It’s a small chunk of land, about half the size of Rhode Island, located in a part of the world most people know nothing about.

Today, the heads of Toyota, Honda, and the Pentagon all share a common interest.

But they’re not the only ones watching. Venture capitalists, hedge fund managers, and resource companies from all over the globe are also watching and waiting. . . ready to pour billions into Greenland once they get the green light.
Why?
This coming January, when the Kingdom of Denmark relinquishes sovereign control over Greenland’s natural resources, the world’s biggest deposit of Rare Earth Metals (or REEs), will fall into private hands. . . for the first time ever.

This single site boasts deposits valued at an estimated $1.3 trillion. . . and yet, REEs are worth more than just money.

Which is why the world’s leading manufacturers of hybrid cars, wind turbines, batteries, and yes — even the guidance systems to our most sophisticated air and ground defense missiles systems, are watching the events in Greenland unfold with baited breath.

The elements that fall into the category of Rare Earths include:

• Lanthanum – essential in the production of electric car batteries;
• Terbium – without this element, high-strength magnets would not exist;
• Erbium – makes possible a wide range of light-weight, high-strength metal alloys;
• Thulium – makes high-frequency lasers a reality.
• And once Greenland takes control of its mineral wealth, this land — totaling barely 800 square miles — is projected to supply 25% of the world’s entire REE market. . . for half a century.

To companies like Toyota and Honda, that have virtually staked their futures on the rapidly expanding hybrid/plug-in car market, and to our own defense industry, which cannot perform even the simplest task without highly-involved electronic assistance, this news could not have come at a better time.

Because for the last decade and a half, our greatest and most populous modern rival has been hard at work to corner the market on these vital elements.

And on April 17 of this year, with the signing of a single contract, the Chinese reached a record 96.7% global market share.

China’s “Dragon Metals”

…..read more HERE.

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Brian Hicks is the managing editor and chief investment analyst of the $20 Trillion Report, a weekly investment advisory that covers the energy sector. Since its inception in 2004, the $20 Trillion Report (TTR) portfolio has returned an average gain of 37% per annum.

In addition to running the TTR, Brian also contributes to Wealth Daily and Energy & Capital, two investment dailies that are free to the public.

“I can imagine the company representatives on the Titanic II design committee repeatedly pointing out that the Titanic I tragedy was a black swan event: utterly unpredictable and completely, emphatically, not caused by any failures of the ship’s construction, of the company’s policy, or of the captain’s competence. “No one could have seen this coming,” would have been their constant refrain. Their response would have been to spend their time pushing for more and improved lifeboats. In itself this is a good idea, and that is the trap”…..

…..by working to mitigate the pain of the next catastrophe, we allow ourselves to downplay the real causes of the disaster and thereby invite another one. And so it is today with our efforts to redesign the financial system in order to reduce the number and severity of future crises.”

Just Desserts and Markets Being Silly Again  

I can’t tell you how surprised, even embarrassed I was to get the Nobel Prize in chemistry. Yes, I had passed the dreaded chemistry A-level for 18-year-olds back in England in 1958. But did they realize it was my third attempt? And, yes, I will take this honor as encouragement to do some serious thinking on the topic. I will also invest the award to help save the planet. Perhaps that was really the Nobel Committee’s sneaky motive, since there are regrettably no green awards yet. Still, all in all, it didn’t seem deserved. And then it occurred to me. Isn’t that the point these days: that rewards do not at all reflect our just desserts? Let’s review some of the more obvious examples.

…..read more HERE.

or read his sumary below:

Summary

1. Yes, this was a profound failure of our financial system.
2. The public leadership was inadequate, especially in dealing with unexpected events that often, like the housing bubble breaking, should have been expected.
3. Of course, we should make a more determined effort to do a more effective job of leadership selection. But excellence in leadership will often be elusive.
4. Equally obvious, we could make a hundred improvements to the lifeboats. Most would be modest beneficial improvements, but in the long run they would be almost completely irrelevant and, worse, they might kid us into thinking we were doing something useful!
5. But all of the above points fail to recognize the main problem: the system has become too big and complicated for even much-improved leaders to handle. Why should we be confident that we will find such improved leaders? For, even in an administration directed to “change,” Obama and his advisors fell back on the same cast of characters who allowed, even facilitated, the development of the current crisis. Reappointing Bernanke! What a wasted opportunity to get a “son of Volker” type. (Or should that be “grandson of Volker?”)
6. The size of the financial system continues to grow and shows every sign of being out of control. As it grows, it becomes a bigger drain on the rest of the economy and slows it down.
7. The only long-term hope of avoiding major recurrent crises is to make our financial system simpler, the units small enough that they can be allowed to fail, and, above all, to remove the intrinsically conflicted and dangerously risk-seeking hedge fund heart from the banking system. The rest is window dressing and wishful thinking.
8. The concept of rational expectations – the belief in the natural efficiency of capitalism – is wrong, and is the root cause of our problems. Hyman Minsky, on the other hand, was right; he argued that the natural outcome of ordinary people interacting is to make occasional financial crises “well nigh inevitable.” Crises are desperately hard to avoid. We must give ourselves a chance by making the job of dealing with them much, much easier.
9. All in all we are likely to have learned little, or rather to act, through lack of character, as if we have learned nothing. In doing so we are probably condemning ourselves to another serious financial crisis in the not too- distant future.

This article courtesy of John Mauldin and his Outside of the Box. Ed Note: read the entire letter HERE at Jeremy Grantham’s GMO.com

John F. Mauldin
johnmauldin@investorsinsight.com

….sign up for John Mauldins Letter HERE.