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What Are the Strategic Metals Offered by Swiss Metal Assets

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Haines MaasenThe Rare strategic metals are a group of metals that have garnered attention in the last few years. The metals are primarily mined as by-products of minor metals like copper, zinc, tin and iron mining. There is a company that offers these metals as a vehicle within a portfolio. Swiss Metal Assets was formed in 2010 to meet the demand of investors for an option to enter the strategic metals market. These metals are used in mobile devices, hybrid vehicles, solar panels, computers and the one that has the US government nervous national defense. Each of the metals has a very different path to the market. Some of the strategic metals are produced in large amounts while others are produced in very small amounts. Here are all the strategic metals that are offered by Swiss Metal Assets.

Bismuth (Bi): This metal is used in pharmaceuticals like Pepto Bismol, alloys, nuclear reactors as a substitute for lead and cosmetics. Bismuth is mined as a by-product of lead and other base metals. This metal is available in the, “Key Industries” basket of metals. Supply is approximately 8500t.

Chromium (Cr): This metal is used as plating, in tanning, as a refractory material, stainless steel, dye and pigment and as a catalyst. Chromium is mined as chromite ore which is then converted to ferro-chrome. This metal is available in the, “Construction” basket of metals. Supply is approximately 22,000t.

Cobalt (Co): This metal is used in pigments, super-alloys, batteries, catalysts and of great importance to military applications. Cobalt is mined as a by-product of nickel and copper mining. This metal is available in the, “Construction” basket of metals. Supply is approximately 98,000t.

Gallium (Ga): This metal is used in the solar cells, defense, LED´s and semiconductors. Gallium is mined as a by-product of aluminum and zinc mining. This metal is available in the, “Energy”, “Key Industries” and “Defense” basket of metals. Supply is approximately 216t.

Hafnium (Hf): This metal is used in microprocessors, nuclear control rods and alloys. Hafnium is mined as a by-product of zirconium. This metal is available in the, ”Key Industries” basket of metals. Supply is approximately 70t.

Indium (In): This metal is used in mobile phone touch screens, LCD´s, LED´s and solar cells. Indium is mined as a by-product of base metals. This metal is available in the, “Key Industries”, “Energy” and “Defense” basket of metals. Supply is approximately 640t.

Molybdenum (Mo): This metal is used in Alloys which account for 86% of all usage, compounds, fertilizer and vitamins. Molybdenum is mined as Molybdenite ore. This metal is available in the, “Construction and Engineering” basket of metals. Supply is approximately is 234,000t.

Rhenium (Re): This metal is used in rocket and jet engines as a superalloy. Rhenium is mined as a by-product of molybdenum mining. This metal is available in the, “Defense” basket of metals. Supply is approximately 49t.

Tantalum (Ta): This metal is used in capacitors in electronics and in alloys. Tantalum is mined as Tantalite ore. This metal is available in the, “Key Industries”, “Construction” and “Defense” basket of metals. Supply is approximately 790t.

Tellurium (Te): This metal is used in solar cells, electronics and alloys. Tellurium is mined as a by-product of copper mining. This metal is available in the, “Key Industries” basket of metals. Supply is approximately 115t.

Tungsten or Wolfram(W): This metal is used in defense, superalloys, tungsten carbide for machining and electronics. Tungsten is mined from wolframite and scheelite ore. This metal is available in the, “Construction” and “Defense” baskets of metals. Supply is approximately 72,000t.

Zirconium (Zr): This metal is used in nuclear, space vehicle parts, jewelry as cubic zirconia and compounds. Zirconium is mined as a by-product of titanium and tin mining. This metal is available in the, “Constuction” basket of metals. Supply is approximately 1,190t.

By: Randy Hilarski - The Rare Metals Guy

The Financial Crisis Began Five Years Ago

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Quantitive Easing 3, QE3The Financial Crisis Began Five Years Ago

The Scale of intervention in the world markets since 2007 have been beyond extraordinary. The US Federal Reserve and the European Central Bank have made moves to stabilize the economies. The balance sheets of both the Fed and the ECB have ballooned in these short five years. The mortgage crisis was just the beginning.

Here is a list of US Fed and ECB Intervention:

  • September 2007 US interest rates were cut from 5.25%-.25%
  • March 2008 The Bear Stearns deal $30 Billion
  • September 2008 $400 Billion for Fannie/Freddie
  • September 2008 $85 Billion to purchase AIG
  • September 2008 $25 Billion to save automakers GM and Chrysler
  • October 2008 TARP $700 Billion
  • October 2008 $540 Billion to secure money market funds
  • October 2008 $280 Billion to secure CitiGroup liabilities
  • November 2008 $40 Billion for AIG
  • January 2009 $140 Billion to secure Bank of America liabilities
  • January 2009 $787 Billion Stimulus
  • July 2009 $3 Billion for Cash for Clunkers car program
  • March 2009 QE1 $1.25 Trillion in Treasuries and Mortgage Debt purchased
  • August 2010 $200-$300 Billion in Treasuries purchased
  • November 2011 Operation Twist Exact Cost is not known
  • November 2011 ECB LTRO 1 €490 Billion to loan to Banks
  • March 2012 ECB LTRO 2 €530 Billion to loan to Banks

The central banks of the world have decided to put patches on the financial crisis. When will we once again have a major financial crisis? How are you protecting your future?

An easy way to protect your future is to diversify your portfolio with hard assets such as gold, silver and strategic metals. A safe secure means of implementing this strategy is utilizing a self-directed IRA. Through a self-directed plan, you control your own financial destiny and have the flexibility to choose exactly what you include in your portfolio. The great thing about hard assets is that you physically own them such as strategic metals which can be stockpiled for you with a view to returning them to the industrial market for a premium when supplies are further diminished.

The central banks of the world have only shown us that they are still willing to provide stimulus to their economies which is essentially putting a band aid on more medium to long term problems. Is QE3 around the corner?

For those holding fiat currency, such as the US Dollar or the Euro, the future looks uncertain

By: Randy Hilarski - The Rare Metals Guy

China to Cut Rare Earth and Strategic Metal Production

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Republic of China

China to Cut 20% of Rare Earth and Strategic Metal Production

For the past three years China´s influence has increasingly put pressure on the mining and refining industries throughout the world. China controls 90% of worldwide production of rare earth metals and 95% of rare strategic metals like tungsten. The Ministry Of Industry and Information Technology has announced that it will be cleaning up the countries metals mining industry.

The new standard says that individual Chinese rare earth mining companies must now produce a minimum of 20,000t of ore per year. Extracting and smelting companies will have to produce a minimum of 2000t or more per year of refined product. This puts 23 mining companies within China on the closure list and 100 smelting and extraction companies. This jeopardizes over 20% of Chinese production. The goal is consolidation of the mining industry within China. It will allow the Chinese central authorities to fix prices. The other benefit is that Beijing will be able to have more control of the flow of the metals. For years China has had a notorious black market in the rare earths. The number of companies that will be allowed to export these metals will also be reduced.

In March Japan, EU and USA filed a World Trade Organization complaint against China. The governments accused China of violating its free trade agreements. China believes that the decisions will help protect the environment and its technology industries. It appears that China would like the world to bring its production of cars, electronics and equipment manufacturing to its shores. One way of doing this is to keep the prices via export quotas and taxes of these critical metals elevated so that it makes economic sense to produce the goods in China.

The metals subject to the new guidelines are the rare earth metals or lanthanides and rare strategic metals like tungsten, molybdenum and gallium. These metals are critical to our lifestyles. The solar, automobile, mobile phone, television, wind energy, computer and national defense industries are at the mercy of these metals.

Recently we saw some of the fallout that can happen when Chinese companies have access to foreign company technologies. VW recently complained that FAW, a Chinese production company, stole its engine technologies and have started building their own version of the motor and selling cars with the motor in Russia alongside VW and Skoda´s own models.  This is the risk you take when building your products in China. Companies have a choice to either build in China with cheap metals or build in their own countries where the metals are twice the price after export taxes and XWorks costs.

One customer that must be nervous is the US Defense Department. These metals are absolutely critical for production of aircraft, armaments and armor. Many of these products rely on materials like tungsten that are not found in great supply domestically. In 2011 the British Geological Survey ranked tungsten 8.5 out of 10 on its critical metals list. There are mines throughout the world that countries and companies are rushing to get on line, but it could be years before they are viable. Until then it looks like these metals may be a great place to invest.

Swiss Metal Assets have recently began offering its, “Defense” basket of rare strategic metals with an end utility targeting the defense industry. The basket price has responded to this news by increasing in price by 2.3% since its launch on May 1st 2012.

By: Randy Hilarski - The Rare Metals Guy

Strategic Metals that make your Computer Work

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Computer processors, cpusThe computers we use on a daily basis are an intricate piece of machinery. So I guess it just stands to reason that there are a plethora of materials that is necessary with making them operate. In terms of metals alones, most computers contain fractions of minor metals, precious metals, rare earths and rare strategic metals. Some of these materials are extremely rare and most are quite expensive. Here, we are going to take a short journey through your computer to see what metals make it work.

The hard disk is made from either a metal or glass. The metal versions are made with a combination of aluminum and magnesium. The layers on the disk can be made up of many different materials. The outer coating is generally NiP which is a nickel phosphorous alloy that can be brought to a high polish while underneath the polished layer you can find the magnetic layer which consists of cobalt, iron and nickel. Beneath this layer we find the recording layer which contains metals like platinum, chromium and cobalt.

For years, memory and processors have been composed mainly of silicon. However, over the last few years a rare strategic metal called hafnium has been added to improve the performance of the chips. Hafnium is a critical metal that is quite rare. The other highly valuable metal used in the processors is gold. If you look closely at a processor all the pins are coated with gold.

The disk drive consists of powerful magnets. The magnets themselves consist of neodymium which is a rare earth metal. Neodymium is mixed with iron and boron to form a magnet that can lift up to 1000X its own weight.

The capacitors and resistors on the motherboard are a combination of many different metals. Resistors are mainly composed of aluminum oxide but at each end you may find palladium, platinum and silver electrodes. The most common capacitors today utilize another rare strategic metal called tantalum. It is this material that has made it possible to reduce the size of many of our current personal electronics.

The metals that connect all of these components together are copper for the wiring and a silver, tin and copper alloy in the solder.

Over fifty metals are used to bring us the computers that we use on a daily basis. According to both the United States & British Geological Survey’s, many of these metals are in critical supply. Governments in the West have shown a lack of tolerance towards the opening of new mines that would clearly assist in fulfilling the demand of the growing ‘personal electronics market’. Growing demand and dwindling supplies mean there is an obvious opportunity for future profit!

 By: Randy Hilarski - The Rare Metals Guy

VW Upset Over Chinese Firm Espionage

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Volkswagen, VW FAW in ChinaToday out of Frankfurt was news that VW is accusing Chinese group FAW of industrial espionage. The allegations are that FAW, a VW partner in China copied one of the engines VW is using in its vehicles. FAW is planning to sell a vehicle that competes directly with VW and Skoda in the Russian marketplace. In 2011 VW sold 2.26 million cars in China. China is VW´s largest export market.

China has laws that require foreign automakers to partner with Chinese companies where the Chinese partner has the majority stake. China does not allow foreign automakers to produce the cars in China, but they do produce parts.

Sure there are ethical issues here, but that is not what I want to discuss. What I find amazing is how the Western news agencies approach this information. For years Western companies have been shifting production to the cost effective Eastern countries. The labor costs, production costs and materials to produce the items are cheaper. We constantly hear about the lower labor and production costs, but the one that is not talked about very often is the minerals and metals that go into these products.

In 2011 the British Geological Survey put together a list of the most critical metals in the world. Many of these metals are used in the production of your car, mobile phone, computer and almost everything you come into contact with on a daily basis. Some of the metals are tungsten, tantalum and bismuth. What many people do not know is that China controls the mining and refining of over 95% of the metals. While Western countries were closing their mines in the 80´s, China subsidized the industry and in just a few years had a near monopoly on strategic metals and rare earth metals. Now China is in firm control of the raw materials while Western nations try to play catch up.

This puts the West at a severe disadvantage. China has decided that if you want access to these metals at a cheap price you have to produce your products within China. Western companies like VW have no choice but to accept the agreements in order to stay competitive.

Recently China has decided to restrict the export of these strategic metals even further and have begun to close some mines. This will make the problem for the West even more difficult. Recently the West and Japan went to the WTO (World Trade Organization) claiming unfair trade practices. China claims that it is restricting exports of the metals in order to clamp down on illegal mining.

Within a few years it is expected that China´s growing economy will require it to import great amounts of raw materials. This will have a great impact on both the supply and prices of these metals. The end result is that in order to be competitive companies will have to do business in China. If they choose not to this could have dire consequences for both shareholders and the companies themselves.

 By: Randy Hilarski - The Rare Metals Guy

Why Do We Buy Metals?

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euro zone fireThe last few months have been rather dull in the metal markets. Prices have been trading sideways like they did before this commodity bull market began. Most metals investors that I come in contact with on a daily basis are long term investors who do not worry too much about the fluctuations and volatility of the metals markets. Whether you own gold, silver or strategic metals, all have good reasons to be included in your portfolio.

Why do we own gold and silver? The governments of the world are not showing restraint. It seems every week a different country is in need of a bailout. After 2008 the world expected that the banking system would pay for its transgressions against the people of the world. This has failed to materialize. Very little has changed since 2008. The same mistakes that were made before are being repeated on a larger scale. National deficits around the world are increasing at a rapid pace. The only action politicians and bankers take is to inflate the money supply to continue growth.  There is a good chance gold will once again be considered a tier 1 asset by the banking system. This means that instead of having a 50% weighting as a bank asset, it will have a 100% weighting. This is very bullish for gold and by proxy silver. The US Dollar may be strong now, but when the world stabilizes what will happen once investors return their assets to other currencies or countries? What will happen to all this excess liquidity that the US Federal Reserve has created? The word that comes to mind is inflation. It will not be a good time to hold Dollars.

Why do we own strategic metals like indium, gallium and tantalum? These metals are the backbone of the smartphone, solar systems, electric vehicles, computers and the defense industry. Almost every technology product you come in contact with on a daily basis has strategic metal components. These metals are 95% controlled by China. This has put China in the driver seat as far as production, refining and exporting of these metals.  China is closing mines and limiting exports. This is bullish for the strategic metals. The use of technology in the world is rapidly growing. Where will we source more metals to keep up with the demand? These metals are mined as by-products of minor metals like copper and zinc. Expanding the supply of the strategic metals is not possible.

Precious metals are an integral part of any long term investment portfolio. We hear all sorts of percentages of how much precious metals you should own. The answer is whatever makes you feel comfortable. Strategic metals are a great option for people who want to expand beyond precious metals. The metals markets might currently be trading sideways, but for how much longer?

By: Randy Hilarski - The Rare Metals Guy

In a Down Economy Tungsten Continues to Outperform

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Tungsten Carbide Bur Bits

Tungsten Carbide Bur Bits

The hardest metal on the planet continues to hold its own in the market. Many investors are looking at tungsten as demand has continued to remain consistent as supply falls. The world economy is limping along but tungsten continues to have support. The EU and the UK have both classified tungsten as a critical metal. In the 2011 BGS (British Geological Society) reported tungsten scored 8.5 out of 10. This information has brought the attention of investors and nations alike.

Tungsten is critical to the oil, mining, tool making, national defense and fracking industries. The strategic metal is vital in armor plating and munitions. Tungsten happens to be the hardest element on the periodic table. The metal also has a high resistance to heat and corrosion. Currently there is no substitute for tungsten.

Recently the Portuguese government decided to reopen some of its mines in the north of the country. Portugal is seeking mining companies to help rejuvenate its mining industry which was closed during the 1980´s due to low metal prices and a struggling economy. Portugal has a large deposit of tungsten in Panasqueria. The government in Lisbon sees mining taking a key role in the recovery of its economy. Tungsten is one of many metals that Portugal has access to.

In China we see the opposite happening. They are closing mines around the country, focusing instead on a few large mines. China has shown an interest in providing metals predominantly to its own industry. China has depleted its tungsten reserves for years while prices were low. The government is waking up to the fact that they need a domestic supply of metal in order to continue growing its industry for years to come. In response, Beijing has decided to restrict export of the metal. This has caused the price of the metal to remain at its historic highs. For years China supplied about 85% of the total world supply of tungsten.

On the investor side we see Berkshire Hathaway investing $70 million in Woulfe Mining in February 2012.Woulfe Mining has a large deposit in South Korea which was one of the largest tungsten mines prior to its closure in 1992. Berkshire Hathaway sees an opportunity in the tungsten market, what about private stockpiles? There are private buyers and companies storing tungsten in Switzerland and Panama. If you would like more information on this program you can contact the Panama based team at Swiss Metal Assets.

The future for tungsten is positive. If the strategic metal can perform as well as it has in this miserable economy can you imagine how well it will perform once the world economy recovers? The world economy will rebound, where are you putting your resources?

 By: Randy Hilarski - The Rare Metals Guy

Could we See Gold as a Tier One Asset Again?

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There has been some news out of London that has largely gone unnoticed. This news could have a huge impact on the value of your gold and silver holdings! The Basel Committee for Bank Supervision (BCBS) is considering changing gold´s status to a tier 1 asset with 100% weighting. Currently gold is a Tier 3 asset with a 50% weighting and these changes would realign Gold to its original status prior to August 15, 1971.

The impetus for the BCBS´s proposal is very clear. The commercial banking system needs beefing up if it is going to avoid another global meltdown. Commercial banks currently have to hold 4% of their holdings in Tier 1 assets. Should the BCBS´s plans be implemented this will increase to 6% by January 2013 with a possible higher weighting in 2018. The one asset with zero counter party risk is gold. Tier 1 assets are AAA rated holdings according to the rating agencies.

Gold Silver Ratio

Central banks are also buying gold for the same reason. For over thirty years gold has been forgotten by banks and deemed a barbaric relic of the past. Currently the top 110 Central Banks hold on to approximately 16% of their reserves in gold. If commercial banks are required to convert just a few percentage points of their tier 1 assets into gold this could have a dramatic effect on the future value of gold and silver.

What is the Basel Committee for Bank Supervision? The committee provides a forum for regular cooperation and banking supervisory matters. They work to improve the quality of banking supervision worldwide. The BCBS is part of the Bank for International Settlements (BIS).

For a few years now many of us in the metals industry have been speculating that such an action could occur. What other options do the banks have? Could this mean we may see a dramatic revaluation of gold? Silver on the other hand is the bystander that may benefit the most from this possible decision to bring gold back to tier 1 status. Gold and silver have traditionally been priced at a consistent ratio of 16/1 until 1980. Currently we see a 60/1 ratio. If gold is revalued or rises steadily silver will outperform gold. This is quite possibly the biggest news of the year for those of us who follow gold and silver.

 By: Randy Hilarski - The Rare Metals Guy

Tantalum the Critical Metal is Also a Conflict Mineral

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Tantalum Mining

Tantalum Mining

When the ¨Dodd-Frank Wall Street Reform and Consumer Protection Act¨ was passed July 21st, 2010 there was a part of the bill that pertained to, ¨Conflict Minerals¨. The goal of the conflict mineral portion of the Dodd-Frank bill was to make companies disclose the origin of the minerals used in their devices. This was a good idea, but is much more difficult than I imagine the policy makers thought it was. How do you track metals that are routinely smuggled out of the DRC into the neighboring countries and then exported legally? So far we have no way of verifying the origin of tantalum.

According to the USGS about 50% of all tantalum is mined in Africa including the DRC, Ethiopia, Mozambique and Rwanda. Each country has its own set of geo-political circumstances that make the mining and exportation of tantalum unique. Recently Ethiopia decided to halt mining of tantalum until they build an operational processing plant that will cost $20 million. The tantalum from Ethiopia was found to have high levels of uranium contamination. Annually Ethiopia was producing 350t of tantalum according to the local newspaper. That is a lot of tantalum to take off the world market. Currently the amount of worldwide production is approximately 1100t. Ethiopia states that it has a 15 year supply of tantalum deposits. The Meles regime sees a powerful revenue stream and will not relinquish control. Unlike the DRC, Ethiopia is considered a stable nation.

In places like the DRC where regional warlords control the mining and exportation of tantalum and other conflict minerals the tracking of the metals is much more difficult. The Dodd-Frank Bill was passed with good intentions but following through has shown to be difficult. If a nation like China struggles to reign in the illegal miners within its own borders, how much more difficult will it be for a nation like the DRC which has a weak government.

What is the big deal? Why is this so important? Tantalum has been deemed a, ¨Critical Metal¨, by the USGS. This amazing element can be found in most of your everyday electronics in the form of capacitors. That iPhone, iPad, smartphone and laptop all contain tantalum. The mineral also is used in national defense applications like guidance systems and jet aircraft engines.

All companies share the responsibility in making sure that the world supplies of natural resources are deemed ethical. I have heard people say that we should not import tantalum and other conflict minerals from the DRC. This also has its consequences. Families rely on this mineral for their livelihood. If mining was to end tomorrow in the DRC thousands of families would no longer have an income. There is no blanket fix, for the conflict mineral issue. In the coming years it would be nice to see companies and countries follow the minerals from source to production. Every company should perform checks along the whole process. I can hope that in the future we might be able to stop using the term, conflict minerals.

By: Randy Hilarski - The Rare Metals Guy

Protecting Your Future by Diversifying Geographically

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GoldSince the financial collapse of 2008, the world has been changing so rapidly it is difficult to keep up. Every week we hear news of another country, city, currency, asset class or company in trouble. It does not help that we have wars, currency wars, price controls and trade wars looming in the very near future. This time of uncertainty has forced many of us to contemplate protecting our future by diversifying our assets geographically.

Daily I see and comment on conversations on social media concerning the palpable fear in the hearts of people from Europe to the USA. The media and politicians have pushed the people to the brink of class warfare. This has prompted many of us to either expatriate or to move assets to locations deemed safe.

People often ask how they can protect their family and assets from the creeping government controls. The easiest step to take would be to take your IRA or savings offshore in a safe jurisdiction like Switzerland, Panama or Singapore. Did you know you can own a corporation within your IRA? This corporation can legally own real estate, strategic metals and precious metals. Why not open an offshore bank account, it is becoming more difficult for Americans but for the rest of the world it is pretty easy to do.

The next step is gaining residency in another country. Recently Panama announced a program for expats to gain permanent residency. The current programs are still in place for retirees. A house in Panama could easily be purchased for under $50k if you choose to live outside Panama City. Many countries have residency programs. Make sure to travel to and spend time in a country before making the decision to live there full time. Culture shock can be difficult for many people to overcome.

A second passport is another wonderful option. If you want a second passport there are a few countries that offer passports to people who are willing to invest money in a country. This option can be quite expensive. You can also qualify for a second passport through residency. Some countries offer passports to expats if they live and work within the country for a set amount of time. Programs change often so contact a lawyer within your preferred country.

Will you make the decision to diversify now while you are still able to? History has taught us that in times of crisis governments make it more difficult for citizens to move money and to travel. It is prudent to diversify geographically, what have you done to protect your future?

By: Randy Hilarski - The Rare Metals Guy

Strategic Metals are Stable in These Volatile Economic Times

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Rare Strategic Metals

This week has been absolutely amazing in the financial markets! Gold, Silver, Bonds, Stocks, Junior Mining, Central Banks, Employment Numbers, Interest rates and Bernanke speaks. If you are like me you are a little burned out from all the information. There is one market that has been remarkably stable.  That is the rare strategic metals.

The rare strategic metals consists of elements used in everything from your mobile phone, lap top, Flat Screen TV, hybrid and conventional automobiles, solar, defense and 85% of everything you use day to day. That iPhone or Android in your pocket has strategic metals like indium, gallium, tantalum, silver and even gold inside.

There is a very important difference between the minor metals like copper and the strategic metals. The minor metals are affected greatly by a slowdown in the world economy. The strategic metals are not because the world as a whole is using more and more of the metals as third world nations adopt the use of wireless devices, computers and other technologies. If you have not heard about the BRICS Cable that will deliver Broadband access to the whole of Africa by 2014, please check out the link. Can you imagine what the market for Smart Phones will be?

Having a global perspective is needed during these difficult financial times. There is so much information available to us online, that we really do not need to listen to what is reported in mainstream media. Looking to the future and seeing the trends will assure you of a prosperous future. Rare strategic metals are one of those opportunities that an investor can look to the future and know that they will be vital to the future of our global digital economy.

By: Randy Hilarski - The Rare Metals Guy

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The Dollar Will Die by a Thousand Cuts

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Back in January I wrote an article, ¨China, 14 Currency Swap Agreements and Counting¨. Since then China has added two more agreements and have started actively trading with Japan using the Renminbi and the Yen.  You may think that this is no big deal. If you are one of the people on the planet that relies on the stability of the US Dollar, this should be alarming news.

China does not want US treasuries any longer. The US government has shown that it has no intention of protecting the value of the US Dollar. The Chinese hold about $3000 Billion or $3 Trillion of US Treasuries or simply put debt. This puts China in a very dangerous position. They must slowly take the US debt off their balance sheets. China and the world recognize that the US Dollar is slowly fading as the world reserve currency. The BRICS are pushing for a new IMF currency. This would benefit countries holding US debt. They would be able to transfer the treasuries to the IMF.

Quietly Indonesia has announced that they will issue sovereign debt or bonds in Chinese Renminbi similar to their, ¨Samurai Bonds¨, which were issued in Yen. The ASEAN, group of nations have decided to finance each other. This partnership was formed to strengthen the regional ties and to help support sustainable growth in the region. For many years the US has had the luxury of borrowing from China and Japan to pay for its debt. The days of cheap international money for Washington are coming to an end. The US Treasury and the Federal Reserve will be forced to buy more of its own treasuries.

Iran is now trading oil for gold. The US and EU led embargo against Iran has resulted in an unintended trade. Prior to the embargo the US Dollar, ¨PetroDollar¨, was the medium of trade for all oil transactions. India has decided that its reliance on Iranian oil was more important than following the US and EU. China and Russia are also in talks with Tehran to find alternative ways to trade. In February there was news of Iran buying wheat using gold in order to bypass the US and EU sanctions. Recently China and Saudi Arabia signed a deal to build a huge oil refinery to be up and running by 2014. Is this a sign that the PetroDollar days are numbered? When Saudi Arabia moves away from the PetroDollar system this will spell doom for the US Dollar.

At home the US Federal Reserve has decided that it will continue its policy of low interest rates. This action will keep the country and the world awash in US Dollars. Ben Bernanke has said that he would like to devalue the US Dollar by 33%. This is a disaster for the people who have savings. It is a great deal for the US government. They get to pay back their debts with cheaper currency. The consequences are increased costs at the gas pump, grocery store, homes, education costs and everything else. This is called inflation, which would be fine if wages kept pace. The sad part is that the people will suffer. We are seeing a shift in the USA and it is not pleasant. I do believe we will see instability in the USA over the next decade.

How does one protect themselves from the inevitable demise of the US Dollar and its reserve currency status? Buy precious metals. Buy hard assets that you own like a house or a farm. Start growing your own vegetables and learn to can, this alone can save you thousands per year. Shop at your local farmers markets where the produce is sourced locally. Invest in sustainable energy for your home or business. Debt can be enticing in this kind of market but for the average person I would not recommend it. For an investor debt could be a great option if you borrow at fixed rates.

Expatriation could be an option for the adventurous. I left the US over a year ago and moved to sunny Panama. This option is not for everyone, but it could be a great way for you to hedge against the demise of the US Dollar. Currently the Dollar is experiencing a period of, ¨Safe Haven¨, status due to the instability in Europe. This period may last a few months or a few years. Take advantage of this situation while you still can. Buy property or convert your Dollars into another currency internationally. The key is to do something. To think that the Dollar can continue in its current role indefinitely is madness. The Dollar will die by a thousand cuts.

By: Randy Hilarski - The Rare Metals Guy

20 Reasons to Own Silver

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In this day and age most people hand over their investment decisions to a financial advisor or pick a few mutual funds to put in their IRA or 401K with a click of a mouse. Then there are some of us who have great distrust for the financial markets and for the people pulling the strings behind the scenes. An even smaller amount of us have zero investments in the stock market. Some of you have real estate, farms, collections, small businesses and quite possibly like myself precious metals.  For me and my family we have put our future into, Poor man´s Gold, The Devils Metal, The White Metal or better known as Silver.

  1. Silver is significantly cheaper than gold. Almost everyone in the world can afford it.
  2. The historical Silver to Gold ratio is 16-1 today as I write this the ratio is 56-1.  If we took the traditional 16-1 ratio silver should be priced around $100.
  3. Silver is being used up while Gold is being hoarded. In the 1950´s there was over 10 billion ounces of silver available worldwide. Today we have around 1 billion ounces of silver available.

This should set the alarms off within any investors mind.

  1. The silver market is miniscule compared to other markets. The total silver market is worth around $28 Billion. A few big investments by institutional investors can play havoc in the market.
  2. The solar industry is requiring more silver. According to the VM Group Silver Survey, the use of silver in the solar industry will increase by 17.5% annually. To as much as 70 million ounces per year by 2020 and another 60 million ounces to be used in solar power concentrator power plants. That is over 15% of the current total silver mined annually.
  3. Hospitals are realizing that the biocide and antimicrobial uses of silver are invaluable in the battle against antibiotic resistant bacteria like, MRSA (methicillin resistant staphylococcus aureus), which have been plaguing hospitals worldwide. Silver nano-particles are making their way into medical clothing, instruments, furniture and equipment.
  4. The use of silver in electronics has more than doubled in the last ten years.
  5. The mines cannot keep up with demand. In 2011 the worldwide production of silver came to 761 million ounces. The total silver used was 876 million ounces. Scrap silver supplied 256 million ounces of silver to the market to make up the short fall. With the use of silver in film rapidly declining, less will be available from scrap. Numbers are from, The Silver Institute website.
  6. If there is a worldwide economic slowdown the miners will be bringing less silver to market. Silver as well as many other rare strategic metals is mined as a by-product of minor metals like copper and zinc. Due to this relationship the miners will not be bringing as much silver to market because they will be mining less minor metals.
  7. The silver price manipulation as exposed by GATA. I believe the days are numbered for this scheme.  To find out more about this please visit GATA.
  8. The government stockpiles are all but gone.
  9. When governments start to take freedoms away from their citizens the people will naturally be attracted to hard assets like silver.
  10. Worldwide mistrust in fiat currencies. Countries can´t devalue their currencies fast enough. It is a race to the bottom. Recently countries like Brazil said that they will devalue their currency in order to keep their exports competitive.
  11. The days of the US Dollars reserve currency status are numbered. China has 16 currency swap agreements with other nations bypassing the US Dollar and counting. Iran and India have decided to trade oil for gold bypassing the Petrodollar. The BRIC´s have had multiple meetings concerning trade and currencies.
  12. The Euro crisis, nobody knows what will be the end result. Uncertainty leads people to safe havens like gold and silver.
  13. There will be a flight to physical metal when investors find out that there is little or no metal backing their ETF´s. Sprott Asset Management has an ETF backed by fully allocated silver, PSLV.
  14. The PAGE (Pan Asian Gold Exchange) will offer 320 million customers of the Agricultural Bank of China the ability to buy silver and gold. This could be a significant market in the years to come.
  15. The demand from India and the Middle East continues to grow. Recently there was a precious metals conference in Dubai and silver was the star of the show.
  16. Silver is less prone to fakes than gold because of its lower value. There are plenty of fake older coins on the market so buyer beware. Stick to known mints and government issued bullion.
  17. Above all silver will always have value and will never go to zero.

 Where will you be putting your hard earned currency in 2012? Soon we have an election in the USA that will have major ramifications for your assets. Many Americans are rather nervous about the path the current administration has taken in regards to personal assets. Also with the future of the Eurozone in peril, how will this affect precious metals? Keep in mind offshore diversification to help protect your future. Silver is an option that can provide peace of mind to the average investor. Will you be buying any silver?

By: Randy Hilarski - The Rare Metals Guy

Strategic Metals and Solar Energy Equal Opportunity

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Around the world we are seeing an accelerating use of solar power.  Governments like China, India, Japan, Germany, France, Saudi Arabia and the USA are heavily subsidizing the production of solar panels.  Yet China still controls over 95% of the strategic metals like indium, gallium, tellurium, molybdenum and cadmium.

Companies like Solar Frontier, a Tokyo based company which is partly owned by Showa Shell Sekiyu.  Solar Frontier specializes in CIGS (Copper Indium Gallium di-selenide) thin-film solar panels. Molybdenum is the layer between the glass substrate and the CIGS layer.  Recently Solar Frontier signed a huge deal in California to supply up to 150 megawatts of solar panels.  This solar power plant will be up and running by the end of 2012 with completion in 2013.  This power plant will supply electricity to 35,000 homes.  According to Lux Research out of Boston the CIGS PV installations could more than double by 2015 to $2.315 Billion.

The other technology impacting the strategic metals is CdTe (Cadmium Telluride) thin-film panels.  First Solar (FSLR) of Tempe, Az. is the main producer of this kind of solar panel utilizing cadmium and tellurium.  According to First Solar they are currently producing 300 megawatts of energy in the USA.  First Solar also has two 550 megawatt projects due to be completed in 2015 and a few more which you can find on their website.

A factor that will impact the solar market greatly is the 31% tariff that the USA plans to put on all imported Chinese solar panels.  China produces silicon based solar panels.  In the short term this may slow the solar industry, but in the long term installers will opt for the CIGS and CdTe thin film solar panels built in the USA.

The rare strategic metals have increased in value over 80% from 2009-2011.  These metals are the ones vital to our electronic age.  They are used in everything from your mobile phone to your laptop and of course solar panels.  Metals like indium, gallium, tellurium and tantalum have a rather limited supply.  China continues to restrict the export of these metals which further exacerbates the supply and price issues.

Annually tellurium is mined at a rate of 150-500t. The firms that produce cadmium telluride panels will need 80-100t of tellurium per gigawatt of solar panels. You may think that we could just mine more tellurium, according to NREL (National Renewable Energy Laboratory) the maximum amount that could be mined would be 1,600t per year. Tellurium like most rare strategic metals is mined as a byproduct of minor metals like copper and zinc.  Mining companies have no financial incentive to focus their efforts on producing these metals. The market for rare strategic metals is just too small.

Unlike the metals copper, zinc and nickel which are traded on the LME. The rare strategic metals are not traded in London on the exchange. This offers investors the rare ability to put their money into a market free of hedge fund and large institutional investor speculation. If you would like to buy these metals and store in Switzerland and soon Panama please contact the team at Swiss Metal Assets.

By: Randy Hilarski - The Rare Metals Guy

To be or not to be a U.S. Citizen

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Eduardo Saverin one of the founders of Facebook will not be an American citizen any longer. The Brazilian born Saverin who moved to America in 1992 and became a citizen in 1998 originally owned a 3rd of Facebook’s shares, but was squeezed out of the company. His obvious betrayal by Mark Zuckerberg was dramatized in the flick “The Social Network¨. Still, Saverin failed to do badly. He ended up owning around 10% of the company, a piece of which he sold off to help finance a range of startups in The USA and an extravagant lifestyle in Singapore, where he moved in 2009. Now he stands to make $2-$4 Billion, dependent on how many shares he owns.

He also was among the 1780 Americans who renounced their US Citizenship last year. That compares to just 235 in 2008. It used to be that people from all over the world wanted to be US citizens. Now we are seeing just the opposite. The explanation for his renunciation likely is taxes. Currently the U. S. is the sole country which taxes worldwide compensation, France is thinking about implementing the same strategy. Most nations limit their taxes to those citizens living and working within their borders.

America’s corporate taxation level is also the planets highest. Taxation rates on earnings, dividends, and capital gains will rise next year if the Bush era reductions aren’t extended. Uncle Sam’s most recent attempt is the Foreign Account Tax Compliance Act, which became effective on January 2013. FATCA imposes reporting on monetary assets overseas when handling US citizens. This turns foreign firms into agents of the IRS, many banks and institutions are opting to not work with Americans. Here in Panama we are finding the same issues. As a US passport holder I can´t open a bank account at a majority of the banks. The banks would love to have the business, but would prefer to not have to deal with the FATCA regulations. I should add that in Panama we have a new bank that opened called UNIBANK that offers services to Americans.

When did being an American become a bad thing? When I served in the US Navy during the 90´s I enjoyed respect the world over. I consider it my duty to pay the least amount of taxes possible within the law. I believe 100% in reporting, a minority of tax dodgers have brought the hammer down on everyone. More and more Americans are expatriating, we will need a legal way to take care of our finances abroad.

As far as renouncing ones citizenship, that is a very personal decision. My Great Grandparents left Chiavari, Italy and Poland for a better life in America. Both of my Grandfathers served in the military. Alfred Hilarski served during WWII in the US Army with, ¨Patton´s Big Red One¨, and Merle Milliman served here in Panama for four years with the USMC protecting the canal. I would love to sit down today with a member of that generation and ask them what they think of the state of affairs in the USA. Choosing to leave the country I was born in was difficult, but deep down inside I know that it is the right decision. I have a feeling that if my ancestors were my age and saw the opportunities abroad, that they to would leave.

In the case of Mr. Saverin it may be about taxes, but who are we to judge? He is doing everything within the guidelines of the current IRS laws. More and more people are looking to leave the USA. Will we see draconian laws limiting travel? Will we see laws limiting the amount of hard assets we can take out of the country? We recently saw another law on the books that allows the IRS to inform the Department of State to restrict travel of citizens who owe more than $50,000 in back taxes to the IRS. The expats I talk to are getting nervous. The speed of regulations in the USA seem to be accelerating, will you leave before the opportunity to leave is gone?

 By: Randy Hilarski - The Rare Metals Guy

Swiss Metal Assets appears on Deutsche Welle Television Show