth industry is that the war has exposed the fragility of the Western decoupling strategy. For years, the goal was to build independent supply chains that bypassed hostile territories, but the cost and time required to dig new mines in friendly jurisdictions have proven to be an immense hurdle. 

But the more this war threatens to drain resources, the capital that was supposed to fund these new mining projects is being diverted to immediate military needs and energy subsidies. This has effectively stalled the Western effort to break the monopoly on strategic metals, leaving the technology sector and the defense industry more vulnerable than they were when the conflict began.

Furthermore, the materials inside the REMX basket are essential for the very drones, missiles, and guidance systems that are being depleted in the current theater. The “boondoggle” here is the realization that a prolonged war actually strengthens the hands of the nations that provide these essential minerals, making the dream of a quick and clean decoupling seem like a distant memory. First among those nations: China.

A Closer Look at REMX

Stocks from China account for about 30% of REMX. But the bigger story to me is the liquidity. Specifically, the lack of it. There are not many household megacap names here. The three largest holdings have between $20 billion and $25 billion in market capitalization. Most are in microcap territory, under $2 billion in size. So, as we saw with silver (XAGUSD), it would not take much of an asset surge in REMX to lift it beyond what would be considered normal.

The chart picture is mixed, though intriguing to me. First, the daily, which looks like most of the market right now — a bounce in progress, but limited upside seems likely.

The weekly chart implies the same thing. However, this is more headline-driven than a chart is likely to speak to with exact precision.

The monthly is the intriguing part to me. A breakthrough beyond $120, about 20% north of the current level, could unleash a rally like the one that occurred around the time REMX debuted back in 2011. A 50% rally in under a year. With the possibility that the war’s outcome could tilt in favor of increased protectionism around these commodities, this is one worth tracking.

REMX is a rare breed in equity-land these days. It carries a ROAR Score of 60, indicating below-average risk. That said, such a score is the lowest rung on the green, or lower-risk, ladder. 

REMX: A Rare and Strategic Long-Term Opportunity May Be Brewing

The narrative for REMX is no longer about a speculative future in electric vehicles (EVs), but about the immediate and desperate need for national security. It is a reminder that in a world of high-tech warfare, the most powerful weapon isn't a piece of software, but the ability to control the ground from which the future is mined. That’s more than “money for nothing.”

Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob's written research, check out ETFYourself.com.