Trump's Billion-Dollar Energy Bet

Trump’s Billion-Dollar Energy Bet

"For too long, the United States has relied on foreign actors to supply and process the critical materials that are essential to modern life and our national security,” says Energy Secretary Chris Wright.

With that in mind — as well as an executive order issued by Donald Trump as soon as he returned to the White House — Wright made a big announcement a few days ago.

The Energy Department is taking about $1 billion of its $161 billion annual budget… and using it “to speed the development of U.S. critical minerals and materials, used in everything from electric vehicle batteries to semiconductors,” reports the Reuters newswire.

“The department intends to offer funding to advance and scale up mining, processing and manufacturing technologies in the critical minerals and materials supply chains, sectors that have been dominated by China and other countries.”

“China holds a dominant global position in the supply of critical minerals and rare earths, but its grip on the value chain — minerals processing and magnet production — is even tighter,” writes Irina Slav at the OilPrice website.

If all of this seems to dovetail with the “American Birthright” thesis of Paradigm’s own Jim Rickards, you’re absolutely right.

As Jim’s been telling us from the moment Trump returned to the presidency, the administration is keen to tap into the mineral wealth on federal lands, a bounty worth as much as $150 trillion.

Whatever your opinion of federal subsidies to business… it’s apparent the Energy Department is betting this $1 billion outlay will pay back many times over.

The breakdown, according to an Energy Department statement, goes something like this…

• $500 million “to expand U.S. critical mineral and materials processing and derivative battery manufacturing and recycling”

• $250 million in aid “for American industrial facilities that have the potential to produce valuable mineral byproducts from existing industrial processes”

• $135 million “to enhance domestic supply chains for rare earth elements”

• $50 million for something called the Critical Minerals and Materials Accelerator program, which encompasses everything from rare earths to lithium to silicon carbide for semiconductors

• $40 million “to develop technologies to recover critical minerals from industrial wastewater.”

To make sure the feds won’t be pouring money down a black hole, there are strings attached for any company that wants access to these funds: They’ll have to pony up at least half the cost of whatever project it is that they want subsidized.

The Paradigm team will keep a close eye on which companies apply for this aid — and which ones have an inside track for approval.

Before it’s all over, this $1 billion program could serve up at least a half-dozen lucrative plays — and some of these awards could be announced before year-end.

That said, you don’t have to wait anywhere near that long to start collecting big Birthright gains.

In fact, one opportunity is so urgent that Jim Rickards recently asked my colleague of 18 years — Paradigm VP of Research Aaron Gentzler — to visit a remote patch of federal land in Utah.

What Aaron found confirmed everything Jim suspected; the Birthright story is about to move into Phase II — typically the most profitable phase in every resource-investing boom.

The 12-month profit potential is 4,800% — for reasons Aaron will show you when you click to watch his on-the-spot report.

Trump’s New Reality Show

Depending on what you read, the number of people Donald Trump is considering to replace Jerome Powell as Federal Reserve chair is as high as 11.

And Powell still has nine months remaining in his term.

If something strikes you about this process that seems familiar, Paradigm’s jack-of-all-trades analyst Zach Scheidt says you’re onto something.

“In a similar vein as his old TV show The Apprentice, Trump wants to ‘audition’ 11 new Fed chair candidates through a long, deliberate and very public process,” Zach wrote on Friday for Altucher’s True Alpha subscribers.

“It stands to reason that these candidates could try to outdo each other in their desire to see rate cuts.

“And four people on this list are already voting members of the Fed. What better way to demonstrate to Trump that they’re really in favor of rate cuts than to VOTE in favor of cutting at upcoming meetings in September, October, December and January?

“That’s why I expect the potential for rate cuts in the near future will rise as Fed members vie to get on Trump’s good side. This is Trump’s ‘workaround’ to getting rid of Jerome Powell.”

Yep. Looking at the futures markets this morning, traders are pricing in an 83% probability the Fed will cut at its next meeting 31 days from today. This is one time you don’t want to bet against conventional wisdom!

Expectations for rate cuts are keeping a floor under the stock market, with only two weeks remaining before Labor Day weekend.

The major averages are little moved as the new week begins — but also within striking distance of all-time highs. The S&P 500 is down a mere eight points from Friday’s close at 6,442.

Not much movement in the precious metals, either — gold at $3,333 and silver a couple pennies below $38. Crude sits a hair under $63. Bitcoin has retreated below $116,000.

One economic number of note: Homebuilder sentiment is in the toilet, with the monthly housing market index from the National Association of Home Builders clocking in at 32. For reference, anything below 50 suggests lousy confidence among homebuilders. And this is the first time since the early 2010s that the number has registered four straight months under 35.

The only scheduled market-moving event this week is Jerome Powell’s final address as Fed chair at the annual confab of global central bankers at Jackson Hole, Wyoming on Friday.

Gold: Now Is When the Rally Really Starts

In addition to the three reasons not to sell your gold that were spelled out in Friday’s edition, consider this…

It’s only now that everyday retail investors are latching onto gold.

For three years, we’ve chronicled how central banks have been loading up on gold at a record pace. The catalyst was the Biden administration’s unprecedented sanctions on Russia’s dollar-based assets — especially U.S. Treasuries.

The leaders of every other country in the world not on friendly terms with Washington wondered, Are we next? So they started grabbing gold with both hands. As our Jim Rickards has emphasized all along, “Gold is a physical, nondigital asset that cannot be stolen, frozen or seized provided it is in safe storage.”

But even as that central-bank buying propelled gold from $1,800 in 2022 to over $3,300 now… mom-and-pop investors sat out the rally.

Until now. Retail investors are starting to pile in.

“You've seen it mainly reflected in the amount of physical gold held by gold-backed ETFs,” explains Ryan McIntyre — managing partner at the Canadian resource-investing giant Sprott.

“We've seen that actually increase for the first time in many years after bottoming out in May of last year.”

McIntyre tells Kitco News that ETF gold holdings are up 11% year-to-date. And that’s still down 17% from their peak in 2020.

“Still plenty of room to go before we hit an all-time high of gold held by gold-backed ETFs,” he says. “But you have seen the institutional and retail investor come along a little bit. To me, that's a new story.”

As he sees it, Joe and Jane Average no longer feel complacent about the wider world: “They've been pretty comfortable with their existing holdings, S&P 500-type stocks, that type of thing. And I think for the first time in a while, they started to reassess a little bit on the risk side in terms of how much risk they're taking and how much they're willing to take.”

Remember that no bull market takes off in a huge way until everyday folks start to participate. For instance, the epic bull market in stocks that ran from 1982–2000 saw the most explosive gains only after normie Americans entered the market en masse starting around 1995.

Based on the figures McIntyre cites, this final most lucrative stage is just beginning…

Stupid Fast-Food Promotion Tricks

How could McDonald’s corporate in Japan not anticipate this outcome?

McDonald’s planned a three-day campaign: With every Happy Meal purchase, customers would get an exclusive set of Pokemon cards. Price? 500 yen or about $3.50. Limit five Happy Meals per customer.

The promotion was cut off after the first day: Turned out it was trivially easy for avid Pokemon collectors — and resellers — to get around the five-meals-per-customer limit with online orders.

No sooner did the campaign launch than some of the cards turned up on eBay selling for $25 or more. At the same time, “social media feeds were filled with surreal scenes,” reports Business Insider — “bags of Happy Meals abandoned in stores, piled outside outlets or stuffed into bike baskets.”

“Congratulations on your thriving business,” snarks an account on X that assembled this collage of pictures…

“My McDonald’s had zero [people] in line but there were tons of online orders,” says Patrick Batac, a civilian contractor at the U.S. Yokota Naval Base. “There were literally bags of Happy Meals overflowing the counters waiting to be picked up and delivered,” he tells the military newspaper Stars and Stripes.

"McDonald's does not tolerate the purchase of Happy Meals for the purpose of resale, or the abandonment or disposal of food," said the obligatory McDonald’s press release that was no doubt vetted by a roomful of lawyers.

That said, by many accounts the fiasco was a veritable feast for Japan’s pigeon population…

Mailbag: The Bismarck, Random Praise and Microsoft

“The Antoni photo presented by your reader looks eerily like an amateurish AI composite,” says a brief email that came in after last Wednesday’s edition.

I’ve been at this daily e-letter thing for 15 years and I’m still surprised at times by the topics that have “legs” in our mailbag. To wit, a large image of the Nazi-era German warship Bismarck that appears in the background of interviews with E.J. Antoni, Donald Trump’s nominee to run the Bureau of Labor Statistics.

Here’s another email, with additional background: “It is a painting that was used on a Revell model kit box in 2010. The artist is a well known photographer and warship painter called Danijel Frka. There are hundreds of these types of paintings that Mr. Frka has made and to single the one that Antoni has as proof of Nazi leanings is pretty far-fetched. I think this is just a person on a hair-trigger looking for any reason to be outraged!

“There is nothing in the artist's bio that would indicate him as a go-to for Nazi propaganda. I'd be surprised if Mr. Antoni even knows what ship it is on his wall!

“Thanks for the laugh!”

Now for some random praise: “Just a note to say I enjoyed today's five-item update. This is a great idea. which I appreciate. Keep it up!”

This individual sounds like a new reader, who also chimed in after last Wednesday’s edition. Thank you, sir! Every newcomer would do well to give our “Who We Are and What We’re All About” edition a look, too.

Meanwhile, after Emily took the helm for last Thursday’s and Friday’s editions, we heard from another reader: “Emily — Love your nonpartisan commentary and delivery, thank you.”

Gee, was that a subtle swipe at me?

For the record, I also take a strictly nonpartisan approach: I fear and detest everyone who exercises political power.

“About a week or two ago, I stopped getting ALL emails from Paradigm Press,” a reader writes. “Then they showed up in my spam review at the end of the day. I released them manually for about a week, expecting the issue to clear.

“Then I went into Microsoft Defender to figure out how to whitelist your sending emails, and have done so for three days now, each morning. So far it’s made no difference. They still get caught, and I still have to release them manually.

“I have to think I’m not the only one. Please have your IT team look into this. It’s worth the trouble to be able to read them, but I have to think that’s not the case for everyone.

“Keep up the great work!”

Dave responds: Indeed you are not the only one. We’ve been on the case for several days.

It’s a Microsoft issue. Thus it affects readers with Hotmail or MSN accounts as well as people with corporate Outlook accounts. We’re working with Microsoft to remedy the situation as soon as possible.

We thank you for your patience. In the meantime, you can always keep up with these daily missives at the Paradigm Pressroom website.

And very soon you’ll be able to keep up with all your Paradigm content — both the free stuff and your paid subscriptions — via the snazzy new Paradigm Press app, available through both Apple and Google. Stay tuned…