“This week we spotlight two key trends and the attendant investment implications that are top of mind for investors. One: Global resource protectionism has accelerated this year and recently went into overdrive with China’s latest restrictions on rare earth minerals. While the U.S. has rapidly reduced its import dependence on China on the surface, where it counts most—rare earth minerals critical for manufacturing autos, missiles, etc.—the U.S.’ reliance on China remains significant. How the U.S. and China leverage their respective advantages—semiconductors and rare earths—will shape the future global economy. Two: Even with the recent pullback, gold continues to glitter. Global sovereign debt has surged to a record $101 trillion, and, with strained public finances, inflation concerns, geopolitical tensions, strong demand from India and China, and central bank diversification, the secular uptrend in gold is likely to persist. We remain bullish on the commodity complex in general, with China’s chokehold on rare earth minerals and soaring debt levels being two key catalysts for continued upside.”
Morten W. Langer
