‘THREE GOLD STOCKS TO PLAY THE COMING BULL MARKET: Brian Chu, editor of the Australian Gold Report, reveals the details on three stocks he’s recommending to play the potentially historic bull run in 2024. Click here for all the details. |
|
China Paves the Way for More Critical Mineral Dominance |
Thursday, 29 February 2024 | By James Cooper | Editor, Mining: Phase One and Diggers and Drillers |
|
Twitter (X): @JCooperGeo [5 min read] In this Issue: Chinese investment surges into commodity rich nations Nickel and copper remain a focus Stolen Russian loot, forever foreign wars and the Fed's funny money... |
|
Dear Reader, Do you remember China’s Belt and Road Initiative, also known as the ‘BRI’? A multi-trillion reworking of the historic Old Silk Road that connected East to West. A network of highways and railways linking China with strategically important nations across Eurasia and Africa. The BRI was set to entrench China as the world’s most important superpower as it paved exclusive access to commodity rich nations. A huge strategic advantage as we approach an era of shortages across energy and raw materials. The building of the BRI, itself, was set to require huge investment in infrastructure, driving demand for industrial commodities like iron ore, nickel, copper and aluminium. But against the backdrop of lacklustre growth and a struggling real estate market, China’s BRI looks like it’s on a road to nowhere. Yet according to the latest report from Australia’s Griffith University cumulative investment just breached US$1 trillion for the first time in 2023. So much for a China meltdown! China’s Belt and Road is back. In fact, investment has surged. However, over time the direction of this megaproject has changed shaped. According to the Griffith Asia Institute, participating African nations were among the biggest winners last year: ‘BRI countries in Africa saw a 47 percent increase in Chinese construction contracts and a 114 percent increase in investments. ‘In consequence, Africa as a continent became the largest recipient of Chinese engagement worth USD 21.7 billion, overtaking Middle Eastern countries that saw USD 15.8 billion in engagement.’ The African continent offers a vast untapped frontier for mineral discovery and already hosts major deposits of copper and cobalt. In a playbook from the colonial powers of the past, China is looking to connect itself with the riches on offer. Yet, by digging into the specific countries receiving the largest share of Chinese investment it becomes clear which commodities the Middle Kingdom is targeting. According to the Griffith report, Indonesia was the largest recipient hauling in US$7.3 billion from China last year. So, what’s driving the flow of capital here? One reason could be the country’s vast nickel supply. Indonesia has already established a major presence in the nickel market thanks to years of Chinese investment. The flow of investment has allowed Indonesia to tap into its vast nickel laterite deposits and construct downstream processing. In recent times that’s flooded the nickel market and depressed prices. With mine closures across the west and strong investment links to Indonesia, China has built a commanding position in the nickel supply chain. Next comes Hungary. This East European nation doesn’t host major commodity reserves but it is geographically important to China’s BRI ambitions. As part of its broadening reach into Eastern Europe, China is funding a high-speed railway connecting Budapest to the Serbian capital Belgrade. This is a flagship project under China’s Belt and Road Initiative. But according to Griffith University the third largest recipient of Chinese investment in 2023 was Peru. A country located on the opposite site of the world and well beyond the historic Silk Road trading route. Importantly though, Peru is the world’s second largest supplier of global copper. In fact, China has already established a presence here via MMG, a Chinese-backed firm who owns and operates the enormous Las Bambas copper mine. An operation contributing 2% of global copper production. China appears to be narrowing its BRI focus by tapping into key minerals. From Africa’s vast copper and cobalt deposits, nickel laterites in Indonesia and copper rich Peru. No doubt, China views this as strategically important. Copper and nickel are set to play a critical role in electrification and industrial expansion. Targeted investment into these commodity rich regions demonstrates China’s understanding that securing metal supplies will be critical in a future economy that promises more instability between East and West. As an investor you should be paying attention. Regards, James Cooper, Editor, Mining: Phase One and Diggers and Drillers James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle. With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One. Advertisement: 140 GOVERNMENTS MOVE IN LOCKSTEP What are they up to? And why is their agenda on the brink of collapse? Discover how you could benefit from what could be one of the biggest government failures in modern history. CLICK HERE FOR THE FULL STORY |
|
A Predictable, Avoidable Disaster |
| By Bill Bonner | Editor, Fat Tail Daily |
|
[3 min read] ‘If it is easy for us to go anywhere and do anything, we will always be going somewhere and doing something.’ US Sen Richard B Russell Then chairman of the Senate Armed Services Committee Sin on top of crime. Scam riding on a flimflam. Mistake hard on the heels of an error. And all of it part of a pattern. We summarise last week’s cogitation…it is not that we know anything more than you do…but we aim to avoid the Big Loss, and here is where we think it may come from. That is, it will come from the world of megapolitics…the deeper, hidden forces behind the headlines. Donald Trump has warned Europe that it better pay more for its own defence. But, defence against what? After three years of war, Russia has shown that it can barely capture an area, right on its flank, of Russian speakers who want to be part of the Russian federation and used to call their country New Russia. The idea that Russia, with a GDP less than the value of Nvidia, poses a threat to Germany and France, with a GDP thrice as large, is a fantasy. Why then should Europeans waste money on more weapons? Stolen Loot In yesterday’s news, America’s Secretary of the Treasury suggests stealing money from Russia. Why? So the Ukraine can buy more weapons. AP is on the story: ‘Treasury Secretary Janet Yellen on Tuesday offered her strongest public support yet for the idea of liquidating roughly $300 billion in frozen Russian Central Bank assets and using them for Ukraine's long-term reconstruction. ‘“It is necessary and urgent for our coalition to find a way to unlock the value of these immobilized assets to support Ukraine’s continued resistance and long-term reconstruction,” Yellen said in remarks in Sao Paulo, Brazil, where Group of 20 finance ministers and central bank governors are meeting this week.’ The US is headed towards a predictable, avoidable disaster — a classic denouement for a great empire. It is spending too much money and trying to bully too many people in too many places; this will probably lead to the end of the empire. But that is still far into the future. More immediate…and inevitable…is a debt crisis. Defaults. Depression. Inflation. Whining…wailing…teeth grinding — the yoush. Why then, do the deciders not do something about it…something so obvious and easy as cutting spending now? Why? Because this is megapolitical problem, not a political problem. The interests of the deciders — of both parties — and the interests of The People are at odds. Cutting back on US deficits would require cutbacks in the one and only area of discretionary spending that might actually make a difference. But it is also the area that cannot be controlled. The dogs of war have slipped their leash. The firepower industry – including the whole ‘empire budget’ of foreign aid, spooks, university and think tank grants, contracts to ‘defence’ suppliers, and overseas bases – is the biggest, richest, most powerful single business in the empire. It is so big and so rich that it can no longer be brought to heel. The federal government, academia, media, Wall Street – all have been captured. The Firepower Industry When Europeans spend more on ‘defence,’ they buy weapons from the US firepower industry. When the Ukraine gets more money, its corrupt leaders skim a portion; the rest buys supplies from America’s firepower industry…and lobbyists to argue for more. Is this ‘Russian propaganda?’ Maybe. More likely, it is the megapolitical reality of a late, degenerate empire. The empire budget is the biggest ‘discretionary’ item of US federal spending. If the feds can’t cut there they can’t make meaningful cuts anywhere. And if they don’t make very substantial cuts, the US will continue to run deficits…bigger deficits…until the whole system blows up. That is not a prediction. It is just maths. Already, the interest on the federal debt is about US$1 trillion. Much of the debt was contracted, however, at some of the lowest interest rates in history. As those bonds are rolled over, they will be refinanced at higher rates (barring a freakish return to ultra-low interest rates). At the current pace, the debt will soon reach US$40 trillion. At 5% interest, that would be annual payments not of US$1 trillion but of US$2 trillion. Tax receipts last year were about US$4.5 trillion. Assume they rise to US$5 trillion (with no recession). That will mean that 40% of all tax receipts must be earmarked for debt service. Cometh the Gunslingers How could the feds do that? Will they just stop sending out Social Security checks? Will they just stiff creditors and default on the debt? Will they turn out the lights in the Capitol…serve only cold sandwiches in the Senate dining room? What they won’t do is cut back on ‘military’ spending. Typically, the armed forces are controlled by using the power of the purse. The firepower industry relies on civilian funding — either from private lenders (such as Nathan Rothschild, who funded Wellington in the Napoleonic wars) or from tax revenue. Such funding was always limited…thus keeping the gunslingers in check. But now, the Military-Industrial complex controls the purse. The US invited its military to ‘cross the Rubicon’ when it fudged its money system. Post-1971 Congress could run deficits and appropriate more and more money for its enforcers without raising taxes. And they could use their billions to support think tanks that explain why we need to spend more money on ‘defence,’ and lobbyists who tell Members of Congress that they may face some stiff competition if they don’t vote for the next military appropriations bill, and ‘journalists’ to whoop for more war in the newspapers. Stephen Walt in Foreign Policy Magazine, sums up the situation: ‘The United States Couldn’t Stop Being Stupid if It Wanted To ‘There’s too much money in being stupid. And now, with more money than ever before, it is the Military/Industrial Complex that calls the shots, not the elected government.’ And since what it wants more than anything else is more power and more money…spending on firepower cannot be cut, the budget can’t be balanced, and disaster can’t be avoided. Regards, Bill Bonner, For Fat Tail Daily All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. |
|
Advertisement: THIS GOLD STRATEGY RETURNED 5,024% The founder of The Australian Gold Fund built his entire business on one simple gold-based investment strategy. Now, he’s revealing all the details, volatility, risks, and historical returns — in one outlier case, as much as 5,024% — in an exclusive interview with Fat Tail Investment Research: CLICK HERE NOW TO WATCH THE FULL INTERVIEW |
|
|