Buy one, it goes up one! Direct investment by the Trump administration sparks a new wave of speculation on Wall Street

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The direct investment actions of the U.S. government in enterprises are giving rise to a new high-risk investment game on Wall Street. As a series of government investments spark surges in target companies’ share prices, investors are racing to guess and bet on the next company likely to be favored, hoping to position themselves before government action and reap staggering returns.

This high-stakes betting game has recently intensified. On Monday, the stock price of lithium miner Critical Metals Corp. soared at one point on rumors that it was in talks with the U.S. government for a potential equity investment; USA Rare Earth Inc. also surged last Friday on similar speculation. On Monday evening, the White House confirmed it would acquire 10% of Trilogy Metals Inc., and as the news broke, the company—valued at about $343 million—saw its stock price double.

These latest market dynamics stem from a pattern that has already formed. Previously, Trump administration investments in companies such as MP Materials Corp., Intel Corp., and Lithium Americas Corp. all triggered double-digit or even triple-digit stock price jumps. This string of successful "golden touches" has greatly stimulated speculative enthusiasm in the market.

The Trump administration says these capital injections are essential to ensure that the U.S. has domestic producers in key areas such as modern weapons, artificial intelligence products, and infrastructure. Analysts note that as the government could wield tens of billions or even hundreds of billions of dollars, any investor who can successfully predict its next target could obtain tremendous wealth.

Government Investment Ignites Share Prices

For investors, there is ample reason to follow in the government’s investment footsteps. After the Department of Defense provided a $2.3 billion loan to Lithium Americas, its stock rose nearly twofold. Intel, which was struggling, was revived after the Trump administration forcibly converted its $10 billion federal grant into a 10% equity stake, with shares up 82% so far this year. When the federal government agreed to purchase $400 million worth of MP Materials stock, its annual gain reached an astonishing 376% that year.

Brooke Thackray, a research analyst at Global X Investments, stated: "Investors have suddenly begun to act before the government steps in, betting on companies the government might take an equity stake in, provide loans to, or grant funding." This “front-running” behavior comes in response to the Trump administration’s publicly stated strategic intention. The government has made it clear that it needs to inject capital to support U.S. domestic manufacturers, technology suppliers, and heavy industry companies in order to secure critical supply chains.

Speculative Frenzy and Risks

However, this guessing game is full of risks. On Monday, a White House spokesperson clarified that the U.S. did not consider taking an equity stake in Critical Metals, causing its stock price to fall by more than half from an earlier 109% gain, ultimately closing up 45%. This highlights the uncertainty of betting on rumors.

David Deckelbaum, an analyst at TD Cowen, compared the current market activity to the “meme stock” frenzy during the COVID-19 pandemic. He warned that most of the gains from that period eventually evaporated. He worries that, if government investment ultimately fails to materialize or fails to effectively help the related companies grow, these mining stocks could face the same fate.

"Right now, it’s more about speculation," Deckelbaum said in a phone interview. "Especially retail investors, who follow money flows and market momentum. Once momentum stalls, you’ll obviously see the opposite reaction."

Wall Street’s List of Potential Targets

Despite the risks, Wall Street and the financial sector are still actively searching for the next potential target. The Trump administration’s push to acquire critical materials is not limited to U.S. companies, further expanding investors’ search range.

According to informed sources, U.S. officials from various agencies have held talks with several Australian mining companies. In Toronto, Canada’s financial hub, rumors abound about mining and energy producers. Analyst-named potential candidates include metallurgical coal producer Ramaco Resources Inc. and Energy Fuels Inc., which owns U.S. uranium mines.

In addition, as graphite is considered a key mineral and global supply is mainly concentrated in China, Toronto-listed Nouveau Monde Graphite Inc. is also on the watch list. Further afield, shares of Australia’s Iluka Resources Ltd. and Lynas Rare Earths Ltd. have also risen on speculation that the U.S. government is evaluating them.

Capital Flows into Key Mineral ETFs

This new interest in critical minerals companies has also benefited related exchange-traded funds (ETFs). For example, the Sprott Critical Minerals ETF saw record monthly inflows in August, with September’s inflows ranking second in history. The fund has recorded positive net inflows for 20 consecutive months, with a gain of 77% so far this year.

Steve Schoffstall, director of ETF product management at Sprott Asset Management, said: "All these events have become catalysts for share price increases, even if only in the short term." He believes that direct U.S. government equity investments represent practical actions that "go beyond rhetoric," aiming to truly catalyze the growth of specific industries in the U.S.

Risk Disclaimer and Legal NoticeThe market carries risk, and investment requires prudence. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situations, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific circumstances. Investments made based on this content are at your own risk. ```