Trump Buys His First Mining Stock

1Trump Buys His First Mining Stock

The story never caught fire in the corporate media — but we made a point of bringing it to your attention at the end of April.

Interior Secretary Doug Burgum said the U.S. government is looking to invest in mining companies — as he put it, an “equity investment in each of these companies that’s taking on China in critical minerals.”

The development fit right in with the “American Birthright” thesis of Paradigm’s macroeconomics maven Jim Rickards.

As a reminder, the Trump administration intends to open up huge swaths of federally owned land to energy and mineral development. Potential value of the resources under that land — $150 trillion.

It’s still early days for the Birthright story. But Jim’s readers are already prospering. Depending on which Rickards publication they’re subscribed to, they’ve pulled in gains so far of 10% on a copper miner… 11% on a gold miner… and gains of 31% and 41% on companies providing seismic data to miners and drillers.

But we were still awaiting the first case of the government buying an ownership stake in a publicly traded company.

That development came first thing this morning.

MP Materials X

From CNBC:

The Defense Department will become the largest shareholder in rare earth miner MP Materials after agreeing to buy $400 million of its preferred stock, the company said Thursday.
MP Materials owns the only operational rare earth mine in the U.S. at Mountain Pass, California, about 60 miles outside Las Vegas. Proceeds from the Pentagon investment will be used to expand MP’s rare earths processing capacity and magnet production, the company said.
Shares of MP Materials were last up about 50% on the news.

As we’ve been telling you for a while now, rare earths are an obscure but critical class of minerals used in everything from your smartphone to hybrid car batteries to guided missile systems — the last of those obviously of interest to the Pentagon.

China controls about 60–70% of global rare earth production… and more important, over 85–90% of global rare earth processing.

At present, even the rare earths coming out of MP’s mine are sent to China to be refined. A fair chunk of Pentagon money will no doubt be devoted to building out domestic refining capacity.

Jim Rickards’ “Birthright” thesis proved so compelling that other Paradigm editors picked up the torch — including recommendations for MP Materials.

This morning, readers of Enrique Abeyta’s entry-level newsletter Breaking Profits are sitting on gains of 80% after less than a month’s holding time.

Meanwhile, James Altucher and Zach Scheidt brought MP Materials to the attention of Altucher’s True Alpha readers in late May — recommending call options.

The first half of that trade soared 603% in a week. Just over a week after that, James and Zach recommended selling the rest of the position for a 918% gain.

As always, a handful of readers “freelanced” the trade — holding on beyond the sell recommendation in hopes of even bigger gains.

We heard from one of them today: “Please accept my sincere thank you for the MP recommendation. I held till today (nail biting) and was rewarded with a 1,400% gain… Best trade/investment of my four-year career.”

Don’t feel bad if you missed out. As I said a few moments ago, it’s still early days for the Birthright story.

If you’re still not fully up to speed on what Jim Rickards calls “a chance for the average American to become richer than they ever imagined,” follow this link to get started.

2Tariffs: Sanctions by Another Name

The big market news in the last 24 hours is a snap announcement by Donald Trump to impose a 50% tariff on Brazil.

“The 50% tariff is the highest level announced so far in Trump’s flurry of letters to world leaders this week,” says The Wall Street Journal — “which were sent after he pushed back the deadline to impose his so-called reciprocal tariffs to Aug. 1.”

Trump’s rationale? He has a beef with the left-wing Brazilian government’s prosecution of former president Jair Bolsonaro — a fellow right-wing populist.

As Trump put it in his letter, “The way that Brazil has treated former President Bolsonaro, a Highly Respected Leader throughout the World during his Term, including by the United States, is an international disgrace.”

This is a novel use of tariffs… not to “level the playing field” when it comes to trade, nor to raise revenue for a cash-strapped federal government… but to meddle in the political affairs of other countries.

Bolsonaro might well be getting a raw deal — but so what? What’s it to you as an American, earning and burning each day to make ends meet?

But make no mistake: You’ll feel the consequences. “Brazil is the U.S.’ second-largest trading partner in Latin America,” colleague Sean Ring writes in today’s Rude Awakening. “We import everything from their soybeans and orange juice to steel and rare earths. Prices on some of those goods will rise. Supply chains will get squeezed.”

So tariffs are now another tool of economic warfare along with sanctions, blacklists and asset freezes.

The “Global South” is taking notice.

Coming on the heels of the annual summit of BRICS nations this week — Brazil is a founding member along with Russia, India and China — the reaction is already frosty. “BRICS just put out another statement condemning what they call ‘unilateral economic aggression,’” Sean writes.

Meanwhile, “China and Russia are loving this. Not because they care about Bolsonaro, but because they want to fracture American dominance in trade and currency systems. And this tariff fight with Brazil? It helps them make their case.”

Pile that on top of Trump’s previous threat to slap a 10% tariff on any nation “alinged” with the BRICS: “That’s a big list,” says Sean. “And if it triggers a wave of currency de-dollarization or drives BRICS members to accelerate the development of a non-dollar trade network, that could hurt the U.S. much more than losing a few billion in Brazilian oranges.”

But that’s the medium and long term. Short term, Mr. Market is riding high today.

At last check the S&P 500 is nearly a quarter percent and *this* close to eclipsing its record close a week ago today.

The Nasdaq is pulling back slightly from the record close it set yesterday. The Dow is up about a half-percent — still a ways away from its high water-mark last February.

Crude has pulled back over 2% for no obvious reason, a barrel of West Texas Intermediate fetching $66.86. And after setting a record yesterday, Bitcoin has pulled back slightly to $111,331.

Precious metals, you ask? Read on…

3Counterintuitive Gold Signal

Gold languishes just over $3,300 today. But this gold bull market is still in its early stages — appearances to the contrary.

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The New York Post reports that owners of gold jewelry are banging down the doors of precious metals dealers along west 47th Street — eager to sell with prices still near all-time highs.

“This is a new experience for me,” said one woman who walked out with a check for $3,330 after dropping off a handful of gold trinkets.

Traffic is so heavy that “the frenzy has sparked a cash shortage across New York City’s Diamond District,” reports the Post. “Retailers claim cash is in short supply because of bank credit limits. Most customers are paid with checks and wire transfers.”

Even so, “Cash on hand can mean the difference between clinching a sale or watching a client wander over to the next jeweler.”

You might be tempted to think a development like this means “the top is in” — and the gold price can only go down from here. Not so.

Indeed the fact so many people are eager to part with their gold suggests this gold bull market has much longer to go.

The real sign of a top? That comes when the opposite condition takes hold — nobody wants to sell and everybody wants to buy.

Any veteran of the gold space will tell you that — like Jim Grant, editor of the legendary newsletter Grant’s Interest Rate Observer.

Grant recalled in 2018 how he learned this lesson the hard way.

“In January 1980, at the peak of the Great Inflation of the Jimmy Carter era, a line snaked out of the doors of a Lower Manhattan coin dealer. The people in that queue were waiting to buy gold at what proved to be a generational high, $850 an ounce. I was in that queue.”

From there, it was down, down, down. Gold wouldn’t return to that lofty level for another 27 years.

“I’ve made plenty of mistakes since then,” said Grant. “But that particular mistake I’ve subsequently avoided. Believe me, once was enough.”

Checking in on gold’s little sister: Silver is outperforming gold today, up nearly 1% to $36.67.

4Shoe Rule Axed

And now a 5 Bullets business travel alert: The TSA’s preposterous shoe rule just went away.

“TSA will no longer require travelers to remove their shoes when they go through our security checkpoint," Homeland Security Secretary Kristi Noem announced on Tuesday.

Of course, because security-state bureaucrats never apologize for their actions, Noem framed it all in terms of evolving technology: “Everything the TSA does and requires of travelers has always been necessary, but they have advanced over the years,” Noem said. “We have made advancements in how we screen individuals.”

Contrary to what Commando Barbie would have you believe, it was never necessary.

The rule came about after an incident in late 2001, three months after 9/11: A British-born al-Qaida recruit named Richard Reid was flying American Airlines from Paris to Miami. His shoes were filled with explosives. He tried to set them on fire midair.

He failed; the flight attendants tackled him long before anything happened. He’s doing life plus a 110-year sentence with no chance of parole.

The shoe-removal rule was never anything other than “security theater.” How do we know this to be the case? Well, for one thing, the rule didn’t come into effect until August 2006, nearly five years after Reid’s stunt.

Another tell is that the shoe rule never caught on elsewhere. “You don't take your shoes off anywhere but in the U.S.—not in Israel, in Amsterdam, in London," aviation security expert Yossi Sheffi told The Washington Post in 2011.

That’s because authorities overseas understood that even if Reid had succeeded with his plot, it was highly unlikely he could have downed the plane.

"We all know why we do it here,” said Sheffi, “but this seems to be a make-everybody-feel-good thing rather than a necessity."

So why junk the rule now? "I think it's politics, not security,” says former TSA officer Caleb Harmon-Marshall, who now writes a travel newsletter. He was first to report the change this week ahead of Noem’s announcement.

“A handful of lawmakers have recently ramped up criticism of the TSA, with some even floating the idea of dismantling the agency altogether. From complaints about long lines to inconsistent screening experiences, the pressure has been mounting. And this shoe change? It feels like a direct response to that pressure."

Sounds about right.

Celebrate the end of this idiocy if you like — but don’t think for a moment it’s because the control freaks and power trippers have come to their senses.

5Mailbag: Medicare Premiums, Cynicism

“There’s a fifth ‘gotcha tax’ that you did not mention,” a reader writes after Tuesday’s edition.

“It’s those outrageous Medicare premiums that increase dramatically as your income level rises. While those are adjusted annually for inflation, they are another bite out of seniors’ pocketbooks.”

Dave responds: You have George W. Bush to thank for that. Before he unleashed his Medicare Part D boondoggle in 2003, everyone paid the same Medicare Part B premium.

But to help cover the gargantuan costs of Medicare prescription drug coverage, Bush and the Republican Congress implemented a literally Marxist pricing scheme for Part B premiums — from each according to his ability, to each according to his need.

This year, the standard premium of $185 a month leaps to $259 for those earning over $106,000 (for couples, $212,000). There are four more tiers of even higher premiums for higher incomes.

This scheme is especially cruel for widows and widowers — because after the death of a spouse, their premiums are based on individual income, not joint. If their income doesn’t fall dramatically, their premiums might rise dramatically. (Of course, they often get bumped into a higher income tax bracket, too…)

“I read your thoughtful reflection addressing the critiques of cynicism,” a reader writes in response to the Dave’s-too-cynical issue republished on Independence Day.

“Your reference to John Adams, lamenting the necessity of studying war so that future generations could pursue the humanities, resonated deeply. Your observations about intrusive governance and the troubling silence of journalism in the face of power highlight a brutal truth many prefer to ignore.

“Your ‘cynicism,’ as some call it, is rooted in an honest acknowledgment of reality. Indeed, we're in turbulent times — the chaos described by Strauss and Howe's Fourth Turning is unmistakably upon us. Yet, amidst this chaos, your voice, your willingness to speak clearly about our hypocrisy and societal contradictions, is invaluable.

“Your desire to help people and your hope for a spiritual awakening are precisely what people need most at this moment. You wonder if such aspirations fit within a financially oriented newsletter — I believe they do, perhaps more than you realize.

“What we put out into the world is what we receive back. The current madness and hypocrisy are not inherently ‘wrong’ — they're simply reflections of the collective energy we're expressing. The chaos is our resistance to the call to evolve. But here's the key: Once we recognize we're all interconnected, not separate individuals locked in endless competition but rather unique expressions of the same unified energy, we can consciously choose better paths forward.

“Your powerful insights help accelerate this awakening. Rather than dwelling on the madness, your encouragement toward recognizing our interconnectedness and choosing better options can be transformative. By shifting the focus, even slightly, toward what we can collectively become, you not only help readers navigate these turbulent times but also actively contribute to the very awakening you and I are excited about.

“Keep shining the light, Dave. You're making a profound difference.”

Dave: Gee, what can I add to that?

As Robert Benchley may or may not have written, “Drawing on my fine command of the English language, I said nothing.”

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