China launched the One Belt One Road (OBOR) project 5+ years ago and made their first rail delivery in February 2016. China has been stock piling commodities, especially base metals, like copper and steel, for the past 2+ years in order to produce all the finished goods necessary to construct the largest infrastructure the world has ever seen. In 2016 we witnessed close to a doubling of the market price for iron ore and Alasdair sees this trend continuing into 2017.
I sat down with Alasdair Macleod, Head of Research at GoldMoney.com, to discuss the current state of commodities, gold, silver and the mining sector. According to Mr. Macleod, China has run into a bit of problem with their stock piling efforts. The iron ore has now been ruined and will need to be replaced. This will create even more stress on the mining industry due to the fact mines have been in decline for the past several years since their capital inflows have slowed. We have seen a resurgence of interest in the mining sector for the past year and this will help to relieve some of the stress, however, it is a question of how long will it take to create the needed relief.
President Trump campaigned, and won the Presidency, on a platform of returning jobs to America. He has vowed to unleash an infrastructure project that will rival China’s OBOR project. Where will the raw materials come from? How quickly will they get to market to produce the finished goods necessary to rebuild America’s infrastructure along with China’s already in progress infrastructure project? This does not take into account India and China’s internal solar projects that promise to power somewhere around 600 million homes between the two countries. The required volume of silver alone has forced China to purchase raw silver ore directly from the mines and refine it themselves. How can this continue?
Alasdair says price will alleviate the stress and bring the commodities to market in a timely manner. This does not include silver. Silver mining has been under pressure for the past 4+ years and it typically requires 5 or more years to fully develop a new silver mine. Silver is being mined as a byproduct of the base metals, like copper, lead and zinc and these three metals will be required, in quantity, to fulfill these massive infrastructure projects.
Mr. Macleod also explains how savings accounts, namely pension funds and the like, have been completely eviscerated due to the theft by the central banks through monetary debasement. When the central banks print money, now called Quantitative Easing, all these central banks are doing is transferring wealth from the majority of savers to, literally, a handful of people. If you didn’t know, there are currently 8 people in the world that have as much wealth as 50% of the people in the world. Think about that the next time you go to the grocery store and your favorite food item has risen in price, again, by another 0.15$, or more, per unit/lb. That money was transferred from you to someone else.
Pull up a chair, pour yourself a beverage and give Alasdair a few minutes of your time, you won’t regret it.
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