U.S.-Iran Missile Strikes Mark the “Death of Globalism”

Last week, President Trump ordered a drone strike that killed Iranian General Soleimani. A few days later, Iran retaliated and fired missiles at sites in Iraq that host U.S. personnel.

I discussed the death of Soleimani in this forum in the days following. For the moment, let’s allow the “tactical” dust to settle concerning who’s shooting at whom; who is blowing up what.

Instead, let’s take these missile exchanges as an illustration of a major global trend; an investable industrial trend, no less.

In a noisy sort of way, the recent missile exchange marks the death of globalization. Meanwhile, the exchange of rockets opens up a new “Trade of the Decade.”

Let’s look deeper into what we just saw.

Obviously, we saw a missile exchange. Whooosh-boom! Whooosh-boom!

Then, world leaders talked tough and rattled sabers. Oil prices rose, as well as the price for gold and silver.

But there’s much else at work here…

There’s more than the spike in oil prices, or the spike in the price for gold and silver. Or even the global “arms trade,” broadly speaking. Although those sectors are ripe for investors.

In terms of missiles arcing back and forth, we’re looking at another “Trade of the Decade;” it’s similar to what I discussed on January 2 regarding Bill Bonner and gold.

Here’s what I mean…

The U.S. fired missiles and took out an Iranian general. Iran fired back at U.S. personnel, but didn’t harm anyone. Your first thoughts were likely along the lines of… Will there be another war in the Middle East?

You wondered, and billions of other people across the planet; we all wondered.

At this stage, it seems safe to say that there’s probably no looming “war.” Whew!

But if not all-out war, we have to be concerned that there’s continuing bad blood between the U.S. and its allies, and Iran and its supporters like Russia and China. That’s evident.

Now, look past the headlines.

The deeper imagery of roaring rockets isn’t just some Freudian rush, over and beyond people and military targets getting blown up. No…

We’re looking at the destruction of globalism.

It’s the end of “globalism;” that term you’ve been hearing for 30 years, since the end of the Cold War.

Those flying missiles are the signal that globalism is extremely dead. It’s blown up, just like the late deceased Soleimani.

Globalism is (or “was”) the idea that the world will integrate closer in terms of economics, industry, jobs, trade, finance and more. Somehow, we’ll have a big, global economy, lubricated by the almighty U.S. dollar.

Globalism is why the U.S. shut down so many of its mines, mills and factories. The U.S. and Canada, plus Western Europe de-industrialized at a large scale, throwing millions of former workers out of their jobs.

Globalism drove people, businesses and even governments out of old-line industrial activities; in particular, to eschew key elements of basic production.

As globalism unfolded, we experienced macroeconomic moves through which entire nations reconstructed themselves into so-called “service economies.”

Globalism meant that nations elsewhere in the world – and people not in the U.S., Canada, Europe – had the factories, jobs, businesses. Other people (in China and elsewhere) made much of the world’s basic stuff.

Then in so-called “developed” economies, people would just buy things freshly unloaded from those 40-foot containers that you see out back of Target, Walmart, etc.

Globalism – or certainly, “globalism” as practiced in the U.S. and much of the West – was always a bad idea… A pipedream of some kind of mythical, mystical “economic efficiency” that wrecked entire cultures.

Now, with U.S.-Iranian missile exchanges, we have the ultimate expression of how dumb globalism really was.

The U.S.-Iran missile exchange highlights the aforementioned “dumbness” of globalism. It’s plain to see, if you know what you’re looking at; like this…

Drone

U.S. Air Force MQ-9 “Reaper” Drone, with two AGM-114 “Hellfire” Missiles, and 500-Pound guided bomb.
Source: USAF, Centcom.

What makes U.S. drones work; and Hellfire missiles? Indeed, what makes those Iranian tactical ballistic missiles work?

The engine? Wings? Rocket motor? Yes, but…

Here’s another hint.

Missle

Cutaway Model of Lockheed-Martin AGM-114 “Hellfire” Missile.

C’mon… Wrap your brain around it…

Why do drones fly? And Hellfires shoot? Even those Iranian missiles… What’s the key?

Okay, end the suspense… It’s complex guidance systems.

Modern weapons – drones and missiles, plus much else – work because of complex, internal guidance systems.

Yes, I mean computers, as in circuit boards, chips, software… And complex steering systems that control how the beasts move and fly through the sky.

Indeed, on that Hellfire missile above, look at the back end. You can see small control fins at the rear of the vanes. Those little surfaces move, and guide the missile through the sky to its target; the technology behind it is mind-blowing.

So, back to the question… What? Makes? It? Work?

Answer: Exotic metals.

Huh?

Yes… Exotic metals. Or what I – and many others in the field – call “technology metals.”

These are metals from the Periodic Table, to be sure. Not magic metals from a different universe. No Star Trek substances. Everything comes out of a rock or mineral assemblage somewhere. But these metals have names that are not household words.

You know what iron is, right? And aluminum. Copper, lead, zinc. Gold and silver, of course. You grew up around them. You know what they are. These metals have been known to mankind for thousands of years.

But the modern world uses many other metals now… Critical metals… Metals that make the world work…

Technology metals are what make your current car so different from the car you owned 25 or 35 years ago. They’re what make your refrigerator different today; or your microwave oven or television set.

Tech metals are why some people have artificial knees and hips. And why you can make “free” phone calls across the world on services like Skype.

Heck, speaking of phone calls, technology metals are what make your iPhone or Samsung smart phone work. One chemistry professor at MIT went to the trouble of figuring out that 63 of the 92 elements on the Periodic Chart are inside your iPhone.

I mean metals of which you may never have heard; unless you were a chemistry geek back in school. (And there’s nothing wrong with that!)

Piles

Rare earth elements (REEs); praseodymium, cerium, lanthanum, neodymium, samarium, and gadolinium. From American Chemical Society.

By now, you’re wondering… What do these exotic elements have to do with the U.S.-Iran missile exchanges? How do they illustrate a new, global trend?

Most so-called “developed” nations import virtually all of their critical technology metals from other places; most often, from “under-developed” nations, and commonly from or via China.

The new “trend” for the U.S. is to reverse that, and re-establish supply chains at home, or in other developed or closely-allied nations.

For example, about 85% of global production of rare earth elements (REEs) comes from China. And REEs are critical to the same systems that make Western advanced tech work. In the world that’s fast-evolving, you don’t want your critical metals and components coming out of China.

Go back to those Hellfire missiles. Recall those little fins at the back of the vanes, at the rear of the weapon. They guide the missile. And what makes them move? Powerful magnets. And the magnets come from… China.

It’s not just Hellfire missiles and guidance vanes…

There’s a long list of critical military technologies that are somewhat, mostly and/or entirely dependent on basic materials that come from China. Or in some instances, from Russia. Or from other countries in the world that we do not want to rely on in a pinch.

What technologies? Missiles, jet engines, electronics, sonar, radar, electronic warfare systems, night vision, space systems. Plus fast computers, quantum computers, directed energy, magnetic systems.

Pretty much everything from deep-diving submarines to orbiting satellites has some amount of technology metals in them. The shocking thing would be advanced tech that didn’t require exotic metals.

Now, the point is glaringly obvious to the people who make defense and related industrial policies in the U.S. It’s time to rebuild a U.S.-centered, robust, deep, broad set of new supply chains for critical materials.

Rebuilding the supply chain is a trend that’s been many years in the making. People have been talking about redeveloping a U.S./Western REE supply chain since the early 2000s. But now… it’s kicking into gear.

For example, in November the U.S. Army issued several requests for industry to come up with ways of establishing a “mines to magnets” supply chain in the U.S. and/or Canada. Air Force also recently issued a similar proposal. And Navy has long been concerned with the problem.

If for no other reason than military issues and production of modern weapons, U.S. defense contractors are working to trace all materials back to source; to the mine and mill.

And the next generations of mines, mills and sites for producing technology metals – REEs and others – will be in the U.S., Canada and other closely allied nations. There’s your investable industrial trend.

It brings us back to the U.S.-Iran missile exchanges.

You can’t build, fire and guide missiles to target without a host of exotic elements, from the rocket nozzles to the guidance systems.

In the current world, where political-military standoffs are destined to continue for a generation and more, the U.S. simply cannot afford – in any meaning of the word – not to have control over critical parts of the supply and production chain. Not in a world of high-tech weapons that rely on exotic elements.

The days of buying critical military components from potential adversaries are coming to a close. It’s as clear as the trail of fire behind a rising rocket.

General Soleimani is dead. So is globalism. And the respective instruments of death both rely on obscure metals arranged within the groups of the Periodic Table. There are opportunities here for people who get out ahead of it.

As the process unfolds, I’ll tell you more.

On that note, I rest my case.

That’s all for now…  Thank you for subscribing and reading.

Best wishes…

Byron King

Byron King
Managing Editor, Whiskey & Gunpowder
WhiskeyAndGunpowderFeedback@StPaulResearch.com

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A Harvard-trained geologist and former aide to the United States Chief of Naval Operations, Byron King is our resident gold and mining expert, and we are proud to have him on board as the managing editor of Whiskey & Gunpowder.

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