Why Critical Minerals Got Sold Like AI

If you own anything in critical minerals, last week hurt.

One well-respected research shop runs a critical minerals index that's up about 305% since it launched in February 2025, against 32% for the S&P 500.

Last week it fell 10.1%, and its uranium index fell 10.5%. Its high-conviction portfolio dropped 5% in a week when the S&P 500 lost about 1%.

VanEck's rare-earths and strategic metals ETF made a new 52-week low last Monday. Sprott's ex-China rare-earths fund, which only launched in April, is now down about 35% from its start.

When a whole sector drops at once, the easy conclusion is that the story broke. I went through it name by name, including our own positions, and prices fell for two very different reasons.

One of them is worthy of your attention. The other mostly isn’t.

Sold Off as an AI Trade

The first reason has very little to do with metal. Korea's stock market, where Samsung and SK Hynix make up more than half the index, is down about 31% from its June peak on worries that the memory-chip boom is cooling.

CoreWeave, the AI cloud company the market now treats as a gauge of AI spending, saw its bonds hit a 15% yield last week, and its shares fell as much as 16% in a single day.

For two years, a lot of money bought critical minerals as a side door into AI.

Chips need gallium and germanium, data centers need copper, and nobody had to work very hard to sell that story.

So when AI wobbled, that money sold the side door too, whether or not the metal had much to do with chips.

Tungsten is the clearest case.

I've written about the tungsten gas used to wire advanced AI chips, and that use is real. But by one industry tally, AI and circuit boards add up to less than 5% of tungsten demand.

Most of the rest goes into drill bits, cutting tools, mining equipment and armor-piercing rounds. The AI selling hit tungsten stocks anyway.

China's Tungsten Price Is Down 69%

The second reason is old-fashioned supply and demand.

China's domestic tungsten price has collapsed.

Ammonium paratungstate, the processed form the whole industry prices off, traded inside China at 470,000 yuan a tonne on October 15.

That's down 69% from its March high, and it's wiped out every gain of the year.

Chinese smelters were sitting on close to 4,000 tonnes of it at the end of September and selling at discounts to raise cash.

Toolmakers are learning to use less tungsten per tool, and China's tungsten imports more than doubled through August.

The Western price is holding up far better, but it's slipping too.

The European benchmark sits around $2,700 per unit, according to Oppenheimer, down about 14% from its recent peak.

By my math that's still more than three times China's domestic price.

That gap is what Western buyers pay for supply they can count on.

It's also a gap Beijing could narrow by approving more exports.

Some of the selling was overdue, too. Nearly half of VanEck's fund is lithium companies. When a theme runs this hard for 20 months, weaker companies get carried along on press releases, and some of them deserved to come down.

China Can Now Stop Its Engineers From Leaving

Since September 15, Beijing can stop its own engineers from leaving the country if they break technology-export rules, with no time limit on the ban.

It kept its most advanced battery-cathode know-how out of last year's trade truce altogether.

And its pause on the sweeping rare-earth and battery controls it announced in October 2025 still legally ends November 10, even though Beijing's commerce ministry says the broader truce now runs to January 10.

Either way, the switch stays in Beijing's hand.

Washington has tightened too.

Since August 27, anyone selling tungsten scrap in the U.S. has to sell all of it to American buyers, under a Defense Production Act order that runs for a year.

And on January 1, about ten weeks from now, the Pentagon starts barring defense contractors from buying certain tungsten products that trace back to a mine in China, Russia, Iran or North Korea.

That rule has a waiver for when compliant metal can't be found, and there's a proposal in Washington to soften it. So I'll be watching how strictly it's enforced.

One researcher calls a U.S.-China deal on export licenses "a fantasy." I wouldn't go quite that far, but I haven't seen anything that points the other way.

Three Questions for Anything You Own

When money gets scared, it hangs on to companies that dig metal and sell it today, and it dumps the ones still asking investors to believe in a mine they'll build later. A developer gets hit twice. Its stock falls, and that makes its next fundraising cost a bigger piece of the company.

Run these on your own holdings:

1. Does it produce and sell metal today, or is it still a plan?

2. Is it funded to its next milestone, or does it need to raise money at today's price?

3. Does it have customers under contract, or only letters of intent?

If your answers come back "plan, needs money, letters of intent," that's where last week's pain lives.

If they come back the other way, what you're looking at is mostly a theme getting sold, and the businesses underneath are still doing their jobs.

That's why early-stage picks should come small.

If something can fall 60% to 80%, size it so that drop stings but doesn't wreck your year.

I see the same split in our own portfolio. Premium Members get the details below.

Brazil Votes Sunday

Back in July I told you a Brazilian election most American investors weren't watching could shape whether the U.S. gets reliable access to the minerals it needs.

Flávio Bolsonaro, who's pitched Brazil as the answer to America's dependence on China, took about 47% in the first round to Lula's 45%.

The runoff is October 25.

Then comes November 10, the date still written into China's legal text, and January 1, when the Pentagon's tungsten rule starts.

Any of those can move these stocks hard, in either direction.

What Premium Members Get Today

Everything above is yours to keep: why the sector got sold, which part of the drop was real, the dates that matter between now and January, and three questions you can run on your own holdings tonight.

What I keep for Premium Members is our own book. They get every one of our hard-asset positions by name, which ones are working, which ones are under review against the exact conditions we set the day we bought them, and what I'm telling holders to do right now.

That same discipline is behind our record. We've closed 14 positions since launching Premium, and all 14 made money, averaging a 78.34% gain against 38.69% for the S&P 500 over the same periods, as of our last monthly recalculation. Six open positions have doubled and paid back every original dollar, and four are up triple digits, the best of them 245%.

When positions go against us, Premium Members get the review in writing, hold or sell, with the reasoning. The full breakdown of where every name stands is waiting below.

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