I'll confess that while I'm not a metals expert -- I'll leave that to my wife and her business partner who will soon be sharing much more of their knowledge on this topic on an offshoot of Spend Matters -- I do find metals trends inherently fascinating since so much of our global economy and world affairs (e.g., defense) is tied to their availability and cost. But before Lisa and Stuart launch their own blog dedicated entirely to the subject in the next few weeks, I thought it would be worth sharing some observations from another expert on the subject, who recently penned his opinion on trends and availability. According to Jack Lifton's above-linked post, one metals group in particular is critical to the defense and industrial sectors in North America.
Lifton notes that "the most critical supply situation ... would strike if America's supply of the platinum group metal, rhodium, were cut off." If a supply shortage of Rhodium happened, "The OEM American automotive industry would then be in a no-build situation as soon as existing inventories were exhausted. Without emergency legislation by Congress at that point, suspending air quality rules nationally, the OEM American automotive industry and all of its supply base would be simply unable to manufacture vehicles that could be legally sold, so it would shut down." What metals are other industries dependent on? I'll list out a few from a longer list he presents: "Manganese (steel, oil), Indium (electronics), Niobium (steel), Copper (electrical components, automotive, appliance, housing construction, military), Palladium (automotive) and Titanium (aircraft, military)."
What's scary reading his essay is how certain metals are mineral resources are subject to the whims and fancies of dictators and trades alike. As Lifton points out with a dose of humor, "If sources of supply are subject to constriction, interruption or cut-off because someone like Putin or Chavez might wake up on the wrong side of the bed or with a diseased bed-partner, or if one or more hedge fund guys could corner the market then the supply of the metal or material" then risk of shortages or disruptions increases even more.