The Driver Behind the Nickel Bull

There’s no doubt that I’m bullish nickel

A large part of my N3 Eclipse report focussed on rising geopolitical conflict.

You may be sceptical that another major war involving the world’s largest political and economic powers could break out in our lifetime…let alone in the next couple of years.

Yet, the risk of a military mistake is becoming larger by the day.

To understand why, let’s wind back the clock…

Since the fall of Napoleon in 1815, Europe didn’t see a war involving all its major economic powers until the First World War.

With a stable business environment, Europe’s share of global trade rose from one-thirtieth to one-third between 1800 and 1913. And investment flows grew 20 times between 1855 and 1914!

Peace brought Europe tremendous economic growth.

Economic and political alliances were sown and tied throughout this period. With Balkan independence rising, the Ottoman Empire was on its final death bed. London was becoming richer by the day, and Germany was following closely in its footsteps. The people of Europe were fat and happy.

But while trade was growing, so were national debts.

Come 1913, there was almost no economic growth in Europe. Unemployment was high. Real wages were falling. And economic tensions were mounting between nations. Indeed, depression type conditions were felt across Europe in 1913. Still, few could imagine that a major war would break out only a year later.

Similarly, most people today would call me foolish for warning that we’re on the brink of another major war. And they would call it outright preposterous to suggest that it could break out before 2017.

Yet…the economic and political similarities between 1913 and 2015 are compelling.

If we keep heading down the road we’re going down, the commodities bull market will be back before you can blink an eye. Given the tight supply and demand conditions, nickel will be the best performing asset class. If you want to know more about the demand and supply factors, see here.

War threat rises as the economy declines

It may surprise you to read that even with the economic chaos in 1913, Europe was more open and united than it is today.

The European royal and upper classes were one big family.

The middle classes had the same tastes.

The working classes — or some of their leaders — dreamt of a Europe-wide revolution. From 1910-1914 Britain, the financial capital of the world at the time, was hit by strike after strike in its shrinking economy.

This saw social unrest skyrocket into June 28, 1914. On this date, Archduke Franz Ferdinand of Austria was assassinated in Sarajevo.

As they say, the rest is history…

With nations on the road to war, the global banking systems collapsed a month later. Indeed, much like the financial meltdown of 2008/09, more than 50 countries experienced bank runs and asset crashes.

However, unlike today, money printing didn’t (temporarily) save the financial system in 1914.

As governments started a war, taking the attention away from their failures, banks shut their doors for six months…saving the financial system from outright collapse. Furthermore, when the panic started, every stock exchange in the world closed for six weeks.

Today, money printing has saved the banks and politicians thus far. But, the system is at its breaking point. Like it or not, this party is coming to an end.

Yet, most people seem oblivious to what’s happening behind the scenes. The majority are happily living in the past…talking about ‘balancing the budget’ and waiting for the next government handout.

This means, unfortunately, most will agree with whatever our politicians and the mainstream media tell them.

Until it’s too late…

The war of 2017

Similar to the lead up into 1914, today’s declining global economy and overleveraged nations have given rise to an immense climb in social unrest.

Around the globe, people are vocalising their displeasure towards government corruption, policies, and the never-ending rise in taxes. The world police have been militarised to protect the government from this rising discontent.

In the last year, we’ve seen riots break out in Baltimore, Ferguson, Hong Kong, London, Thailand, Spain, and Greece. And let’s not forget the Middle East — tensions there have developed into full blown civil war.

Seeing the similarities between today and one hundred years ago, there’s good reason to believe that history could repeat in 2017. That is, a global war is being set up on our door step…

Will it start in the Middle East, the South-China Seas, or Ukraine? Wherever it starts, it will spread.

Although it’s difficult and uncomfortable to imagine, it’s far better to be prepared than ignore this very real possibility. And though talking about finances in the same breath as global war may seem unsavoury, the truth is that most stocks will plummet if war breaks out, while only a few will thrive.

Like it or not, we’re powerless to stop the conflict that’s coming — I only ponder the magnitude of destruction. And all things being equal, wouldn’t you rather be invested in the stocks that will thrive?

Much like the Vietnam War, the scarce supply available in the nickel market will send the spot price through the roof. Nickel stocks could see hundreds, or in some cases, thousands of percent returns.

Remember, governments don’t care about you. They only care about retaining power. And most governments are driven by war because it means more money and power for them.

Look at the US.

The US is a declining economic and political empire.…

Rather than being a friend of the word, it’s clear that US is trying to hang onto political and economic power for as long as possible. It’s using its military influence — or should I say arrogance — to achieve its goals. As the US economy declines, the US is worried about China — the superpower of the 21st century.

This is a dangerous sign for the world.

It’s why China, is partnering and protecting its economic allies, the ‘enemies’ of the Western world — Russia, Syria, and Iran.

But, while the threat of war approaches, much like what happened leading up into the First World War, Western World alliances are breaking…

US political and military arrogance has turned many allies closer to China. The UK, Germany and Australia all joined the Asian Infrastructure Investment Bank (AIIB). This is sign of what’s to come next.

Looking into Europe, the Eurozone is a mess. Greece is blaming Germany for its failures and is seeking Second World War reparations. Furthermore, the United Kingdom has plans and a mandate to leave the European Union by 2017.

When the sovereign debt defaults come in 2016/17, we’ll see political ties rapidly deteriorate between nations. Heading into the Second World War, the same thing happened.

Chaos is coming, social unrest is erupting, and geopolitical tensions are rising to distract the people from government failures — yet again.

Is your investment portfolio prepared for the worst?

Nickel will be a stand out investment class when these events come. If you’d like to buy the nickel stocks I’ve recommended to readers of Resource Speculator before it’s too late, see here.


Jason Stevenson,
Resources Analyst, Resource Speculator

From the Port Phillip Publishing Library

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