The rare earth space has an identity crisis.

Perhaps it should be called the ‘misnomer sector’ for all the labels, misleading headlines and misconceptions bestowed upon its short-term machinations; you could even blame the recent rise in jingoistic-type rhetoric on the misguided notion that one country’s mercantilism is actually a grab at world domination in disguise.

At the moment, this relatively small market is dominated by a few go-to voices that give good quote. A few companies have become, rightly or wrongly, bellwethers for what is a complex landscape. U.S. and European politicians have jumped onto the rare earths bandwagon, sounding proactive and concerned, holding important-sounding hearings that lead to nothing. There are the Chinese politicians who have manufactured the market’s current supply deficit via easy-to-change rules and transient regulations.

Then you have journalists who hadn’t heard about rare earths yesterday afternoon; they need to write “something, anything” on cerium or neodymium for today’s deadline but haven’t gotten past the idea that this isn’t just a dig-it-up commodities story about coal or copper.

And, finally, there are a few hundred Bay and Wall Street prospectors out there who are now selling rare earths and metals to investors as the next, next new snake oil because uranium is out of favor this year.

A catchy-sounding ‘mine-to-magnets’ business model simply restates Henry Ford’s cotton plantation-to-Model T-Ford mantra. There’s nothing new here.

But that’s the problem. Growing the cotton to stuff the car seats with is a lot different, but often no less complicated, than figuring out how to economically produce an inline 4-cylinder engine with valves, bearings, spark plugs and magnetos.

And this seems to be where the whole idea of a rare earths market gets screwed up.

This is pretty much the stage many of us are at now: we know rare earths are not rare, there are 15 not 17 unique elements (or vise versa), some of them are called heavy, some light, part of the process can involve radioactive stuff; and it’s really, really hard to effectively substitute other high-tech widgets for what some of these elements can do -- in everything from iPhones, wind turbines, hybrid cars, light bulbs, yadda, yadda, yadda….

It’s somewhat tragic that these periodic-table darlings are called rare earths instead of what the Greek word for dysprosium (dysprositos) means: hard to get.

The rare earths sector, on a very basic level, is about mining and separating the metals into a concentrate. There is no magic here; farmers in south China are doing it by pouring harsh chemicals into the ionic clay ground.

But this is where companies transcend mining and become specialty chemical houses and, ultimately, a material technology enterprise that’s all about manipulating molecules. The catchall term, ‘value-added,’ dominates this side of the market, even though “hard to get” becomes even more accurate.

There are a handful of companies out there who have spent years if not decades dealing with customers who need specifically-crafted and purified rare earth products to make their own end products work. Processing to purity is vital. It takes years to hone those products to a point where you can make and sell them - and make money.

It’s also a good rule of thumb to know that technology is changing so quickly that your profit window for a certain product is, like, three to five years before you need to come up with something else.

This is the part of the industry that gets the plain vanilla treatment, where complex, dynamic and ever-changing, real-world business models are whittled down to Economics 101 supply-and-demand flow charts.

So who’s to blame for simplifying or misrepresenting this nascent industry? Currently?

Almost everyone.

Politicians eager to please an electorate, sell-side analysts with mystifying target prices and recommendations, a few high-profile executives who give lip service to the future of the industry and then opportunistically sell their shares, opinion-makers who know how to get their opinions quoted; and investors desperate to find the next 10-bagger in an upstart sector over-hyped by this or that newsletter writer.

This jumble of voices then falls through the sieve called a journalist. Poor bastard. If he or she writes one thing, he’s a paid hack for the industry. Another, she’s an environmentalist. Another still and he’s a patriot, an alarmist, ignorant, gullible or a lazy reporter who hasn’t done his or her ‘research’ so it aligns with an armchair critic’s opinion.

The recent stock market upheaval in the rare earths space captures what’s going on in a misunderstood sector; these are the knee-jerk headlines and sound-bites that come at you on a daily basis (if you pay any attention at all):

• Holy Molycorp, What a Wild Day
• Molycorp Continues to Weigh on Rare Earth Stocks
• Molycorp shares popped: What You Need to Know
• Here's Why Rare Earth Metal Shares are Spiking Now
• Not a Short-Covering Rally - a Window Dressing Rally (which is actually worse)
• Lynas Gains Most in Two Years On Rare Eaths Demand Outlook
• "A greater focus on recycling and substitutions, particularly by the Japanese consumers, has resulted in tightness of demand easing somewhat for the lighter rare earths."
• "Moving from a fixed-magnet motor to an induction motor is a hug savings with regard to rare-earth metals."
• Rare Earths Fall as Toyota Develops Alternatives
• "This industry can't turn on a dime; it takes years to develop new product."
• "Like any market, you're going to see up and down in the course of a month or two. But the overall trend remains short supply, heavy demand."

What can one say to all this but, "Good luck with that" and "caveat emptor."

Or, as one rare earth executive put it: “At the end of the day, for someone who knows the industry, you can only shake your head.”

Big word of the day: differentiation.

That will take time. Meanwhile, the lowly rare earths extractor will be lumped in with the bellwether company going for the whole supply chain – mine-to-magnets. Is either strategy a wise one, given the inherent dynamics and end-user demands of this volatile market?

At this stage, it sometimes depends on who you ask and at what time of day.