In this week's Stansberry Investor Hour, Dan welcomes Craig Tindale to the show. Craig is a private investor with a keen perspective on economic and geopolitical analysis. He has more than 5,000 subscribers on Substack.

Craig kicks things off by discussing "hard bifurcation," a term he uses to refer to the U.S. importing its products instead of manufacturing them, creating dependencies on other countries. For instance, China has control over the precious metals the U.S. needs for defense. Craig looks at history to show why nations didn't trade crucial resources with rival nations... and how nations that did faced shortages during war. And he addresses how China could restrict our access to rare earth metals to slow down U.S. AI chip development...

If [the AI chips] get swapped out as soon as they're available, there's no way the Chinese can keep up because they just can't get those chips... At the moment, the Chinese are working on a 3,000-parameter AI on old chips, and our latest one I think is 10,000. If you do this swap in of these latest chips, and you have depreciation that's six or 12 months, you end up with a hundred-trillion-parameter model versus a Chinese one that can't get any better than 10... So the only way that the Chinese can block it is to say you can't have any rare earths... because we're refining it.

Next, Craig notes several gases the U.S. produces that serve as counters to China's choke points. The only thing that could impact them would be a breakdown in the supply chain. Craig says that the U.S. would need at least five years to build the overall industrial factories and infrastructure needed to match what China has. And while not economically viable, if a rare earth shortage did hit the U.S., we could recycle e-waste to produce the materials we need. Craig discusses the byproducts that come from mining production and how they impact other industries...

[As an example,] you haven't got any magnesium service providers... and you need that for titanium... There was a titanium plant in India they had to close down because they didn't have enough magnesium. And they used to import it from the U.S. So you got all these knock-on elements that that continue and continue – like whoever knew magnesium in the U.S. would affect titanium production in India?

Finally, Craig expresses his frustration at how policy and regulation have created more risk factors for shortages. He says that companies move their efforts to other countries where such restrictions are looser or nonexistent. And while most folks won't notice those changes, they'd feel the knock-on effects if anything were to impact operations wherever that manufacturing was happening. And Craig warns folks to become more resilient and self-sufficient to protect themselves against uncertainty...

I think we should all become more resilient, personally... If you go back thousands and thousands of years, [those people] were all focused on their personal resilience – whether they could heat their home, whether they could put food on their table. And now we've decided that we don't need that anymore. [We believe] everything's going to be in the supermarket and everything's going to be fine... I think it's good to be able to do practical things.

Click on the image below to watch the video interview with Craig right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

This Week's Guest

Craig Tindale is a private investor with nearly 40 years of experience in software development, business strategy, and infrastructure planning, including in leadership positions at Telstra, Oracle, and IBM. Additionally, he has direct experience working in global supply chains from his time as the CEO and Asia Regional director for DataDirect Technologies. Most recently, he released the white paper "Critical Materials: A Strategic Analysis," which explores how the race for rare earths and the return of material constraints are shaping geopolitical relationships.

Dan Ferris:              There is something very, very big happening in the world, and today's guest understands it better than anyone I know. We have to talk to this guy. It gets a little sophisticated. It gets a little complicated. Get your notebooks and your pencils out and take some good notes. But I promise you, this is an important trend for investors. There's lots of opportunity in here. I've already seized on some of it in some of my newsletters, and these stocks are working. They're starting to work now and produce profits. So we've got to get on this. And this podcast right here is the perfect place to start. So let's do it. Let's talk with our guest, Craig Tindale. Let's do it right now.

Craig, welcome to the show. Thanks for being here.

Craig Tindale:           It's lovely to be here, Dan. Thank you very much.

Dan Ferris:              So I really want to take this opportunity to familiarize our listeners and viewers with an idea of yours called the "hard bifurcation," which is a piece that you wrote on Substack in January. It's got a lot of wonderful ideas in it that I think are very interesting. And I wonder if we could just begin by kind of pretending we're sitting at our – at a bar with our listener and he wants to know Greg Tindale, whatever do you mean by this phrase, the hard bifurcation?

Craig Tindale:          OK, well, I'll explain it a couple of ways because it usually takes a couple of attempts. Bifurcation means basically disconnection. We all know to some extent we've had a financialized economy. The [Federal Open Market Committee], then the central banking system that we've had, is by design a financialization system. And we've built paper claims on paper claims on paper claims on paper claims, and we've done that for a long way. [Quantitative easing] and all these kinds of things basically inflated the economy and forgot about the industrial economy. So let's call it the paper ledger versus the material ledger.

And eventually, we've said to China so many times that it's not their fault. We don't want to do this. It's dirty. You go and do it, whether that be an iPhone manufacturer or whether it be the refining of critical metals. And so we've reached a point where we hardly do anything anymore. And that's the bifurcation is because we've got an economy that We serve cups of coffee to each other. It's a services economy. And we all heard the mantra, we'll do services, we'll do the higher-value things, and we'll let China refine the copper and extract the rare earths and make the iPhone. And we've got too many unions. And so they can do it because they can put nets outside the iPhone factory and keep their workers happy through force, basically. It was a whole, it was a whole, I guess, ideology that we had that the price of things would define where we should make things. And the lower the price, the better for the economy it was. And that was called price efficiency. It was called economic rationalism, crazy as it might seem.

And so we've reached the point where we don't do anything anymore. And the Chinese in this case have decided that you're going to have to pay offshore renminbi to buy our copper, even though we mine the copper and we ship the copper, or other countries do that. They refine the copper, so they have the choke point of the supply chain. And that rings true for about 75% of the things in our economy. And so, the bifurcation is the disconnection between our financial economy and our material economy, and it can no longer buy stuff and we can no longer produce stuff, and we become, I guess, reliant on the supply economy, the manufacturing economy, the refining economy for everything we need, and we become beholden to them.

And there's a series of political figures and economists over the years that have highlighted the danger of that. Alexander Hamilton in the U.S. Eisenhower was a logistics economist as well as a general. He wasn't a fighting general. He basically made sure that the fighting generals got what they needed to fight. And a lot of people remember Eisenhower for that military-industrial warning that he made in his last address. Well, if you read the rest of the address, he also warned against, like Hamilton warned against not making stuff, becoming too much of a financialist economy. And this has obviously been done because we've got an independent central bank. And to a great extent, they've tried to financialize the economy. They've tried to put money in the coffers of bankers. Just to live in your own house. They don't produce anything factually other than a bit of credit. And so, we've reached a situation where it's at its zenith. And I think through the Trump administration, it's recognized this and started to reverse a lot of it. But it's very difficult to reverse when your supplier economy, your Chinese economy, has got such a stranglehold. You've forgotten how to make things in, in so many ways, not just the fact that you don't make them, but the skills to make them, the supply chains to make them, the industrial infrastructure to make them are all missing.

And so it goes that, that now we're – we are what we are, and yet we haven't got the – we've been bifurcated from the things that allow us to build, in the case of defense, the ability to build... military capabilities to resupply your ammunition or your missiles, or even some of your new military methodologies like drones and – directed energy weapons, etc., are very dependent on rare earths and things that China makes. And China's basically said to the West, especially Japan, but also the U.S., "No, you can't have things to defend. You can't. We will not supply you with things to defend yourself." There's a lot of very complicated licensing rules that tell you that. But if you work through them, that's basically what they say. You can't. We're not going to supply you silver. Because you put silver in your missiles. And we're not going to supply you with silver because you put silver in your data centers, etc. And so we're in the middle of this great competition. And I guess that's a short summary, but we got put here by basically central banking policies and methodologies and theories. They decided we didn't need to make anything. It was old-fashioned. And it's become – Alexander Hamilton said in 1791 that if a country forgot how to manufacture things, he wrote a report in 1791 called the [Report on Manufactures]. And basically said if you can't manufacture things, you can't defend yourself. And freedom and liberty are just kind of virtuous ideas without the ability to, to, to manufacture and support yourself as far as –

Dan Ferris:              I'm glad you mentioned that. Yeah, I'm glad you mentioned that because it's also true, isn't it, that we're – yeah, and you've written about this a little bit, that we are basically this, whatever you want to call this, a freer economy or something, but China has a command-control economy, and we are competing with that. They're our rival. We're under rivalry, as you've written, with them. And it almost seems – I almost see you advocating or simply identifying that if we don't get some kind of control over this situation, over our economy, we're going to wind up being even more dependent. We're going to fail as a country because we'll never get over this dependency and they will hold those choke points. Are you advocating for a command-control economy, or are you simply saying it's kind of inevitable, or this is how it has happened in the past? What are you saying there exactly?

Craig Tindale:          Well, I'm saying all of that, actually. A command-control economy was our heritage. It was a Western heritage. It was the heritage of the U.S. And that's why I mentioned Alexander Hamilton. It wasn't – state capitalism wasn't invented by Xi, it was copied by Xi. And so, prior to – people can argue whether it was '73 or '77 or something like that. But prior to that, we used to keep a good eye on whether we can manufacture things or whether we have sustainable credit levels. And we used to a politician's job was to manage through that. All the wartime leaders of the West, even Australia's Prime Minister Robert Menzies, used to highlight it in speeches. They would say, "Your domestic debt is way too high. We need to rein that in and make sure that we're still producing things. And it was an obvious thing for Hamilton, who was a wartime general, or Eisenhower, or Robert Menzies, who was our Prime Minister in World War II, or even if you look at Churchill.

And so the tradition of the West was to have state capitalism, was to have command economies to some extent. Free markets were a good idea within the economy or within an empire. If you look back at traditionally, empires never traded with other empires. They traded within empires because there's a common sense to it. You don't trade with your rival, because your rival's going to take advantage. And if you do trade with your rival, you do it in such a way that it doesn't upset your domestic security – that you can still make bullets. In the case of rare earths and anatomy, you need the firing pin, and the firing pin comes from anatomy.

It's happened in the past. OK, so if you go back to World War I, 1914, the French got overrun by the Germans at Aubers. And they called it, in the British Parliament, the shell crisis. And the reason they called it the shell crisis is they couldn't provide shells to the front line and shoot back at the Germans because the Germans, prior to World War I, had a company called Metallgesellschaft, which was a global company that used to bring in zinc and copper and lead and refine it in Germany and control the – it had a company that was ironically called the American Metals Company, and they had an Australian company. It was ironically called Australian Metals Company, but it was actually a German company.

So this has happened again and again and again. You can go through back through military history where a country – for instance, another example is the Japanese tried to – Pearl Harbor supplied 98% of the rubber for the U.S. government, and rubber's pretty important in World War II for tires and things like that. And so when Pearl Harbor happened, there was a bigger effort than the Manhattan Project to actually source rubber for tires. It's very little known. I wish they'd make a movie about it because it was actually a bigger effort than the Manhattan Project. So this kind of thing has form, and the form comes from an overconfident winning country from the prior engagement, like in Germany. You allow them some kind of latitude and they take it back, they take advantage of it. And we did this through our economic policies and our economic theory. We all remember economic rationalism and all this kind of stuff. We didn't want to make any of that stuff. And so we don't. We decided we didn't – we're going to go up the value chain. "Learn to code, bro."

Dan Ferris:              Right.

Craig Tindale:          And we would do all that stuff and the future economy, they could do that all in China. And that's, that's where we're at now. We're in a situation where even this – there's an interesting take on this AI race. We all read those reports where China's just behind us, and America's got four to six months leadership. And the reality is, the West has got significantly more leadership. If you look at the way Colossus II is being built by Elon, he's going to be able to – Burry talks about depreciation of three to four years on a chip and argues strongly that it should be three years. I argue strongly it's going to be about six to 12 months. I think, with the inability to build data centers and to source copper, they're going to use the data centers more effectively, and you can already see in the architectures that are coming out that these chips are going to get swapped in. At the moment, I think we're on H100, and we'll go to 200 and 300 and Rubin. These are the Nvidia chips, and then Rubin Ultra and Feynman.

If these get swapped out as soon as they're available, there's no way the Chinese can keep up because they just can't get those chips. So you end up watching a different ratio, a different metric, which is the – basically intelligence per watt. How many parameters can you get in per watt? So at the moment, the Chinese are working on a 3,000-parameter AI on old chips. And our latest one, I think, is 10,000. If you do this swap in of these latest chips and you have depreciation, that's six or twelve months, you end up with a hundred-thousand, sorry, hundred-trillion parameter model versus a Chinese one that can't get any better than 10. So the only way that – this is a long-winded way of saying it – the only way that the Chinese can block it is to say you can't have any rare earths, you can't have your gallium, you can't have your scandium, you can't have your tantalum, etc., because we're refining it. And so they have a choke point there, and we have a choke point on the actual chips, the advancement of the chips. And that's just one example. You've got these choke holds that each party has got. It's like MMA, and they're conjoined twins. And they're trying to choke each other out, but they've still got significant trade between them both. Let's not forget that China still imports.

Dan Ferris:              Do you think, Craig, that we ever reached what you call the kinetic tripwire with China?

Craig Tindale:           Very easily. I think we're already there.

Dan Ferris:              Really? Easily? Wow.

Craig Tindale:          I put out a post the other day. Stop looking at all of these things as separate things, that we're in different theaters. We're in the Hormuz theater. We're in the Taiwan theater. We're in the – you just look at Hormuz. We've already got a form of logistics war between China and us. Now, if you look at BTX and naphtha, which are petrochemicals that come from Hormuz, basically Qatar, and the other country, I can't think of the name. The 44 million tonnes go through Hormuz of naphtha and BTX, and that goes into plastics. Now, we're not going to notice whether we've got a naphtha and BTX shortage this year, but we'll move into next year and 44 million tonnes shortage that used to go into the crackers of Asia to make plastics starts to add up.

Dan Ferris:              Right.

Craig Tindale:          And so we end up with this slowly constricting thing. You need naphtha to make herbicide. You need naphtha to make some of the fertilizers. And so you've got 100 things like that, helium, etc. And the U.S. has got some choke holds, and China has by far the majority of the chokeholds. And where does that end up? A lot of pundits, I think one of the favorite things that pundits do at the moment is predict things. And none of us really know where it's going to end up because we haven't been through this before, this level of overconfidence to say, well, this will happen or that will happen. I think we're in this new territory.

Dan Ferris:              Yeah. In the case of naphtha – to me, the U.S.'s great advantage, thanks to the shale revolution, is that we use – we don't use naphtha, we use ethane. And we've got so much ethane because we've got natural gas liquids like crazy because of what we did with hydraulic fracking. And so we become – I think the U.S. Gulf Coast takes over a lot of that cracking that you're talking about. Maybe in Asia, maybe in Europe, some of it in Europe that like there's S&P Global reports coming out all the time about crackers shutting down in Europe and Asia. So...

Craig Tindale:           Well, yeah, you got –

Dan Ferris:              Maybe you got a terrible thing for the U.S.

Craig Tindale:          Well, ethane to US to China, ethane exports is up 300% in 1 year. So there's helium. The U.S. makes 55%, I think, of the world's helium, and it's complicated, but they can arguably upside that as well. So you've got choke points on both sides. And if this equilibrium is kept with the choke points, we'll be fine, because everything will be bought onshore before a critical mass happens, which goes back to your original question.

                             Or like in any military strategy, If you see the effectiveness of your choke point failing down the track, you make it fail quick. You bring on the crisis. And that's what I'm concerned with the Chinese. But the reality is there's so many of these complicated factors, nobody knows where they'll end up without that. But you end up with a shortage at the other end.

Dan Ferris:              True.

Craig Tindale:          In 2027, if you haven't got herbicide, And you haven't, you haven't learned how to make herbicide quick enough – we've got this El Niño coming, and the El Niño means you need more herbicide because there's more weeds if there's less rain, if there's more heat. And we've got less –

Dan Ferris:              The capacity that you're talking about, building that capacity, whether or not we're reshoring on time, you said that is another one of your terms I like, the Hamilton constant. The irreducible unit of time required to build, repair, or replace physical capacity. And one of the things I was dying – I've been dying to ask you is, do you have like an idea of how long it will take the United States to do whatever it needs to do to – Peter Zeihan, another guy we talked with, says the United States needs to double its physical plant, its industrial plant, double it. And do you have an idea of how long, like what kind of a time frame are we in in this sort of race with China?

Craig Tindale:          Well, I don't know what Piers says, but I reckon it's five years minimum. I'm aware of 90% of what's going on and probably I can infer the rest of it. I have really good contacts in a lot of industries and people talk to me all the time. There's – if you just – if you listen to this Google search, mud to metals, red mud, which is the outcome of making aluminum, which is – they call it red mud. It's got lots of rare earths in it. If you look in coal to metals, coal ash and fly ash, they're sitting – you've got nearly 2 billion tonnes sitting around the U.S.

                             You've actually got more in Australia for some reason. That can be turned into rare earths. These kind of things probably aren't economic, but it doesn't matter if they're economic in a crisis. And you can see the movement of that stuff happening. If you're going to replace all of your chips, like in the Nvidia example I was talking about, you've got to recycle them really quick, so there's a thing called flash joule heating.

                             There's probably five or 10 other technologies that helps you recycle your e-waste, because there's mountains and literally mountains of e-waste hanging around that you can turn into rare earths, etc. And those programs, there was only – I can probably count half a billion, maybe a billion dollars' worth of programs that were put in by the Department of Energy, Department of War, that are looking at those things actively. And they're – like I said, it doesn't matter if they're economic. If you can get your rare earths out and you make your ammunition or whatever you need to make, it doesn't matter if it's economic. You just pull it out because from a financial perspective, it's not a big part of the system, if you know what I mean, like gallium, the whole gallium market is only worth – it's only $500 million a year, gallium. And I can see where even in Australia, the Department of Defense, or Department of War as they call it now, making agreements with Alcoa to pull out the gallium. I know that a company called – I'll think of it in a minute – but it's involved with Rio Tinto in Ontario to pull out the gallium out of the red mud there. Indium iridium. It's a material science company and they've already – so there's lots. If you go and – I've got lists and lists of these that are happening and they're happening everywhere, but they take – they're going to take time to scale.

Dan Ferris:              All right. But OK, so they take time to scale is the last thing I heard. All right. This is interesting to me. This is another topic that I never even thought of until I read your stuff about how you described how China has all these processes in one place so they can take the gallium or whatever it is that just comes out of another process. It's nothing you would make independently. There isn't one plant that makes it. They basically use the waste from one process is the feedstock for another. And, and a lot of this stuff just comes from byproducts. I know that – that thought just never occurred to me. I know that in mining, you get byproducts. You don't just mine one metal. But in the processing, the way you described it, I thought, wow, this could be an enormous sort of a project. Who would take something like this on to build that kind of capacity in a place like the U.S. or Australia or whatever Western nation you want to build it in. It impressed me as something that could continue to be a major competitive advantage of China for some time to come.

Craig Tindale:          Well, yeah, if you look at their biggest city for rare earths, it's got 185,000 people in it. I think it's called batia or something like that. And It's basically a rare earths commons. Brazil's got a project like that as well, where – silver's a good example because most people are interested in it. Most, 70% of silver comes from byproducts of other refining metals. So copper, lead, zinc, in the case of silver. So the copper comes over from Chile, Peru, and gets smelted in China and then gets refined, and the silver slag comes out. And that's where 70% of our production comes from, silver. And silver is really important for the next electrical generation era, let's call it, including metals for missiles and things like that.

So if the Chinese, which they in their licensing agreement said, "Hey, we're not going to send you silver anymore." If the Chinese bar us, we're already in 5,000 tonnes per year deficit as far as our production in the West. It pushes it up to 10,000 or 12,000 tonnes per year that we're in deficit. And so we're missing that silver. There's no way we can get it back. We can bid up the price of the 30% that's left. And that's likely to happen. That's why silver will go through the roof because some of these users have got deeper pockets than others. For instance, [photovoltaic ("PV")], a high level of silver in the PV makes the solar cell more effective. But maybe the defense buyer can afford more. So they – the PV buyer can't afford it. And so, the solar cell's less effective. So you get all these hits. And so most of the rare earths aren't mined by themselves. There's not a – there are no gallium mines.

Dan Ferris:              No.

Craig Tindale:          There's no scandium mines.

Dan Ferris:              Right.

Craig Tindale:          And there's no – people have this image in their head that there's a mine for each one of these things, and you just need more rare earths mines. Most of it we've been giving – I wrote a paper on it three or four weeks ago. We've been giving China about a $200 billion every decade free kick where we send over the aluminium, the bauxite to smelt into the aluminium, and we just forget about the gallium that's embedded in that – the derivative metals are in that. Now silver's like that, gallium's like that. So a lot of the metals that we're short are derivative metals that we sent to them in the first place. That's the irony of the whole thing. And we haven't got capability to smelt it, refine it here. And so, all our copper refiners, for instance, are going broke because the Chinese say to the Peruvian or the Chilean miners, "Hey, we'll give you $50, $100 a tonne to refine your copper," and you've got the, in this case, the Korean copper refiners. They haven't got enough. They haven't got enough money. They they're not making any money out of it, so they go broke. And so the chokehold tightens because the Chinese are willing to fund their refiners, and we're not. So it's a complicated problem because it's complicated economically as well, and the incentives are complicated.

Dan Ferris:              So you're saying the Chinese government is willing to fund the refining processes and other Western governments and Korean government is not?

Craig Tindale:          Yeah, basically. That's because we've got a state capitalist system. Seeing copper refining as obviously important, and you've got a stateless capitalism system which is saying, well, it has to support itself. And the state capitalist system subsidizes –

Dan Ferris:              Right. Well, you actually made a good point by pointing out that we subsidize them. You made the point that our environmental regulations are basically a subsidy to Asia. That was another thing that you said that I just, "Oh geez, it's so right." And we just got another example of it, didn't we? With – when the last – and you've written about this – the U.S. magnesium shut down, the last big primary magnesium producer in North America. And – so now we're more dependent than ever on places like Russia and China for magnesium, which is –

Craig Tindale:          It's a perfect, perfect example with Utah.

Dan Ferris:              The Superfund site. Yeah. Yeah.

Craig Tindale:          Utah decided they didn't –

Dan Ferris:              Yeah, go ahead.

Craig Tindale:          They didn't want the pollution. They wanted a pristine wilderness. And I live in a pristine wilderness. That's great. I wouldn't want a magnesium site in my, in my, on my acreage. But we got rid of it. Now you haven't got any magnesium service providers, not of any substantial – and you need that for titanium. It happened in India, by the way, too. It's been infected. Like, there was a titanium plant in India they had to close down because they didn't have enough magnesium, and they used to import it from the U.S. So you've got all these knock-on elements that continue and continue. Like, whoever knew magnesium in the U.S. would affect titanium production in India? But I managed to source it all. And I wrote a piece called "Shock Point," and I went over every major infrastructure explosion or fire or accident in the U.S. Because I – to be honest with you, when I started, I thought, "Is this some kind of nefarious situation?" Because everything keeps blowing up.

Dan Ferris:              Right.

Craig Tindale:          And so I read into the reports of all these industrial accidents and they weren't. They weren't nefarious at all. They were just a country that's forgotten how to make things. So they make dumb accidents. And so the end of the infrastructure –

Dan Ferris:              Craig, did you hear the story? I'm sorry, did you hear the story about the 110-year-old water main in West Hollywood that blew up in the past day or so here? I thought of you immediately.

Craig Tindale:          No. It's what – yeah, there was one in – I think it was in Louisiana. I'm not sure exactly what, but it was funded by the Biden administration, and it was basically a chlorine plant. And they'd spent nearly $200 million on it. So it was a fairly big investment. And I thought to myself, "That's weird. It's new. It's blown up. Why did it blow up?" I chanced online to find the actual official report. Investigative report. And it was basically somebody who didn't know what they were doing, turning on the wrong valve and turning off the right valve and doing this and that. And all of a sudden the whole thing blew up.

Dan Ferris:              Mm-hmm.

Craig Tindale:          And it was just user error. Fair enough. But the company just abandoned the site. They said, "Well, OK, we've built a $200 million plant that blown up. We're not going to do that again. We'll just source it from Asia because it just doesn't make any sense." So you've got this malaise that it's hard to work out how it's going to get solved over the long term or the – it's – when I talk to, when Peter or I talk about the five to 10 years, I bet he said probably 10 years. The reality is that there's a lot of things that need to get solved. It's not just as simple as building a project. You've got to build a whole infrastructure. And your whole system can break down if one piece of that infrastructure –

Dan Ferris:              Yeah.

Craig Tindale:          – fails. And so you've got to have the right skills. You've got to have young people who have been trained in infrastructure builds, who are engineers, etc. And the young people aren't getting trained like that. So I don't know how that's going to get solved.

Dan Ferris:              What you describe, Craig, reminds me – it sounds like something out of the book Atlas Shrugged by Ayn Rand. That is these exact things. People, they don't make anything. Things are breaking down. People don't know how to do it. The knowledge has been lost. It's exactly what happened.

Craig Tindale:          That's the cycle. It's almost biblical. If you go, if you read some of the Old Testament as systems theory – take all the religiosity out of it, etc. – and you look at the Book of Giants or the Book of Jubilees, they describe exactly the same process that breaks down society. You end up with a managerial class who don't know how to build things, in charge of everything. The Bronze Age collapse, the French Revolution, the whole thing. It's this intelligentsia class that think they know how to do everything. They're taking over, and they, through policy and regulation, eventually make everything.

Yeah, I have an example in Western Australia. I did a bunch of big mining conferences a couple of weeks ago, and we had some people stand up talking about the decarbonization of Western Australian mining. And there were two presenters, and then I had the main keynote that went after them. And I said, "Do you realize you're not actually decarbonizing? You're just sending all the carbon that you used to have overseas, right?" They – we went – let's go through this ESG thing. They had counted all the carbon, the copper refining, the nickel refining that they'd sent to Indonesia as decarbonization. And I pointed out that they were still using 8 billion barrels of diesel per year in the state, and they only had 14 days' supply. And that was the Tier 1 mines who had 10 or 14 days. All the Tier 2 mines had –

Dan Ferris:              Yeah.

Craig Tindale:          – $95 billion worth of annual revenue was dependent on 14 days diesel supply. And here we are buying nuclear subs to protect ourselves. And all they have to do is knock off our supply lines. It's like if you gamify it, like everybody knows how this game ends. And so, and then you look at every project, the ESG costs for a mining project in the West is 8% to 20%, and Canada's the worst. Of the mine, that's the capital. They've got to raise that.

Dan Ferris:              Eight percent to 20%.

Craig Tindale:          You've got – what was the – Glencore? Glencore was going to build a copper refining system in, I think it was Ontario. I can't remember exactly which one, but it was Canada. And they were asked to – arsenic's important. So they were asked to – they had to get 100% of the arsenic out of the system. And what they had to do was reduce it to a solid. So just think of Jell-O or something like that, full of arsenic. They had to turn it into bricks, and then they had to – and then they were asked to get the sulfur requirement down to near zero. And by the time they worked out that – it was impossible to do, it was like physically impossible to do. So Canada decided that it would rather not have a copper refining system that Glencore was going to make for them, because their regulatory requirements were too high. And this is the crazy irony of our modern thinking. It's OK to move a copper refinery to the other side of the Earth because we can pretend through our systems, our ESG systems and through our carbon systems, that carbon doesn't exist over there, that pollution doesn't exist over there. They live on a different planet. And that's effectively how our regulatory system works, that it's OK to move everything overseas, the dirty stuff, because we don't see it. And that's what was happening in this presentation I was doing is, I had two or three presenters before me saying, "Well, yeah, we're successfully decarbonizing Western Australia." We're not decarbonizing Western Australia, we're deindustrializing Western Australia. And that's what's happened in the U.S. and Canada. We don't want to do anything.

Dan Ferris:              Have you ever heard Robert Friedland, the mining mogul. He talked about – he says people think, modern people think a ham sandwich comes out of the refrigerator, and they don't see that it starts with a river of blood in Chicago. And I thought that was – that's, that's the modern sensibility, isn't it? We don't– we just see our neighbor's new shiny Tesla. We don't see kids mining cobalt in the mud in the DRC or someplace.

Craig Tindale:          No, we don't. And we don't even notice. We think of a cloud as this ethereal thing that's up there that doesn't, it's not heavy at all. And these AI systems and these, even these normal clouds are highly industrialized.

Dan Ferris:              It's like a city. Yeah. It's – you're dropping a city's worth of power demand and water usage on tens of acres or maybe 100 acres or so. And it's – there's nothing "green" in the modern sense about it.

Craig Tindale:          Like nothing.

Dan Ferris:              But that actually – this, this is something I wanted to ask about though, now that we're talking about this. You mentioned, it was in passing, something I read of yours, where China also, by doing all of these things, they also have expertise in the waste handling. So it's not just that they tolerate the pollution, they actually also learn about how to handle the waste. Did I read that right? Did I have you right on that?

Craig Tindale:          Well, they do. I call it a commons approach, and the old commons approach in the Old English is, we'll do – the guild would all get together and do the same thing in the same place. It's just a common-sense approach. So the way the Chinese do it is they handle pollution and water issues together and electricity issues. And they have a shared commons in order to process all these metals so that, when you have a bauxite to aluminium process, you get the slag and that immediately goes to the gallium factory and all the pollution is handled in a common method. And that obviously lowers the cost and probably increases your expertise on how to handle those kinds of things because you've got specialists involved. And we've lost touch with the fact that we – all these iPhones, all these new robots that we're supposedly going to have, all this new AI, is an industrial metabolism like no other that we've come across. It's the Industrial Age 2.0, or whatever we want to call it, is more industrial-focused than we had when we had steam engines.

There's 50,000 tons of copper that goes into one of these hyperscale data centers. Nine tons of silver. So we have to obtain all these before we – we need to be able to source our bill of materials to build all these, and we haven't. We've learned, we've come to the point that everything's ethereal, it's up in the air, and that we – they magically happen. And we haven't – the mindset that we've got these days, it comes from "learn to code, bro." It comes from this idea that we could go up the value chain and didn't have to do anything industrial. It's come from a cult belief that we've all got because if we look back honestly 25 years ago, 30 years ago. We heard this stuff and we didn't question it. We all did.

Dan Ferris:              We thought it was great. Yeah.

Craig Tindale:          We thought it was great. I remember going back, I did billions worth of outsourcing for large corporations. And I was the guy that worked out that it was cheaper to get it done in India than it was in Australia or the U.S. And so I did a lot of deals on that kind of side. And then I look back on these deals and I think to myself, because you realize when you're going through that – hey, this is just a stopgap moving it offshore is no solution. But we're still doing that because the whole incentive of the monetary system, of the central banking system, favors asset inflation. It favors –

Dan Ferris:              That's another thing that we have to learn. Yes. Yeah. But this is another thing that we have to learn, isn't it? Because for the last 40 years, what has every investor who calls themselves an investor from Warren Buffett on down, what have they been looking to do? They've been looking to find the place that requires the least amount of capital tied up in physical things. They've been looking to tie up the least amount of capital in physical things, preferably none. Give me a building with people and phones and computers, and that's it. Something like a bank or an asset manager or something. Just knowledge and electronics, and that's it. Tie up no capital in physical things, and that's what they've learned how to do. That's how we've learned how to allocate capital in the United States. So yeah, from the capital allocation, the first dollar all the way down to the workers, we don't know how to do it.

Craig Tindale:          You still got those guys. You look at these great capital managers who still lecture us and still espouse what's going to happen next, the great inflation asset managers like Warren Buffett, like – was it Paul Tudor Jones – Like all those guys, they lecture us and they say it's defunct now, the economy is not going to do very well. "You better get your money out. It's going to crash." All this kind of stuff. They've been around since the '70s. All they've done is ridden capital up and down. And hey, that was the game in town, and they got rich doing it. So I think we change our heroes, too, you know what I mean? I don't think the –

Dan Ferris:              Oh yeah.

Craig Tindale:          The great capital managers are the people that we should be looking up to, or should we have ever looked up to. Even like people like Zuckerberg, he learned to farm our attention. How about the great innovators in industrial systems and things like that who got forgotten? There's probably 100 Elon Musks out there who wanted to build something that never got noticed because we were focused on attention farming and riding the inflation vehicle.

Dan Ferris:              They never even got – exactly. They never even got the first round of VC capital. They never even got the first round because everybody was looking for the next software company. That's exactly right. That's what I'm saying. So the expertise up and down from the first dollar into all the way down to the – that worker who threw the wrong switch and blew up the plant. We need all of it, every bit of it, everything in between. Let me ask you this though, Craig. You talk about the 1942 mobilization in the United States. All of a sudden it's illegal to make a car because we need these plants to make planes and tanks and all these things for war. And went from basically zero to 300,000 aircraft in four years. Not bad. Yeah. How do we – can't we do that again?

Craig Tindale:          No, I think you have to do it again. That's the whole crisis, isn't it? Whether you're successful, who knows? This is one of the things I rally against is, everyone wants to make certain – everyone wants to wants to say that the Iran situation is over and we've lost or whatever. Nobody really knows what's going to happen in the next stanza, and that's what is the reality, is our ability to predict is limited in this kind of situation. But yes, you're mobilizing Defense Production Act. There are 100 things that are already happening that I grapple with every day and I look at every day, and it is moving. But hey, it's not going to be easy in the middle bit. I think eventually, the U.S. catches up. It's a powerful economy. It has a lot of moves. And people who focus on Trump must realize that Trump will be gone sooner or later. And it's probably going to be sooner. He's an older man. And the whole project is going to have to continue. You're going to have to reindustrialize. The West is going to have to reindustrialize. And this is going to take 10 years. It's not going to take a couple of years. It's not going to go back to the old system.

But the second powers, the third powers, the fourth powers, geopolitically, are the ones that are going to suffer. China and America can probably look after itself because it has a lot of options militarily, etc. But you've got places like Bangladesh that probably can't get LNG to make their fertilizer. If you go back to the '70s where we had another fossil-fuel crisis, we also had a lot of raising money for famines and all those things. They were common things in those days. And we've got the same kind of thing arising is, we've got El Niño coming. We've got a whole bunch of stuff coming that we're going to have to adjust for and adapt to and become more resilient about. And the US has to do that. Australia has to do that. The entire West has to do that. And there'll be countries that fall off the perch, so to speak. And that'll be sad.

Dan Ferris:              I hope I'm not living in one of them. It's been great talking. It's time – I think this is a perfect moment for our final question, because this is something that I ask every guest and it's the same question, identical question, no matter what the topic. And we've talked about a lot of different aspects of your ideas here. And the final question is simply, if you could give our listeners a single thought, a single takeaway today from everything that we've talked about, what might that be? What might be the one thought that you'd like to leave them with?

Craig Tindale:          Oh yeah, OK. I think we should all become more resilient, personally. The idea that me as a pundit or any other pundit knows what's about to happen, we both come from – and all the listeners, too – come from thousands of generations that were focused on resilience without exception. If you go back thousands and thousands of years, they were all focused on their personal resilience, whether they could heat their home, whether they could put food on their table. And now we've decided that we don't need that anymore. Everything's going to be in the supermarket and everything's going to be fine. And I – like I just mentioned then, I've built this big enclosed garden to grow my own veggies. I already do that. I've got greenhouses. I've got – I think we're up to 12 horses. My wife likes horses. So, I'm very practical because I think it gives you peace of mind. If everything – the world falls apart next week, Craig's OK, and his family's OK. I think we should all focus on that, because I think it's good for your mental health. I think it's good to be able to do practical things. I think you get a – the more resilient you are, the more secure you feel. So I think it's just a good habit. Whether you need it or not, who knows? Like I said, I can't predict the future, but it doesn't look happy. It doesn't. I think we become better people because we become more resilient, become more caring about each other, but do things local.

Dan Ferris:              All right. Resilience. I like that. That's actually – that's a really great answer. And listen, Craig, thanks for being here, but I want to tell you something. I have – I feel like I have only begun to discover your Substack, so I will be dig – I know I'm going to be digging into it. I'm a subscriber, I love it, and you're definitely going to get invited back. So I hope you'll come and talk.

Craig Tindale:          Thank you, sir. I appreciate it. We went through a bit of trouble. The listeners don't know this, but we, we had a few stop-goes on this, didn't we? And we finally got there.

Dan Ferris:              This is about our third try. Yeah. All right.

Craig Tindale:          All right, Dan, thank you very much. I really appreciate it.

Dan Ferris:              That was extremely interesting to me. I hope it was as interesting to you. This is obviously a very sophisticated set of ideas, and I really do want to have Craig back to break some of it down further, and we'll even talk about some stocks, some ticker symbols that play into this trend, this great bifurcation trend. I'm very much at the beginning of understanding it myself. I think there's something really important going on here, and I think it is – well, just put it this way: I recommended the S&P 500 Industrial ETF, that is the industrial sector ETF from the S&P 500. And I noticed recently it was making new highs. So, oh, OK, well, maybe there's more to this than I even thought. And maybe the market is starting to see this stuff. We had COVID and now we've got the Strait of Hormuz, and these big events are showing us the vulnerabilities in the global supply chain and in the supply and processing of all those critical materials that we talked about. So I think there's a lot here for a really smart investor who wants to dig in deep. We're digging in deep with some of this stuff. You heard all – we talk about all these chemicals and processes and chemistry. It's technical.

                             It might not be for you. It might not be for everybody. But if it is, I think there's a lot of opportunity in here. And I think the market is already starting to recognize it. So it's like – I'm going tick-tock here, everybody. We got to get moving on this. So I'm going to try to get Craig back on the show pretty soon.

                             Wow. So that was another great interview, another great episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I really, truly did. And go ahead and click subscribe and like, and don't forget to sign up for our free daily e-mail.

Announcer:             Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stansberry Research, its parent company, or affiliates.

[End of audio]