The Coming Lithium Wars

If goods don’t cross borders, soldiers will [Morning Reckoning] June 15, 2023 [WEBSITE]( | [UNSUBSCRIBE]( The Coming Lithium Wars - If goods don’t move across borders, soldiers will. - But the resource discoveries are on the BRICS side of the world. - What happens when the West starts to run out of resources? [We just had the biggest – and most drastic – operational change in our company’s history]( I believe it will have profound effects on our editors and readers alike. I’m urging you to listen to a short memo from our VP of Publishing. He explains why, after 20 years, this decision was 100% necessary… […and why this “fix” could have a significant impact on your personal wealth.]( [LEARN MORE]( Asti, Northern Italy June 15, 2023 [Sean Ring] SEAN RING Good morning Reader, Happy Thursday from glorious Northern Italy! Last week, I was watching one of my favorite YouTube channels, [CaspianReport](. Its latest video is “[India discovers $410 billion lithium deposit]( Nice one. CaspianReport has a particular affinity for the BRICS countries and their allies, to be fair. Four of the following five listed videos are: - China plans to dethrone the dollar - Pakistan is dying (and that is a global problem) - Russia plans to annex Belarus by 2030 - Russia and Iran join forces with India I love watching these videos because I’ve been to many countries and find their politics fascinating. Many Western analysts either don’t look at this stuff, don’t understand this stuff, or don’t want to give “the enemy” any ideas. After all, Jim O’Neill of Goldman Sachs Asset Management coined the term “BRICs” in a marketing ploy to get his research read. Now, they’re America’s #1 headache. And for good reason. And that headache grows larger daily, not least because of India’s lithium find. But first things first. If the Lithium Doesn’t Cross Borders, Will Armies? It’s commonly believed that Claude Frédéric Bastiat (1801-1850) coined the phrase, “When goods don’t cross borders, soldiers will." Sadly, he never said that. But many, including myself, believe it to be true nonetheless. [The Liberty Fund]( did a bit of digging and found that Otto T. Mallery came the closest to writing the phrase. In his book, Economic Union and Durable Peace, Mallery advocates mutually beneficial economic agreements for the following three reasons: - Economic bargains which are likely to be kept are preferable to political agreements which are likely to be broken. - If soldiers are not to cross international boundaries on missions of war, goods must cross them on missions of peace. - Unless shackles can be dropped from trade, bombs will inevitably drop from the sky. (p.10) Though I’d never heard of Mallery before, I liked him immediately. Incentives are better than promises. What concerns me about all these metal finds is they’re not happening in the West. Europe is resource-poor. That’s why it’s always had to become an empire of some sort. Financial historian and world-famous author Niall Ferguson's theory of empires and resources suggests that empires' success largely depends on their ability to control and exploit resources. According to Ferguson, empires that can secure access to resources at a lower cost than their competitors are more likely to be successful in the long run. If the BRICS control the resources, where does this leave the West? It’s a conundrum I’ve not been able to answer. But it can’t be good. Lithium is essential because of green power and electric vehicles. Rightly or wrongly, this is the direction the world is heading. So let’s start at the beginning. [Rickards: “Look at this $1 bill…”]( [Click here to learn more]( There’s a very important reason Jim Rickards is holding this $1 bill… It has to do with [a critical 11-word message]( hiding in plain sight, right on the front. Without this message… Every dollar you own would be completely WORTHLESS. And as Jim points point… That could be EXACTLY what Joe Biden has in mind. [Click here to learn the TRUTH, and how to protect your money now](. [LEARN MORE]( What is Lithium? If you’re a Sopranos fan, lithium is what made Tony see this beautiful creature in Season 1: [The Sopranos character] Credit:[The Sopranos via Uproxx]( Maria Grazia Cucinotta. Impossibly beautiful. I never wanted to take drugs so badly. Alas, she was a figment of Tony’s imagination. Let us raise a glass to Tony’s imagination. But mental health treatment is only one of lithium’s uses. Can you imagine teenage boys taking a dose of lithium while wearing Apple’s new virtual reality headsets? In a month, you’d have to buy them guide dogs… Ok, what is lithium, and what else is it for? Lithium is a soft silver-white metal within the Alkali group of the periodic table. It is a crucial component of electric batteries used widely, from smartphones to electric vehicles. Batteries: Lithium's most extensive single use is in Lithium-ion batteries. They’re rechargeable batteries in many electronic devices, including smartphones, laptops, and electric vehicles. Lithium's high demand for these batteries is due to its ability to store a large amount of energy relative to its weight and volume. Mental Health Treatment: As mentioned, lithium is used to manage bipolar disorder. It can help control mania episodes - periods of excessively elevated mood and behavior. Aerospace and Military Applications: Lithium and its compounds make special glasses and ceramics, including the Mount Palomar telescope's 200-inch mirror. Lithium deuteride was the fusion fuel in experimental thermonuclear weapons. Lubricating Greases: Lithium is used as a thickener for lubricating greases, which is its most significant non-battery use. Lithium greases are stable at high temperatures, water-resistant, and resist the effects of oxidation. Air Treatment: Lithium chloride and lithium bromide are hygroscopic materials used in air conditioning and industrial drying systems. Metallurgy: Lithium (as lithium carbonate) is used in the manufacture of iron, aluminum, and certain kinds of steel to improve their strength and hardness. So lithium is essential and versatile. Now, where did they find this big haul? Where (in India, China, or Pakistan) is Jammu and Kashmir? [map] Credit:[Pinterest]( It’s a mess. Three countries lay claim to the area, and sometimes, the area itself wants independence. So not only do you have some BRICs arguing between themselves, you’ve got India and Pakistan quibbling as well. A brief history of Kashmir from 1947: When British colonial rule ended in 1947, the princely states, including Jammu and Kashmir, could accede to India or Pakistan or remain independent. Jammu and Kashmir, a predominantly Muslim state ruled by a Hindu maharaja, chose to stay independent initially. However, when Pakistani tribal militias invaded the state, Maharaja Hari Singh requested military assistance from India. He agreed to accede to India in exchange for military aid, which led to the first Indo-Pakistan war. The United Nations (UN) intervened in 1948, calling for a ceasefire and a plebiscite to determine the region's future. The referendum, however, never occurred. In the meantime, the region of Jammu and Kashmir was essentially divided along what became known as the Line of Control. Over the decades, several wars and numerous skirmishes have occurred in the region, notably the wars of 1965 and 1971 and the Kargil War in 1999. An armed insurgency, beginning in the late 1980s, escalated the conflict further, with accusations of human rights abuses by both the Indian military and separatist movements. From a geopolitical perspective, the conflict has been complicated by other factors, such as the strategic interests of China, which also controls a part of the territory known as Aksai Chin. Back to the Lithium Picture this — it's 1997, and a geological survey in Jammu and Kashmir, India, whispers tales of lurking lithium reserves. However, the echoes of potential riches fall on deaf ears as lithium’s value at the time was equivalent to little more than pocket change. Thus, it was deemed unworthy of further exploration. Fast forward to the present day — 26 years have flown by, and India, in a plot twist worthy of a blockbuster film, stumbles upon a mind-boggling 5.9 million tons of lithium deposits in the same region. Suddenly, India leaps up the global leaderboard, rubbing shoulders with the heavyweights in the lithium reserve arena. Imagine the possibilities. This could turbocharge India's transformation into a green energy titan. However, as we know all too well, even the slightest tremor can trigger a geopolitical landslide. The fact that these deposits reside exclusively in India's territory may churn the simmering pot of conflict involving the three powers. Yet, India's lithium jackpot isn't just another ripple in the pond of world affairs. It's a seismic wave in our global village, where a disturbance in India could spell a trade tsunami for the US and India. After all, the lines we draw on maps are as influential as rivers carving out valleys. And there's no better stage for this grand theater of territorial claims, physical geography, and real control than Kashmir, a melting pot of cultural influences nestled at the heart of South and Central Asia. The lithium windfall could be a lifeline for India's struggling manufacturing sector. It could bolster the country's ability to produce high-tech goods, such as smartphones and solar panels, and launch India into the vanguard of emerging technology industries. With a whopping $2.2 billion incentive scheme on the table, New Delhi aims to kickstart battery cell production and lure in mining and processing infrastructure. Given that the investment appetite for lithium has rocketed thirty-fold since 2010 and is predicted to multiply six times in the next two decades, it’s clear that India is betting big on a green future. India's ambition doesn't stop there. The nation hopes to have renewables powering half its energy needs by 2030, slicing the emissions intensity of its GDP by a commendable 45%. This aspiration isn't just an item on India's to-do list; it has global climate implications, considering that India is home to a sizable slice of the world’s population. However, before we pop the champagne and toast to a greener future, some naysayers dampen the party mood. Critics argue that the shimmer of the lithium lode may not be as bright as it seems, highlighting potential environmental, geological, and financial extraction costs. But then again, critics always rain on parades, don't they? In the grand scheme of things, this dramatic revelation underscores the dance between opportunity and responsibility, particularly in the compelling narrative of India's unfolding lithium saga. Wrap Up There’s lots of “stuff” in the ground, and the race to get it heats up. This time it’s lithium. And it’s not just India. Iran has just stumbled onto its own lithium stash. If the BRICS have one thing, it’s natural resources. Are we sure we want to remain their adversaries? Let me know what you think by emailing me [here](mailto:feedback@dailyreckoning.com). All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com Twitter: [@seaniechaos]( [URGENT From Jim Rickards: Join Me LIVE On Friday Morning?]( Hey, it’s Jim Rickards… and whatever you have planned for this upcoming Friday at 10 AM Eastern, I suggest you cancel. Because I’ll be hosting a LIVE Zoom call where I’m going to break down my latest predictions for 2023. [Just click here now to see how to reserve your seat](. [LEARN MORE]( In Case You Missed It… Watch Out: FOMO Trading Is Back Greg Guenthner, Editor [Greg Guenthner] GREG GUENTHNER Good morning Reader, FOMO is finally back! Fear of missing out is one of the most powerful forces in the market. When conditions are just right, FOMO latches onto our lizard brains, leading to terrible investing decisions. We chase overbought stocks, fall for dubious stories and scoop up shares of some of the most risky, speculative garbage companies we can find. What could possibly go wrong? Well… everything, of course. To be fair, I’m not knocking stock market speculation. After all, I’m a trader. I have no trouble buying less-than-perfect stocks or flipping shares of fundamentally challenged companies. Different stocks and sectors fall in and out of favor all the time. And improving or deteriorating fundamentals have little to do with short-term performance. Market conditions and narratives are the main determinants of how a stock will perform over shorter time frames. Consider the broader market narratives and how they’ve evolved since late 2022… Many stocks — including mega-cap leaders Apple Inc. (AAPL) and Tesla Inc. (TSLA) — were in free-fall in December. Investors had endured a painful correction lasting the entire year. Not only were the averages in bear market territory — the popular Covid Bubble stocks had been decimated. Anyone heavily concentrated in these names was sitting on huge losses — far deeper than the 20% correction in the S&P and 30% drop in the Nasdaq Composite. It’s safe to say that most (if not all) investors were less than enthusiastic about stocks heading into 2023. Then, a funny thing happened. The market rallied. A few weeks later, stocks were still zooming off their lows. But no one believed it. We’ve talked about these early-stage bull moves before: the disbelief rallies. After a few failed relief rallies leave overeager buyers stuck in their trades, most folks simply give up. Then, when a rally does finally stick, the market’s cried wolf so many times that most investors simply don't trust the move. They sit on the sidelines and wait for the market to prove itself. This perfectly describes the market action during the first quarter. Most analysts, fund managers, and individual investors simply did not believe that the rally would last. Instead of buying stocks, they waited for the market to roll over. But the averages weathered their first meaningful pullback in February. They also survived a banking crisis the very next month — and even rallied into the second quarter. In fact, every single time the so-called experts said the market would roll over, we saw another rally. As the S&P approaches year-to-date gains of 15% and tops its August 2022 relief rally highs, we’re finally seeing investors come around to the idea that the market has turned a corner. But not everyone is happy about it. [[CHART] Could Inflation Hit 20%+ In 2023?]( [Click here to learn more]( Take a close look at this scary chart pictured here… What you see is the money supply in America… And as you can see, the number of dollars in circulation has exploded in the last few years. In fact, more than 80% of all dollars to ever exist have been printed since just 2020 alone! Which is why some say inflation could soon explode even higher than it is now, to 20% or more. And if you’re at or near retirement age you must take action now to protect yourself… otherwise you risk losing everything. [Simply click here now to see how to survive America’s deadly inflation crisis](. [LEARN MORE]( The Chase is On! “People will hate on this stock-market rally,” a recent Bloomberg Surveillance note begins, “They'll say it's fake, or just a handful of tech stocks making everything look better than it is. But the bottom line is, the S&P 500 and the Nasdaq — and especially the Nasdaq 100 — are up significantly, despite all the naysayers, and that alone is enough to drag cash in.” There’s that FOMO talking again… It’s not only retail investors getting “dragged in” to this rally. The pros are also getting sucked back into stocks. Fund managers who missed the earlier stages of the rally that began in January are significantly lagging their benchmarks. The big-tech Nasdaq 100 has already gained 35%-plus year-to-date! If you’re managing money and you’ve been twiddling your thumbs worrying about elevated valuations in this group, you might be in a bit of trouble here. The runaway performance of the big tech names has created a hold your nose and buy situation that’s powering this rally higher into the summer months. As Citigroup’s Stuart Kaiser explains in that very same Bloomberg piece, “We are reluctantly staying in the tech trade.” In other words, get onboard — or your job might be in jeopardy. Now, we have the strongest stocks attracting even more attention. Mega-cap tech, semiconductors and artificial intelligence names are rolling as summer approaches. Can the good times keep rolling? Or will these trends run into some trouble as the summer heat approaches? [Shocking Backdoor Crypto Play – LIVE on Camera!]( Crypto millionaire James Altucher just received a strange box that could COMPLETELY change how you look at cryptos: [Click here to learn more]( [CLICK HERE to See What’s In the Box]( He opens it live on camera, and shares details on the strange device that’s delivered everyday Americans over $1,170 per month in passive crypto income. [Click here to discover it for yourself now](. [LEARN MORE]( Buying Into the Summer Doldrums Now that the herd is backing up the truck and pushing many market leading stocks to new 52-week highs, we should take a moment to see how the S&P fares during a typical pre-election year. Here’s a look at the S&P 500’s year-to-date performance, overlaid with a typically pre-election year: [chart] A couple of key takeaways from this comparison… First, don’t get too hung up on the S&P’s performance perfectly mirroring the pre-election year composite. The trend is what counts. And so far this year, it’s closely followed a typical pre-election cycle. Next, take a look at how the composite behaves at the end of the second quarter. In a pre-election year, the S&P typically tops out at the end of June and remains in a range until an end-of-year push in November - December. Will the market follow the blueprint this year? I doubt it will match up perfectly. But the composite does give us a general idea of what we could expect as this rally matures. Plus, it’s fitting to see so many investors scrambling to buy just as the cycle is potentially topping out into July. The market loves to get everyone bulled up at the wrong time. No one wanted anything to do with stocks when they were ripping in January. Now, they’re buying with both hands into a potential short-term top. What do you think? Is the market running too hot? Or, will the good times roll through the summer? Let me know by emailing me [here](mailto:feedback@dailyreckoning.com). Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. He knows the global economy is being corrupted by forces that most people can't understand and has used his unique and worldly experiences to help people navigate the markets. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. 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