Meritocracies, Copper, Batteries,
Petrol, Solar and Gold
Posted Nov 7, 2011
Last week the LaBorde family was down
in South Louisiana at the New Orleans Investment Conference.
After attending a presentation on China by the very passionate
Dr. Stephen Leeb, author of Red
Alert: How China's Growing Prosperity Threatens the American
Way of Life; it became more apparent that China is becoming
an economic super predator. His explanation of the current situation
seemed comparable to a boxing match. In one corner there stands
a boxer who does not know he is in the ring, but he has a very
strong reputation. In the other corner stands a boxer who is
a little lighter but has been training hard. To tilt the scales
farther, the boxer that has been training has also decided to
hedge his bets by purchasing all of the boxing shoes, gloves,
trainers and ring time while the other boxer was not even paying
attention. 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.
As a long time chess player, Dr. Stephen Leeb expressed that
he is downright scared of the way that our opponent is systematically
playing an enviable game of strategy and yet we haven't even
started to acknowledge that we are engaged in a competition that
threatens our entire way of life. His argument was focused around
resource acquisition for global economic control. On the surface
his reasoning sounded much like many of the ideals that we have
previously heard. However, as he continued to speak his argument
invoked a mixture of respect for the efficiency of the Chinese
machine and shock at how far behind we may be. Some of the high
points of his presentation are listed below:
People: Besides having a massive workforce 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 US does. An example of this can
be seen in that one of the premier female chess players in the
world right now is a young Chinese adolescent that was pulled
out of the fields when it was recognized that she had an aptitude
for strategy as a young girl. If she continues on her current
trajectory, Dr. Leeb suspects she will be playing the men soon.
It is this mindset of making efforts to elevate their best, brightest
and hardest working that permeates much of their society. In
business there are more Chinese billionaires being made each
year than anywhere else in the world. In government they have
repeatedly been cultivating this kind of talent as well and Dr.
Leeb believes that this talent is playing the resource war very
Copper: China is spending dollar amounts of a similar
magnitude in Afghanistan as the United States, the difference
is that they are mining copper while we are creating the world's
best distraction for them to do so. The reason that getting a
leg up on the world's copper supply is exceptionally scary is
that copper is at the root of many or the world's future "green"
technologies besides being the backbone of many of the world's
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 they now produce
97% of the world's supply. This probably needs no explanation
as the world moves into electric cars and even a couple electric
planes. Clean energy is a global concern and the efficient storage
of this energy is a big concern as well and will only grow in
importance over the coming years. China has stopped exporting
rare earth metals in raw form and instead will only sell them
as components in finished products shutting out everyone else
around the world. This gives them a tremendous leg up on all
finished products related to rare earth metals, such as batteries
and permanent magnet motors, a core component of most high-efficiency
Solar Energy: "First Solar" is the name of the
U.S. based company that was the second largest producer of solar
panels in the world in 2010. Last week First Solar took a 25%
bath and the top of the blame list can be summarized with a quote
from an article in Forbes from last week, "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."
First Solar was listed number one in the top 25 fastest growing
companies in America in 2011. What could bring an innovative
giant like this down? According to the article, a $30 billion
dollar helping hand of the Chinese government to its entire solar
sector making US production not financially feasible at this
time. With that kind of help there is just not much a company,
or country, can do to prevent China from getting a complete and
total lock on the solar industry - a potential lynch pin industry
in the forward motion of clean energy.
The Oil Game: Two words, Petro China. Petro China is the
traded name of the Chinese National Petroleum Corporation that
announced its plans to go public in November of 2007. The company
tripled in value once public, was the most valuable publicly
traded company on the exchange as of September 28th of 2011,
and was the first company to reach a trillion dollar market capitalization.
Though the Chinese are gearing up for futuristic energy sources
they seem to have a firm understanding that petrol based energy
will be ushering us and them into the world of green energy and
will be critical in bridging us there.
Gold: What is China doing with gold you ask? They, along
with Russia, appear to be slowly but surely attempting to accumulate
enough to one day back their currency with it. They are also
encouraging their citizens to accumulate gold by opening a new
metals exchange and granting tax exemptions. If you have slept
through everything else written in this article, this single
point should be enough to tip you off that: 1. The US dollar
is potentially in more trouble than indicated by the press and
2. If metals become popular in a country with a population of
1.33 billion savers there may be a boost in gold's overall demand;
this could potentially resemble the craziness associated with
the Tickle-Me-Elmo doll during the 1996 Christmas season.
To quote Dr. Leeb, "We are at war and we don't even know
it! Wake up, America!"
Of all the points listed above one is of particular concern to
us - it is that China is poised to change the global pricing
of gold. We can buy and be holders of Petro China, rare earth
metals, copper and stocks in Chinese solar companies; but we
sell gold and understand it best. As a result of hearing Dr.
Leeb's impassioned views we feel that both gold and silver are
positioned very well for motion in a positive direction. It is
our position that gold and silver will be rising significantly
over the next year, so if you have any questions about acquisition
please feel free to give us a call. [ 318-470-7291 ]
Dr. Stephen Leeb was one of the best speakers I have heard this
year on things we should be paying attention to that will affect
our way of life in the near future. His book will be our next
read as these points listed above were just quick highlights
from a short presentation he gave at the New Orleans Investment
Christopher LaBorde also contributed
to this article.
Silver Trading Company
Larry lives in Shreveport, LA with his wife Puddy, and sells
precious metals at the Silver Trading Company.
Larry can be contacted at email@example.com. You can view his web
site at www.silvertrading.net.
Send questions, comments or corrections to firstname.lastname@example.org.
"Please note that I am by no means a financial advisor and
all investments should only be made after performing your own
due diligence." -Larry