While short traders tend to evacuate their positions after benefiting from a steep correction, they appear set on betting against the wider U.S. strategic resources sector despite the brutal sell-off that has been affecting it throughout 2026.
Specifically, despite many firms involved with rare earth, lithium, uranium, antimony, and tungsten extraction and processing seeing their equities halve since late 2025, short interest for their shares remains elevated and at up to 33.85%, per Fintel data gathered and curated by commodity expert Oliver Groß.
Indeed, reflecting on the sell-off and the continuous presence of bearish bets, the analyst opined that these investors are ‘playing with fire’ in an October 20 X post:
“Even after the massive sell-off over the past few weeks/months, the short interest in many U.S. critical minerals, lithium, uranium, and rare earth stocks remains extremely high. It seems that most short sellers have not yet covered. They’re playing with fire.”
The data presented shows that four companies are especially affected, with more than 20% of their float shorted: Critical Metals (NASDAQ: CRML) at 33.85%, United States Antimony (NYSE: UAMY) at 28.50%, MP Materials (NYSE: MP) at 25.37%, and Energy Fuels (NYSEAMERICAN: UUUU) at 22.66%.
Notably, all four of these stocks hit milestone highs late in 2025 or early 2026 amidst the U.S.-China and other trade wars and began crashing around the time a deal between Beijing and Washington was announced late last October, or as other tensions, such as with Denmark, subsided early this year.
Why these four resource companies are crashing in 2026
Crucially, the companies represent the efforts of Western governments – spearheaded by Washington – to reduce strategic reliance on the People’s Republic amidst the continuously tense relations.
China famously placed export restrictions on rare earth minerals – of which it is one of the largest suppliers on earth – partially in retaliation for the U.S. ban on shipping advanced artificial intelligence (AI) chips to the East Asian country.
Meanwhile, market speculation over the future of the industry was also fueled late last year as it briefly appeared possible that the U.S. would invade its NATO ally, Denmark, over the mineral-rich island of Greenland in a move that would have, among other consequences, removed various environmental protection regulations and made mining easier.
Why short sellers are refusing to budge on U.S. strategic minerals stocks
Still, the program is arguably made more difficult – and, in the short and mid-term, less attractive for investors – by the high costs, dubious competitiveness, and the long wind-up period.
Indeed, the so-called ‘Global North’ – generally viewed as the U.S., the E.U., the U.K. and several of its former dominions, and a handful of Asian countries – abandoned much of its heavy industry and moved production to nations like China as part of its effort to lower labor costs and move pollution elsewhere.
The move arguably backfired as, on the one hand, the People’s Republic developed its domestic capabilities far faster than anticipated, and, on the other, much practical experience and production capacity was lost in the former industrial capitals of the world.
Looking ahead, however, the companies are likely to retain strong backing from the U.S. government and its allies due to the strategic importance of industries they are operating in, which – paired with the severity of the recent downturns – raises the risks associated with keeping short positions against their equities.
Featured image via Shutterstock
The post Short sellers are ‘playing with fire’ in these U.S. stocks, expert warns appeared first on Finbold.