Investors were all a-twitter as Market Vectors’ long-awaited rare earth exchange traded fund (ETF) launched. In the last two weeks it has retreated more than 6%. What’s going on here?

Market Vectors Rare Earth/Strategic Metals (NYSEArca: REMX) spiked at the beginning this year, but now it’s wavering closer to its 50-day moving average:

The run-up was due, at least in part, to China’s decisions to limit exports of rare earths. The country has the vast majority of the world’s supply of the metals.

But the dip may be attributed to a recent decision by the World Trade Organization, which said that China has no right to put such export restrictions in place, says Nigam Arora for Seeking Alpha. That decision has sparked a wave of profit-taking. [Why Fundamentals Favor a Rare Earth ETF.]

Despite that, is there still a case for rare earths? Some feel that the answer is decidedly yes.

According to Reuters, fears that China’s policy of curbing exports would cause global shortages is what sparked this investment rush. Long-term, demand for rare earths could continue, though not on the same level as more widely-used and commonly-known metals.

As with any mining operation, the closer a project is to existing infrastructure, the better. Also, while rare earths are crucial for certain technologies, global demand for the group of 17 elements is not that high. Analysts believe there is room for five or six projects outside China. [The Ins and Outs of Rare Earth ETFs.]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.