China’s Rare Earth Supplies May Swing Trade War

China’s Rare Earth Supplies May Swing Trade War By  for Casey Research

“We’re going to war in the South China Sea… There’s no doubt about that.”

Steve Bannon – previously one of President Trump’s closest political advisers – said these words shortly after Trump became president. He was referring to military conflict between China and the US… one that would likely be the biggest war since WWII.

While these words might seem like hyperbole to many, they touch on something important… arguably the biggest story for the next generation.

Watching the mainstream media circus covering Trump and China gives the impression that once the two sides reach a trade agreement, it will be back to business as usual. But that view completely misses the Big Picture…

The trade war between the US and China was always just a sideshow of a much bigger issue: Who will be the world’s dominant power?

It will be China, or it will be the US.

It can’t be both.

Could the US ever accept being No. 2? We won’t have to wait long to find out.

That’s because China is on the path to having double the US’ GDP by 2030.

The situation will soon reach a tipping point.

The US finds itself in the same position that previous established powers did as they were challenged by rising powers. Many of these countries found it preferable to strike while the rising power was still relatively weak, as they had a greater chance of prevailing than if they waited.

This dynamic is called “Thucydides’ Trap.” It’s named after the Athenian historian Thucydides, who observed this dynamic in Ancient Greece.

Graham Allison, a professor at Harvard, has studied 16 cases of Thucydides’ Trap throughout history. In 12 of them – 75% of the time – the result was war.

War between the US and China is not inevitable. But if history is any guide, there’s an excellent chance – say, 75% – that Steve Bannon will be proven correct soon.

One thing I’m sure of is that the mainstream financial media are wrong about the trade war. Even if some sort of deal is worked out, it will do nothing to resolve the larger problem of Thucydides’ Trap.

China’s rise is a Big Idea… arguably the Biggest Idea of our time.

Lee Kuan Yew, the former leader of Singapore, put it like this:

The size of China’s displacement of the world balance is such that the world must find a new balance.

It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.

Rising tension between the US and China is a trend you can bet on, regardless of what happens in the trade war. I think it’s a near-certainty. And it presents an opportunity for savvy investors.

You see, China has an ace up its sleeve… and as tensions between the US and China escalate, it will be forced to play this card. That will send this one industry soaring, potentially 10-to-1 overnight.

And it all has to do with a special group of metals no one’s talking about…

Rare Earth Elements

A consequence of the China-US rivalry is the near-certainty rare earth elements (REEs) will come into play.

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