Imagine a young man who decides he’s going to have a massively muscled body like Arnold Schwarzenegger…
Note that I wrote “have,” not “earn” or “work hard to have.” After all, good health is everyone’s right. Right?
So he has no plan to diet and exercise. He’s not going to study nutrition or invest in himself through the best-quality food. He’s not going to learn about anatomy or fitness either. And perish the thought that he’d have to break a sweat—let alone spend years running, lifting weights, and so forth.
Why bother? He can vote for politicians who promise to deliver what he wants… somehow.
Why waste time on such a silly exercise?
Because this is essentially what the average person in the so-called developed world wants when it comes to a “green” future.
For instance, John Q. Public applauds when politicians:
- Ban internal combustion engines before there are enough electric cars—or even the capacity to build enough electric cars—to replace them.
- Blame greedy corporations for high gas prices after blocking pipelines, denying permits, cancelling licenses, increasing regulations, increasing taxes on the industry, etc.
- Shut down perfectly serviceable nuclear power plants, forcing people to burn more coal—of all things!—to stay warm.
- Ban or make permitting impossible for the new mines needed to produce the copper, lithium, cobalt, nickel, graphite, silver, rare earths, and other “new energy minerals” green tech requires.
- Decide to double down on unreasonable and hideously expensive green pipedreams during a war that just made it all that much more difficult.
We might cut Mr. Public some slack since he was educated in government schools. Of course he thinks the state is an unlimited cornucopia—if we vote for the “right” people and submit to the will of the collective like good little ants.
But not much slack, since the mendacity of politicians is well known to all. That and many other clear and obvious facts have to be studiously ignored to avoid seeing that 2 + 2 = 4, and from that, all else that follows in this case. Refusing to face facts is more a matter of character than education.
Regardless, The Powers That Be (TPTB) doubling down on the green agenda during a war is going to make an already difficult timeline all but impossible.
No one should kid themselves by saying that the war is in Ukraine, with limited impact outside the theater of conflict. The COVID-19 shutdowns have shown just how interdependent and fragile the global economy had already become. The shooting war is creating a whole new set of supply chain disruptions and other damage. But as tragic as the current military conflict is for people on both sides, it’s the economic war that has the larger and more enduring destructive potential for the world as a whole.
(If the economic damage gets bad enough, that includes the potential for the shooting war to become global as well. But… let’s not go there. Surviving WWIII is beyond the scope of this service.)
At any rate, TPTB doubling down on stupidity isn’t surprising—but it is shocking to see at this time, just the same. How could anyone be foolish enough to conclude that a time of global economic war that’s making everything more expensive and difficult is a great time to embrace even more unrealistic environmental goals?
Mind you, I’d be saying the same thing even if I were 100% convinced that it’s urgent for human survival to reduce CO2 emissions. I’m not arguing here against reducing CO2. I certainly don’t enjoy pollution. I’m just saying that if a policy sacrifices human well-being for the sake of human well-being, it’s self-defeating.
But no, we couldn’t possibly take a breather due to the war. Why give people a chance to adjust and recover so they can tackle climate change with more resources and energy? Let’s ban Russian oil and gas, shut down nuclear power plants, and ask everyone to pay a high multiple for energy—and still not have enough.
This strikes me as truly insane.
I suppose that if most people voted for politicians who would take us down this path, they may deserve what they’re going to get.
Sadly, the rest of us who don’t agree with the madness will be forced along for the ride.
And that’s not all. As crazy as this high-level policy agenda is, what’s happening at the nuts-and-bolts level is just like my imaginary Schwarzenegger wanna-be who refuses to exercise. Somehow, TPTB imagine that the green utopia they promise voters can be achieved without doing the necessary hard work. Just the opposite. For the most part, they continue moving to block, tax, and regulate the mining industry out of business.
The problem with making copper the new oil is that you can’t just poke a hole in the ground and have it come gushing out…
Well, okay, it takes a lot more than that to deliver petroleum products to the market. But the time it takes to bring known reserves to market is much, much shorter in the oil patch than in hard rock mining.
Yes, there are known, large deposits of copper, lithium, graphite, nickel, and other necessary minerals around the world. But permitting a major mine can take many years—even decades—with no guarantee of success. Nor is successful permitting any guarantee the government won’t turn around and yank the permit after all. That’s happened in Arizona and Alaska recently. Or the government can just take a large chunk of a mine for itself, as happens in some African, Asian, and other countries from time to time. Or, after companies spend billions building mines, local communities can shut them down with illegal roadblocks, as happens a lot in Latin America.
Even with permits secured, mining executives, their boards, and their investors need to believe that they will be allowed to profit from building a mine before they’ll pour billions into doing so. That’s far from certain in the current political environment in many countries. Mining has become so demonized that mining companies are constant, easy victims of ignorant “not in my back yard” (NIMBY) thinking—and outright extortion.
Enter Joe Biden, with a plan to invoke the Defense Production Act to secure the minerals vital to the green agenda.
Not so fast.
The plan isn’t to reduce barriers to entry, cumbersome regulation, or project-killing permitting delays. Nope: we’re going to subsidize politically correct mining projects. That might boost companies with credible ESG credentials… but how many projects will be green enough, hire enough LGBTQ workers, and be loved enough to have no picturesque opposition?
Subsidies won’t ensure supply if mines can’t get permitted: no mining = no green dream.
You and I may understand this reality, but TPTB—and most voters—don’t seem to see it yet.
I do believe, however, they’ll wake up and smell the napalm when the hard shock wave of facts slaps them in the face with greater force than Will Smith’s prime-time TV slap.
The good news for disciplined resource speculators is that this is a rock and hard place here that has one most likely resolution…
TPTB will either have to give up on the green agenda or give up on NIMBY attitudes toward mining—and I don’t think they’ll give up their green ambitions.
I thought this was true before the war, especially for copper. But the New Iron Curtain makes the rock and hard place inescapable. I do think TPTB will pivot to policies more favorable to mining.
In the US, if the GOP wins a majority in Congress this year or the White House in 2024, we may even see an Operation Warp Speed II invoked to secure “critical mineral” independence. But if the Democrats retain power, they won’t escape reality and will be forced to do something similar in due course.
I think Europe is already pivoting to a more pro-mining stance. With the more practical mentality of the EU’s eastern members, I expect the transition to get going faster. But as much as the EU loves to micromanage through regulation, it could take longer to materially increase output.
As for the rest of the world, Africa is already much more open to mining, but physical security and rule of law issues continue to plague many of the continent’s resource-rich countries.
Much of the Asia–Pacific region is also mine-friendly, but corruption and resource nationalism have made it a trickier region for miners.
Latin America has generally been headed in the wrong direction, with governments looking to raise taxes and royalties on miners, or even turning anti-mining to appeal to increasingly popular green sentiments. Native populations are being given veto power over mining projects. This is already having a significant impact on supply.
All of this will increase the urgency for TPTB to adopt and encourage pro-mining policies in the “first world.” They may fiddle around with subsidies and other silly ideas at first, but at some point, reality will force them to allow miners to get on with the business of exploring, developing, and producing the resources their agenda requires.
As I say, this is good news for disciplined resource speculators; all of the above portends high prices for key energy minerals for years, and perhaps decades to come.
That may not sound like a very original thought. What’s new is the severity of the squeeze between the rock and hard place. This has ratcheted up greatly since last the war in Ukraine started—and even in the last week since the sanctions escalated.
This makes the trend much more solid than even I had appreciated.
This is the sort of thing that makes even a disciplined speculator want to go all in. I won’t do that, on principle, and because a market crash creating lower entry points is still a possibility this year.
But it’s a fact that my wife and I just sat down to talk about how we can raise more funds to invest. When I outlined the thesis of this article to her, her eyes lit up.
At the risk of sounding promotional, I believe the squeeze between the rock of NIMBY thinking and the hard place of the green agenda is likely to create fortunes for those who speculate accordingly.
So, while TPTB are doubling down on stupidity, I’m looking to double down on the best resource speculations that should benefit.
- My favorite energy minerals remain uranium, copper, and silver. Others may continue doing well, but I’m less confident about them, especially as most aren’t scarce.
- Uranium remains a special case, both for still being relatively cheap and for having potentially market-altering catalysts in the near term.
- I think oil remains elevated in the near term as the Great Reopening heats up. However, I’m not sure triple-digit prices are sustainable after that, as more production will likely come online. That’s until the green agenda cuts supply off again before the world is done with gas and diesel cars and trucks. Then the real, likely uncurable shortage kicks in.
- I’m also still very bullish on monetary metals—gold and silver—as I see the stagflation I’ve been expecting taking shape now. Yes, silver bulls, you’re not imagining things: I put silver on the list twice. Make of that what you will.
As for which companies offer the most leverage for the least risk in whatever resources you want to speculate on, that’s what My Take is here for. I’ll do my best to be your due diligence guy.
Or go it alone. No hard feelings. Just remember that discipline pays; don’t compromise on what makes for a great speculation.
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