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Should I Buy My Dream Home Now?

Dear Fred,

 

 I am writing in response to your question, “Should I buy a bigger house now so that my adult children will have a place to stay when they come home to visit because interest rates are so attractive?”

As you well know there has always been trouble in the world. I have studied cycles in history and as they state in the book, "The Fourth Turning" history is not linear but more like a vertically extended slinky. While history advances, it does so in cycles that run approximately 80 to 100 years per cycle (four generations). The Russian economist Kondratiev in the 1920's came up with the K wave cycle of 50 or so years. Stalin didn’t approve of his work since it did not predict the end of capitalism and had him killed by firing squad in 1938, but that is another topic. Then there are cycles within cycles such as Martin Armstrong's work exemplifies based on a multiple of pi. The Old Testament also talks about seven year cycles and the seven times seven year cycle that results in the 50 year jubilee. The debt forgiveness during the jubilee is necessary to wash out the excess debt buildup in the system. (If you have ever played a very long game of monopoly the banker ALWAYS wins in the end---never forget this when trying to outsmart the bank.)  

I feel that we are currently entering into a long term economic winter (20-25 years in duration) as a result of the build up in debt that is currently overwhelming the system. We have tried everything to put it off including changing the bankruptcy laws that make it harder to enter into bankruptcy. We have lowered interest rates in order to allow us to take on and service even more debt. The world's central banks are entering into "negative interest rates" in order to encourage consumer spending and discourage savings. Competitive currency devaluations also tend to discourage savings and encourage spending. People tend to forget that Capitalism at its very heart is about accumulating capital through savings to purchase the economic tools (backhoes vs shovels; factories vs garage industries; trucks vs draft wagons) that allow the overall standard of living to increase for all of society. When Capital is destroyed, squandered on silly public works programs (bridges to nowhere) or misspent on consumer items then there is less to invest in the very powerful capital intensive tools that allow us all to live better through an increased standard of living for all.

Bill Bonner writes that economics has become a complex mathematical discipline in the past 75 years where people in power can just adjust the dials and pull the right levers in congress and at the Federal Reserve and the economy will respond like a machine. The truth is the economy is 7 billion people (a huge living organism) that is beyond the control of a few people. Each of these 7 billion souls is making individual decisions based on their own best interest (as well they should) and that the entire complex world does not respond to the tinkering of a few individuals. God has made us all with free will to live and prosper in an amazing complex society. It is my belief that the purpose of government is simply to provide a very loose framework so that we can all operate within this grand chaos and that it should simply act as a referee so that we do not harm the weak or each other. I believe that economics is more a philosophy and not a science. That being said, we should always watch out for "heard mentality" in society and therefore in economics. As Charles Mackay said, “Men go mad in herds, while they only recover their senses slowly, one by one.” I believe cycles will eventually trump the few men and women behind the curtain trying to operate society as a machine.     

Now we come to your question of a long term low interest mortgage on a larger home in today's current economic climate. Dad once said (he was quoting someone and the name eludes me) that there are two ways to deal with the bank. The first is to owe them nothing the second is to owe them 110% of all you own - anywhere in the middle is a dangerous place. Keep in mind that Dad was a banker in the late 1960's. In other words if you owe them 110% of your loan they will work with you and extend you terms and do everything possible to avoid foreclosing on you because they will suffer a loss. If on the other hand you borrow 50% from the bank and put up 50% of your funds you are in a perilous condition. If your investment suffers a 40% loss and you cannot pay they will swoop down, foreclose and sell your property at a discount where they will recover all their capital and you will loose all of your capital. Just keep this in mind.

A home is a normal person's largest investment and it is usually a poor investment when all is factored into consideration, however, you gotta live somewhere. Once you realize that a home is more of a lifestyle choice and less of an investment it is easier to move forward with your decision.   

So the big question is, will the banks remain solvent and will the economy muddle along for the next 30 years so that I can pay off my low interest mortgage? Or even better; will the banks remain solvent and will the economy soar in the next 30 years so that I can pay off my fixed interest 30 year mortgage with my lunch money? Only God himself knows for certain but if cycles are correct we are entering (or have entered) into an economic winter. If you feel your jobs are secure and if the banks (nation, economy, currency) will remain solvent for the next 30 years then you will come out on top. There are a lot of unforeseen hazards or black swans that could cause problems on the horizon. In an economic winter all sorts of crazy leaders and theories arise. If you read "The Roosevelt Myth" by Joe Flynn he has one chapter entitled "The Dance of the Crackpots" in which he details all the crazy economic suggestions that were put forth (some were even tried and failed miserably) during the beginning of the great depression during the "first" new deal. The last economic winter brought forth the fall of Russia and the rise of communism, WWI, the great depression, the collapse of world trade and several other major financial upheavals. It is NOT the end of the world, it is just a little economic madness for a while. Eventually people come to their senses (reread the quote above from Mackay), the debt is forgiven and economic spring begins again.

There will always be cycles and we simply have to live in the economic cycle in which we are born. I suggest that you prayerfully consider wise council from multiple sources (certainly do not take what I am saying as the unvarnished truth) and do what you feel is right and gives you peace in your decision. Perhaps look for a great bargain, maybe a smaller fixed rate 10 year mortgage, maybe a place you can buy now and easily add onto later, maybe a larger piece of land with a nice house that will allow room for one or two small guest cottage(s) a little later as finances permit. My only recommendation is to avoid a large long term debt that does not give you any flexibility in the future in case things get difficult.

As Mark Twain once wrote, "I apologize for this long letter but I didn't have time to write a short one."

 

Your friend,

Larry LaBorde

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Pray for $500/oz Gold

Most responsible adult Dads buy life insurance to protect their loved ones. It is a strange bet we make on our own life.  We bet we die young to win but hope and pray we die old and lose our bet.

 

Gold is somewhat the same financial bet.  No one really wants to see gold hit $10,000/oz next year because of what it would take to get there.  We would be rich but live in a poor world surrounded by misery. 

 

So we place our bet and hope we lose.  In other words, we buy gold and pray it goes to $500/oz.  We pray for a long, happy, healthy financial world to live and raise our children.

 

What would a world with $500/oz gold look like?

 

It would be a world with a strong USD brought about by a surplus in federal / state / local government budgets across the country.  Where the government debt is slowly shrinking instead of growing by leaps and bounds.

 

It would look like a country with full employment in good manufacturing, mining & agricultural jobs that create wealth for everyone.

 

It would look like balanced trade with the rest of the world instead of a staggering trade deficit that keeps getting larger.

 

It would look like a Federal Reserve with a much lower profile that doesn’t conjure up $1 trillion / year out of thin air.  (Maybe no Federal Reserve at all?)

 

It would look like a much smaller government in general with much lower taxes and no income tax on labor.

 

It would look like a world where the government did not spy on its own citizens and make numerous laws that made criminals of us all.

 

It would look like locally owned healthy banks on Main Street and much smaller investment banks on Wall Street.

 

It would look like personal responsibility with medical savings accounts instead of Obama-care.

 

It would look like our troops at home defending our shores from foreign invaders instead of our government using them to fulfill its lust for money and power under the guise of chasing boogey men around the world.

 

It would look like a stable monetary system that held its value that allowed citizens to save without fear of inflation stealing their savings.

 

It would look like more privately owned small business owners who invest their profits at home and less multi-national corporations moving capital and factories offshore.

 

It would look like a country filled with Christian men and women who love God and care about one another.  With capable leaders of high moral values that put their country’s welfare above their own.

 

That’s what a world with $500/oz gold would look like.  So don’t worry about the short-term volatility.  Just place your bet.  Buy gold at whatever price you can while you can.  Then pray for it to please drop to $500/oz.  I wouldn’t mind losing that bet at all.

 

Larry LaBorde

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Cry for Argentina

In 2002, my wife Puddy and I traveled to Argentina for a business trip. We traveled south a few days early and toured Buenos Aires before our conference. We found Argentina a delightful tourist destination. The beautiful city of Buenos Aires compares favorably to other cosmopolitan cities that we have visited. We found the people polite, well-dressed, prosperous and friendly.

Continue Reading

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Detroit; Suicide or Murder?

The lovely Miss Puddy once again accompanied me on another trip.  This time the destination was Detroit.  I wanted to see the famous Detroit Institute of Art before the bankruptcy judge ordered all the pieces to be sold.  There has been a lot of ink spilled on Detroit recently.  While visiting the city I read Charlie LeDuff’s new book, “Detroit, an American Autopsy” which I highly recommend.

Many people feel Detroit did itself in with unions, municipal corruption and incompetent industrial leadership.  In other words, a death by its own hand.  It is comforting to sit at a distance and say Detroit was a suicide and therefore it cannot happen here.  But be careful for as LeDuff writes, “Go ahead and laugh at Detroit.  Because you are laughing at yourself.”

A closer inspection reveals the problem in one small word – JOBS or lack thereof.  The deindustrialization of the country and especially Detroit is really the heart of all its troubles.  Since Detroit was the biggest industrialized city in the country it only makes sense that Detroit was hit hardest and hit first.

No amount of government bailouts, downtown revitalization, reform governments or bankruptcy courts will fix this problem.  There is only one solution – JOBS.

It seems that they moved the factories overseas or south of the border but forgot to take the workers with them.  Now the city is filled with empty houses and idle hands.  Less than half the adult population works at a steady job.  With joblessness comes the desperate feeling that all hope is lost.

LeDuff talks about the hard dollar and the easy dollar.  No one wanted to work for the hard dollar – those guys were chumps.  Everyone wanted the easy dollar – the hustler.  Detroit was built on the hard work of men that wore white socks, looked at the pictures of their grandchildren and worked “one more day” in horrible conditions for 30+ years.  The new generation wants to hustle for the easy dollar.

It seems that everyone from the boardroom to city hall to the scrap dealers want to make one last big score on their way out of town because they all realize this is the end of the line.  That is why CEOs of dying corporations get their $10,000,000 bonus checks even when the company is losing money.  Why City Hall is a feeder program for the prison system.  Why the fire department has a strange symbiotic relationship with midnight scrap dealers.  (They scrappers burn the buildings partially to expose the copper wiring and plumbing making it easier to steal.)

Trying to fix Detroit by fixing these problems is like cutting at the branches.  To fix the problem you have to hack at the root – JOBS.  The deindustrialization of the country and Detroit in particular is what has caused this nightmare.

In order for a society to have wealth it must create wealth.  There are only 3 main ways to do this:  manufacturing, mining and farming.  Service industry jobs are great but an economy cannot be built on doing each other’s laundry and cutting each other’s hair.  Someone must make something, grow something or dig something out of the ground.  It is just that simple.  Mining, manufacturing and agriculture are what create wealth.  The service industry is where we spend our wealth.  All “jobs” are not the same.  It is critical that we have more jobs in the wealth creation sector.

Many new economists of the last couple of decades talk of our consumption economy.  Talk about rubbish!  What family ever spent themselves into prosperity?  President GW Bush even mailed out $600 cash to families after 911 to stimulate our economy.  He said to be patriotic and go buy that new SUV.  Well if $600 per family was good for the economy why not $6,000, why not $6,000,000 per family?  Because spending our wealth will not make us prosperous.  Only jobs that lead to the creation of wealth will ultimately raise the standard of living.  The only businesses storefronts that seemed to be open in Detroit are tattoo parlors, liquor stores, hair/nail salons and a few convenience stores with bars on the windows.  These are hardly wealth generating industries.

Our balance of trade shows that we used to export goods all over the world.  The wealth of the world flowed into our cities as we provided food, manufactured goods and mined products for ourselves and sent the excess to others.  The bottom chart shows that after WWII our trade surplus skyrocketed.  At that time we had virtually the only major economy that was not bombed into oblivion.  As the world rebuilt we still exported our surplus until a funny thing happened.

 

In 1971 President Nixon took us off the gold standard.  Now we no longer had to balance our books or pay the price of our gold reserves going overseas.  We could just print money at no cost and buy things from around the world.  We could write IOUs and spend them everywhere.  It was good to have the world reserve currency along with the largest military in the world.  After Nixon came the OPEC oil shocks where oil jumped up 70%.  Again in 1979 OPEC hiked prices.  The chart clearly shows that we started importing more and more than we exported.  Our IOU’s made up the difference.  Our national debt, corporate debt and personal debt grew.

The chart below shows the number of manufacturing jobs in the US.  Note that the number peaked around 1979 and has been slowly dropping ever since.   The last time the number of manufacturing jobs was this low was the mid 1940’s.  At that time our population was less than half of its present size so manufacturing jobs as a percentage of the workforce is much worse than this chart reflects.

There is a slight bump in the numbers at the right hand side of the chart but only because the government BLS has played with the numbers.  Now they consider “building a hamburger” at McDonalds to be “manufacturing”.  It is clear that the number of true manufacturing jobs is going down even while the population is growing.

It is no coincidence that the middle class has been losing ground.  The middle class has lost purchasing power and its standard of living since it peaked in 1979 (the same year that manufacturing jobs peaked).  You just cannot equate a job building a refrigerator with a job serving ice cream.  One creates wealth and the other is a luxury as a result of that wealth.  The jobs are not the same and yet both figure into the employment number the same.

When we drove through Detroit inside the city limits there were places that looked like Beirut after it was bombed.  We saw houses and buildings crying out to be demolished but no money to do so.  Some homeowners have tried to take matters into their own hands and have burned down crack houses and blocked the streets so the fire department could not put them out.  But once outside of the city limits the suburbs looked like most suburbs all around the US.  A surreal contrast to what was going on just a few blocks away.  However, if I am right, those suburbs may not be as safe as they seem now.

The only thing that can save Detroit and the rest of the country from what is coming is JOBS.  Not just jobs at McDonalds or the dry cleaners but manufacturing jobs, mining jobs and farming jobs.  It is too easy to say that we cannot complete with China or India or whomever because of low wages but what about Germany?  They seem to be exporting more than they import.  We have to have modern factories with the most productive equipment in the world for our workers.  The only way we can pay more to our workers than Chinese workers are paid is to out produce them.  It is going to take a lot of capital to rebuild the US industrial base.  Many factories are just hanging on and not reinvesting in more competitive machines because of fear and uncertainty.  It is going to take real leadership and a realization that things cannot continue as they are now.  We are going to have to look down on the hustler and glorify the worker that actually produces wealth in this country.  But first, we must stop the deindustrialization that is still taking place at a record rate in the US.

Maybe the best solution for Detroit was proposed by the Free-Man’s Perspective in the following article from July 2013.  In the article the author proposes that the City of Detroit be declared a tax free zone and to close down the government and privatize everything.  Manufacturing inside Detroit would be free of all taxes.

It would be the best way to bring real jobs back into the city that I can imagine.  Of course what if it did work?  Why not extend the solution to all of our troubled cities?  Why stop there?

 

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The Prozac Gold Market and the Government Shutdown

iStock_000020597445_ExtraSmallWhy aren’t we seeing more volatility in the metals markets? A couple of months ago, Cyprus (Russia’s anointed “Switzerland-lite”), proved that first world banking systems aren’t completely against confiscation or “one-time taxes.” It’s also been reported that Russia and China are “stacking” metals to strengthen their own currencies and perhaps to make a play at some form of alternate reserve currency basket. The U.S. “petrol dollar” is also being threatened by Russia as the U.S. and Russia fight for who gets to control potential future Syrian pipelines. FInally, the U.S. government is currently shut down.

In the case of the shutdown, it’s not an extremely difficult logic train to see that the U.S. dollar is headed for disaster:  Wall Street is at the mercy of the Fed...which is at the mercy of the Treasury Department ...which is at the mercy of the kindergarten Congress...which is has shut down most of the government and is full of people who are not capable of compromise. All of this serves as the backdrop to metals markets that appear to be in suspended animation compared to the looming level of instability in the financial world.  So the question is, why is the gold/dollar relationship so stable? Continue Reading

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Lessons from the Mother Country

Hot Air Balloon image for Lessons from the Mother Country article_Silver Trading CompanyLast month, the lovely Miss Puddy once again accompanied me on a trip back to the mother country.

As some of you know, I am a seventh generation French colonist living in Louisiana. I was the first generation in my family not to learn French as my primary language. Although I speak very little French even to this day, the mere sound of it reminds me of my long-gone grandmother and numerous aunts and uncles. I can remember my father enjoying visiting with his family when I was a child just so he could once again talk the language that he first learned as a child. (My mother never spoke French, so it was never spoken in our home as I grew up.) My father only learned English when he began primary school. He said he got in trouble many times for not knowing how to speak English, but he caught on quickly because he was punished at school for speaking French. My grandmother, however, struggled with English and was always more comfortable speaking French. Continue Reading

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Sixty-fifth Wedding Anniversary

Mr. and Mrs. O.C. LaBorde as newlyweds.

Mr. and Mrs. O.C. LaBorde as newlyweds.

The author offered these remarks on the occasion of his parents’ sixty-fifth wedding anniversary in 2010 before a large contingent of LaBordes.

We are here tonight to honor our parents’ love and commitment to each other for the past 65 years.  Their dedication to each other and their family is rare today.

Modern popular culture seems to appeal to mankind’s worst impulses through profanity and obscenity in the arts, literature and modern media.  It has depicted decadence and debauchery as normal and desirable.

Here tonight are two people who have bestowed upon us a cultural inheritance of the permanent things that order and sustain a Christian life: faith, family, traditions, community, loyalty, courage and honor.

If the opposite of love is not hate, but power (an insight variously attributed to Carl Jung and C.S. Lewis), to truly love someone you must empower him or her.  Not hold power over him.  In this regard, I can certainly say that I have been truly loved by both my parents.

But what exactly did happen 65 years ago in that church in Alexandria?  It was a union of two families and two cultures.  Who were those families?

The LaBorde family originated in France, first appearing in southeastern France near Forez and Lyon then migrating over to southwestern France near Bordeaux.  Dr. Pierre LaBorde, my fourth great-grandfather, came to Louisiana with about 50 other French families when it was still a French colony.  They landed in New Orleans then went upriver to Point Coupee Parish, where they settled for a few years.  After a great flood, they all relocated to Avoyelles Parish where they remained for several generations.  My father was the first of his lineage to leave the old French outpost and once again travel to a foreign land.  He moved to North Louisiana. Continue Reading

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Richard Feynman: Nuclear Physicist and Safe Cracker

Safe with Open Door_Silver Trading Company_iStock_000016460757_ExtraSmallMany years ago, my father was the part owner of a local bank. When I would accompany him to the bank as a young boy, the big vault door always fascinated me. I would stand next to the open door and study the lock workings through the glass panel on the back of the door, hoping eventually to figure out how to crack its secrets. Years later, I purchased the old cash safe out of that same vault and now have it on display in my office as an antique.

That old safe frequently comes to mind because one decision that a gold and silver investor has to make is where to keep the darn stuff. There are several options. You can put your cache in a bank safe deposit box, you can leave it on deposit with your broker, you can bring it home and lock it up in your own safe, you can hide it, you can invest in a fund that sells shares of gold stored in a bonded vault, you can buy mining shares, you can buy futures and so forth. The list is almost endless.

If you are investing for security, however, there is nothing like having a little gold and silver at home in a safe so that you can always get to it regardless of what happens. I am not talking about having large portions of metals stored at home, but modest amounts. If that thought makes you jittery, just think of what you have stored in your garage in “rolling stock.” Most people do not think twice about leaving their $40,000 car outside in the driveway. You need only simply take reasonable precautions with a reasonable amount of metals, beyond that you move on to other investing venues. Continue Reading

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Anarchists are bad guys?

My wife, the lovely Miss Puddy, accompanied me to the latest Sherlock Holmes movie last night.  In the movie, a series of bombings, supposedly perpetrated by anarchist, was terrorizing Europe.  It got me thinking, what is an anarchist?

 

Dictionaries define anarchists as people who rebel against government or other authorities or “powers that be,” especially by using violent actions to overthrow the government.  I don’t agree with an individual’s using violence to get rid of a Senator or mayor or President he doesn’t care for (much less the whole government!), but I do support the idea of resisting too much government intervention in our lives.

 

If anarchists are people who want no government at all, it follows that the opposite of communism (the 100% control of society by government) is anarchy (the 0% control of society by government).  Jefferson envisioned a society in which freedom would flourish to be somewhere around 10% control of society by government.  In his model, government would act as a referee to arbitrate contracts in the courts and to provide for mutual defense as well as to secure private property rights.  This is an oversimplification of his aims, but it does reflect what I see as the amount of government that is appropriate for enabling freedom to exist.

 

Socialism, on the other hand, probably sees somewhere between 50% to 90% government control of society.  In my estimation, under Obama’s governing philosophy, government organizations bumped control of our society to about 65%. In the past year alone, thousands of new laws were passed that further restricted society.

 

Every time our lawmakers pass a new law or a new rule, we relinquish a little more freedom and march a little closer to 100% government control.  God gave Moses only 10 Commandments to follow.  Jesus simplified these to just one law, the Golden Rule.  Somehow government feels the need to expand these with tens of thousands of laws each year!

 

In the movie V for Vendetta, the main character wears a Guy Fawkes mask and overthrows a future fictional totalitarian government in the UK that controls every aspect of daily life. V tells the people they can manage their own affairs without the help of such an all-controlling government. Admittedly, Guy Fawkes himself was not an anarchist, and most likely the character of “V” was not either, but both represent a move away from oppressive governments.

 

Perhaps anarchists (people who believe in 0% government control) are not that bad if they can pull us back down the scale closer to Jefferson’s 10% government.

 

I’ve identified several functions of government that are being done or could be done by the private sector.  Collection of trash is already done privately in many parts of the country.  Many water, gas and other utilities are privatized.  There are private toll roads in some states.  Insurance investigators could look into property crimes.  On a larger scale, the government hires private companies to handle many messy details of the wars it fights.  Money itself could easily be privatized if legal tender laws were abolished; private firms that use digital gold banking accounts could easily facilitate trade without the use of government central banks.  Even space travel is now being privatized.

 

While extremism is usually bad on both ends of the spectrum, and I don’t endorse the violence some anarchists employ, I do find myself aligned closer to the 10% government envisioned by Jefferson and, therefore, closer to anarchy than the present administration’s 65% control of society, which is closer to communism.  Maybe anarchists aren’t all bad?

 

“More law, less justice.” — Cicero

 

“Men fight for freedom, then they begin to accumulate laws to take it away from themselves.”  — Unknown

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China: Meritocracies, Copper, Batteries, Petrol, Solar and GOLD

In the fall of 2011, the LaBorde family attended the New Orleans Investment Conference in New Orleans.  A presentation about China by the very passionate Dr. Stephen Leeb, author of Red Alert: How China's Growing Prosperity Threatens the American Way of Life, warned that China is becoming an economic super-predator.

 

Leeb’s explanation of the current situation reminded me of a boxing match.  In one corner there stands a boxer who has a very strong reputation but who does not know he is in the ring.  In the other corner stands a boxer who is a little lighter but who has been training hard.  To tilt the scales farther in his direction, the latter boxer also purchased all of the boxing shoes, gloves, trainers and ring time while the other boxer was not even paying attention.  You can guess which boxer represents the U.S. and China in this scenario.  The United States is not necessarily done for, but it is time for us to at least realize that we are in a fight and act accordingly.

 

A long time chess player, Dr. Leeb expressed that he is downright scared of the way that our opponent is systematically playing an enviable game of strategy while the U.S. hasn’t even started to acknowledge that it is engaged in a competition that threatens our entire way of life.  His argument focused on resource acquisition for global economic control.  His comments invoked a mixture of respect for the efficiency of the Chinese machine and shock at how far behind the U.S. might be.

 

Leeb expressed particular concern about China’s workforce development strategies; its growing control of the mining and use of rare earth metals and of copper; its focus on petroleum resources; its dominance in the solar market; and its apparent stockpiling of gold and silver.

 

Workforce Development

Besides having a massive cadre of working age people and graduating more engineers each year than we have working in this country, China operates on more of a meritocracy, or by rewarding the merit of individuals, than the U.S. does.  For example, one of the premier female chess players in the world right now is a Chinese adolescent who was pulled out of the fields as a young girl when someone recognized that she had an aptitude for strategy.  If she continues on her current trajectory, Dr. Leeb suspects she will be playing grown men soon.

 

It is the mindset of elevating the best, brightest and hardest working that permeates much of Chinese society.  There are more businesspeople becoming billionaires each year in China than anywhere else in the world.  The Chinese have repeatedly been cultivating this kind of talent in government as well, and Dr. Leeb believes that this talent is playing the resource war very well. Now please don’t get me wrong, China’s leaders are not saints, and the country has a fair share of insider nastiness, but the country is playing harder towards merit than the U.S. is by far, and this should pay high dividends in the future.

 

Rare Earth Metals

Rare earth metals are the bedrock of the future of all long-life, lightweight batteries. Over the years, China has developed its mines in Mongolia and its processing plants to the point that China now produces 97% of the world’s supply.  These resources will be increasingly important as the world moves into greater use of electric cars.  Clean energy is a global concern, and the efficient storage of this energy is crucial to its adoption and success.

 

Further, China has stopped exporting rare earth metals in raw form and instead will only sell them as components in finished products such as batteries and permanent magnet motors, a core component of most high-efficiency electric generators. In doing so, China is locking down its control of key components markets.

 

Copper

China is spending dollar amounts of a similar magnitude in Afghanistan as the United States.  The difference is that the Chinese are spending their resources to build infrastructure in Afghanistan, in exchange for the exclusive right to mine the country’s copper, while the U.S. is creating the world’s best distraction for them to do so.  The reason that China is getting a leg up on the world’s copper supply is concerning is that copper is at the root of many of the world’s future “green” technologies in addition to being the backbone of many of the world’s existing technologies.

 

Solar Energy

First Solar is the U.S.-based company that was the second largest producer of solar panels in the world in 2010.  Recently, First Solar took a bath, losing 25% of its value, and the reason can be found in a recent quote from a Forbes article examining the firm’s slide.  “First Solar did not provide any details but the handwriting was on the wall.  Recently, there has been considerable anecdotal evidence that First Solar is no longer competitive with Chinese imports.”  The title of the article was even more succinct in its finger-pointing: “China Almost Kills Premier U.S. Solar Company.”

 

In 2011, First Solar led the roster of the 25 fastest growing technology companies in America.  What could bring an innovative giant like this down?  According to Forbes, the culprit was a $30 billion dollar helping hand from the Chinese government to its entire solar sector, singlehandedly making U.S. production uncompetitive.  With that kind of financial supports in play, there is just not much a company, or country, can do to prevent China from getting a complete lock on the solar industry, a potential lynchpin in the forward motion of clean energy.

 

The Oil Game

Dr. Leeb’s concern centers on one word, PetroChina.  PetroChina Company Limited is the listed arm of the Chinese National Petroleum Corporation, a state-owned producer of oil and gas.  The company tripled in value in the years since going public, was the most valuable publicly traded company on the Shanghai exchange as of September 28th of 2011, and was listed as the third most valuable company in the world after Apple and Exxon in 2012. Though the Chinese are gearing up for futuristic energy sources, they seem to have a firm understanding that petroleum-based energy will be ushering all of us into the world of green energy and will be critical in bridging the span between current and future technologies.

 

Gold

What is China doing with gold you ask?  It, along with Russia, appears to be attempting to accumulate enough to one day back its currency with it.  It is also encouraging its citizens to acquire gold by opening a new metals exchange and granting tax exemptions for its purchase.

 

China’s actions in the gold markets point to two important possibilities.  First, the U.S. dollar might be in more trouble than the western press has noticed.  Second, if metals become popular in a country with a population of 1.33 billion savers, there could be a giant boost in gold’s overall demand, driving up prices significantly. The potential that China is poised to change the global pricing of gold is sobering.

 

Dr. Leeb’s call to action has some very compelling points and, as a patriot, you can understand his battle cry.  “We are at war and we don’t even know it!  Wake up, America!”

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{{product.name}} (*) (**)

US Price: ${{getPrice(product)}}

Price Outside US: ${{getPrice(product, 'non_us')}}

Ounces: {{product.oz}}

* (15 oz foreign Min) ** (When available)