The U.S. Falls Behind China in Resource Development

A new economic narrative has started building in recent weeks.

Following the announcement that the Department of Defense would take a stake in MP Materials (MP), a rare earth developer exclusively in North America, it’s clear that the U.S. sees domestic resource development as a key part of national defense.

However, the move, while shaking the small resource market, pales in comparison to the hefty investments that China has been making in the metals and mining space for over a decade:

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China has made extensive global investments in resource developments.

Currently, resources make up about 2% of the S&P 500 by market cap. Even today’s big-name gold miners carry market caps of under $100 billion, and the entire resource space is valued at less than any of the Magnificent Seven names.

But these are the critical physical commodities the world needs. Copper, gold, lead, zinc, uranium, and the rare earths.

This story is just getting started, and U.S. developers may see big moves ahead as the U.S. looks to catch up from a decade of underinvestment as China has moved full steam ahead with resource development.

~ Addison

P.S. With the resource market taking off, we’ve asked Grey Swan Contributor Shad Marquitz, to join us again on Grey Swan Live! tomorrow, July 24 @ 11 a.m. ET.

Shad regaled us last time with a litany of tickers he likes in the natural resource space. We covered rare earth minerals, uranium and nuclear energy, precious metals and building materials.

Tomorrow’s call will give us a chance for another full run down with Shad. He’s very articulate on investing in natural resources. If you’re interested in this overlooked space that’s starting to heat up again, you’ll want to join us Live!

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

A new economic narrative has started building in recent weeks.

However, the move, while shaking the small resource market, pales in comparison to the hefty investments that China has been making in the metals and mining space for over a decade:

Turn Your Images On

China has made extensive global investments in resource developments.

But these are the critical physical commodities the world needs. Copper, gold, lead, zinc, uranium, and the rare earths.

~ Addison

P.S. With the resource market taking off, we’ve asked Grey Swan Contributor Shad Marquitz, to join us again on Grey Swan Live! tomorrow, July 24 @ 11 a.m. ET.

Shad regaled us last time with a litany of tickers he likes in the natural resource space. We covered rare earth minerals, uranium and nuclear energy, precious metals and building materials.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

So the “huge shift” in how regulators perceive gold — the one Forbes just discovered — has actually been nearly a decade in the making.

But yes, it was huge. No argument there.

For starters, Basel III made it far more attractive for banks and other financial institutions to hold physical gold.

That’s because the new rulesgave gold formal recognition in the international financial system. Before that, gold — in any form — was treated as a risky asset for regulatory purposes. Holding it came with capital penalties. Now, under the right conditions, it’s treated like cash or Treasuries.

Make no mistake — this is a monumental change.

Given the resurgence in “meme stocks” the past few weeks – Opendoor, Kohl’s – it may be a sign of market froth. And it may take a 5-10% pullback to get some sanity back in the markets.

If you’re leveraged in this market. Don’t be. You’re in a crowded trade.

Wall Street’s never been shy about picking favorites. And this week, retail investors are betting big — $8 trillion big — that the United States will crush China in the global AI arms race.

That’s the market cap of Nvidia and Microsoft combined.

Nvidia impressed shoe shiners and Uber drivers alike when it became the first $4 trillion company. The GPU manufacturer’s market cap is now about as large as the entirety of the European stock market.

Just behind it: Microsoft, flush from its investment in OpenAI and currently valued at $3.7 trillion. Together the two companies have eaten $7.9 trillion… approaching the entire GDP of Japan and Germany combined.

Back in the 2010-2012 period, China was putting export quotas on the REEs (since they had and still mostly have a stranglehold on processing, separation, and refining these metals).

So, it was a very similar environment that we see today with their strategy of export bans on many critical minerals. That restriction in supply was giving a big pop at that time to these niche metals used in electronics, defense, high-powered permanent magnets, windmills, lasers, and so many areas of the modern world.