Li

For Every Action…

Lithium stands as the white “gold” of the 21st century. This lightweight, highly reactive metal powers the batteries that run electric vehicles (EVs), store renewable energy and underpin the “green” technology revolution.

And as global demand surges, the largest lithium deposits are inviting worldwide attention — and inviting some unintended consequences.

In Chile’s Atacama Desert, one of the richest lithium sources on earth, mining uses up to 65% of local water supplies.

In this drought-prone region, water is life — for ecosystems, for rare species like flamingos and for communities whose livelihoods depend on scarce water resources.

Atacama Desert, Chile: The Earth’s driest desert
Courtesy: X

Over time, shrinking lagoons have scarred the landscape, altered fragile habitats and put pressure on the local economy and traditional ways of life.

Yet, Chile’s lithium plays a crucial role, enabling “cleaner” energy technologies. EVs for instance, release fewer emissions than gasoline-powered cars.

However, extracting lithium is resource-heavy and energy-intensive. For every ton of lithium produced? Fifteen tons of carbon dioxide are released, according to MIT research.

Sprawling mining operations, in fact, can create environmental impacts sometimes worse than fossil fuel extraction itself.

This reality reveals a hard truth: Cleaner technologies depend heavily on minerals that aren’t harvested without consequence.

Recognizing this fact doesn’t dismiss the importance of lithium; rather, it calls for smarter mining using better technology…

… An Equal (and Opposite?) Reaction

In the Democratic Republic of Congo (DRC), the sprawling Manono lithium project holds some of the world’s richest reserves.

This strategic asset has long been entangled in complicated deals involving foreign powers, ranging from Chinese state-backed companies to Australian mining firms with historical claims

Recently, startup KoBold Metals — backed, in part, by American billionaires Jeff Bezos and Bill Gates — secured a major agreement with the DRC government to develop these lithium resources.

KoBold combines cutting-edge artificial intelligence with mining expertise to map and extract minerals with more precision.

This tech-driven approach promises to boost production efficiency and reduce environmental disruption compared to traditional methods.

The company’s $1 billion investment aims to diversify lithium supply chains, lessening global reliance on dominant players, and bringing U.S.-friendly alternatives into the mix.

The takeaway is clear: lithium’s significance in the energy sector is indisputable. But there are enormous trade-offs. At this stage, the challenge lies in carefully managing and mitigating the risks involved.

For investors? “Energy was once written off — until it wasn’t,” says Paradigm editor Davis Wilson. “The same setup could be unfolding for lithium today.”

“Fundamentals of Gold”

“I want to cover the fundamentals of gold,” says Paradigm’s macro expert Jim Rickards. To do so, he poses a series of questions. First: What makes gold a good diversifying tool?

“Gold prices do not correlate closely to stock prices,” he says. “Gold and stocks are driven by separate factors. That makes gold a good diversification asset for portfolios that are heavy in stocks.

“When a portfolio is highly diversified, it can produce higher expected returns without adding risk. The difficult part is finding asset classes that really are diversified.

“Buying 50 different stocks is not diversification since you only have one asset class — stocks — and the behavior of various shares will be highly correlated in times of stress.

“Gold is genuinely diversified from stocks and will improve portfolio returns.”

Who should add gold to their portfolios, and how much should they allocate?

“Every investor should have an allocation to gold in his portfolio. It's an excellent diversification and can be a powerful asset to have in the face of natural disaster, infrastructure collapse or social unrest.”

Jim notes: “I recommend a 10% allocation of investable assets. In calculating investable assets, you should exclude home equity and the value of any private business.

“Don’t gamble with your house and livelihood. Whatever is left (stocks, bonds, real estate, etc.) are your investible assets. Allocate 10% of that amount to gold.

That allocation is high enough that you’ll make significant profits (and protect against losses in the rest of your portfolio) if gold soars, but small enough that your overall portfolio won’t be hurt badly if gold goes down.

“A 10% allocation is the sweet spot for both profits and downside protection,” he repeats.

Why is gold a good hedge against inflation?

“Gold is priced in dollars. Inflation means the dollar is worth less in terms of purchasing power. That means it takes more dollars to buy gold, so the dollar price of gold goes up.

“What you may lose in the rest of your portfolio in terms of dollar purchasing power is made up, in part or all, on the profits you make from the higher dollar price of gold,” says Jim.

“Inflation has a way of sneaking up on investors in small increments and can do a lot of damage before investors see it for what it is.

“Owning gold will protect you from that. You’ll have your inflation protection in place 24/7 and won’t be caught off-guard.”

Why is it smart to own gold in times of global conflict/political turmoil?

“Geopolitical conflicts and political turmoil often result in unforeseen consequences,” Jim adds.

“These consequences can include supply chain disruptions, economic sanctions, asset seizures and freezes” — see below — “bond defaults, bank failures and inflation.

“Oil prices can spike if key waterways are closed or a vessel is sunk. Economic sanctions and financial warfare can cause recession or a banking crisis almost overnight.

“Assets such as stocks, bonds, real estate, etc. can be adversely affected by such changes without warning.

“Gold tends to be insulated from such shocks because there is no issuer, no creditor and no country involved. It's just gold. That means you can hold it safely and wait out the turmoil without adverse effects.

“The bottom line is gold anchors the rest of a diversified portfolio. It is physical so it is not easily frozen like government fiat.

“It offers diversification because it does not correlate to other asset performance. It is the best hedge against inflation.

“Gold should not dominate any portfolio,” concludes Jim, “but it should be part of every portfolio.”

About That Fed Rate Cut…

Jim Rickards’ forecast of a Federal Reserve rate cut is gaining credibility — especially in light of the Fed’s “dual mandate”: controlling inflation and unemployment.

To wit, the July 2025 U.S. jobs report shows a slowdown in job growth with only 73,000 new jobs added — well below economists’ expectation of 100,000. The unemployment rate rose slightly to 4.2%, marking an increase from June's 4.1%.

The data, in fact, reflects the lowest monthly increase recorded in 2025. Notably, the labor force participation rate has declined, and manufacturing hiring has stalled amid tariff uncertainty.

Speaking of, the ISM Manufacturing index dropped from 49.0 in June to 48.0 in July — markedly lower than analysts' prediction of 49.5. (For reference, any number under 50 suggests contraction.)

“The job market looks significantly worse today than it did before this report,” says Jed Kolko of the Peterson Institute for International Economics. Well, yes…

Here’s an interesting factoid, courtesy of The Wall Street Journal: “A year and a half ago, the economy needed to add 166,000 jobs a month to keep the labor market steady, according to Kolko. As of June, Kolko said, the needed number was only 86,000.”

“It’s fallen so much because this immigration surge has ended,” Kolko says. “In other words, a job creation number that might have looked lackluster a year and a half ago,” WSJ adds, “might actually be strong today.” Hmm…

On Thursday, President Trump signed executive orders setting new reciprocal tariffs ranging from 10–41% on imports from 69 countries.

Most tariffs will take effect on August 7, allowing Customs and Border Protection time to adjust and giving countries an opportunity to negotiate better terms.

However, Canada faces an immediate tariff increase from 25% to 35%, starting today. According to President Trump, this prompt action is due to Canada’s inadequate cooperation in curbing the flow of illicit drugs across the border.

Generally, countries with a U.S. trade surplus will face 10% tariffs, while those with trade deficits will see rates starting at 15%. High tariffs have been imposed on nations including Syria (41%), Myanmar (40%), Laos (40%) and Switzerland (39%).

Taiwan will face a 20% tariff on its exports to the U.S. beginning August 7, 2025. This rate is lower than the originally threatened 32% in April but higher than the 15% tariffs applied to Japan, South Korea and the European Union.

China and Mexico are temporarily exempt amid ongoing negotiations, with China’s tariff deadline set for August 12.

Two more Big Tech earnings to report: Amazon (AMZN) and Apple (AAPL).

Amazon reported strong Q2 results with revenue of $167.7 billion, up 13% year-over-year, beating expectations. Earnings per share were $1.68, above the predicted $1.32. AWS revenue grew 17.5% to $30.9 billion, driving most of Amazon’s operating profits, which totaled $19.2 billion. Advertising revenue also rose 22%.

And Apple reported solid fiscal Q3 2025 results with revenue of $94 billion, a 10% increase year-over-year, and earnings per share of $1.57, up 12% from last year. iPhone sales grew 13% to $44.6 billion, driven by the new iPhone 16 lineup and an unusual buying pattern partly linked to tariff concerns.

All good, right? Despite the earnings beat, AMZN shares are down almost 8% today while AAPL’s down 2%.

On second thought, Amazon and Apple aren’t really outliers today… Stocks are getting hammered.

Admittedly, the Nasdaq is getting hit hardest; the tech-heavy index is down 1.75% to 20,753. Stuck in the middle — the S&P 500 – is down 1.25% to 6,255 while the Big Board is down “just” 1% to 43,650.

Precious metals? They’re catching a bid today: Gold’s up 1.30% to $3,392.70 per ounce, and silver’s up 0.40% to $36.85.

But the crypto market’s in a slump. Bitcoin’s lost 1.50% to $115,200, and Ethereum’s down 3.80% to $3,600.

UPDATE: U.S. Private Vaults’ Federal Raid

More than four years after federal agents raided U.S. Private Vaults in Beverly Hills, civil asset forfeiture is again in the spotlight.

The controversial case saw more than 800 safe-deposit boxes seized — by a joint taskforce including the FBI, DEA and USPS — with the justification that U.S. Private Vaults catered to criminals, offering extreme customer anonymity and a “don’t ask, don’t tell” policy.

Yet the raid swept up not only those accused of criminal wrongdoing, but also hundreds of everyday people who used the boxes to store life savings, family heirlooms and important documents.

Among the innocent caught in the dragnet was Linda Martin, who lost $40,200 in the raid. Despite the warrant expressly forbidding agents from searching or seizing customers’ property, the FBI took her money and offered no explanation.

Later, the “notice” sent to Martin referenced a laundry list of potential federal crimes but didn’t specify why she was targeted or which law(s) she allegedly violated.

Although the FBI eventually returned her cash, Martin fought back in court, hoping to defend her civil rights to due process, privacy and more. She argued, with the support of the Institute for Justice, that the government must provide specific, fact-based explanations when seizing someone’s assets.

Unfortunately, Ms. Martin’s case hit a dead end last week, as the U.S. Court of Appeals for the District of Columbia dismissed her case for lack of jurisdiction. (Legal advocates observe that most forfeiture cases never even make it all the way through the court system due to procedural hurdles.)

For now, the case’s dismissal means the FBI’s current forfeiture practices remain largely unchecked. And federal agencies retain broad powers to seize property, while Americans — and their property rights — remain under siege.

Try to have a good weekend, reader… And don’t forget to check out Saturday’s 5 Bullets. Take care!

Best regards,

Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets