China’s Game of Commodity Chicken

The geopolitical chess match between Washington and Beijing has entered a new phase — and the pieces in play are no longer currencies or semiconductors, but the metals buried beneath our feet.

China’s grip on rare earth elements and critical minerals has transformed these commodities from industrial inputs to geopolitical weapons.

Meanwhile, like the dragons of Chinese mythology, the nation has been steadily accumulating gold for months.

These shifts represent both a warning and an opportunity that demands your attention.

The New Currency of Geopolitics

This week, Trump claimed on Truth Social that talks in London had produced a draft agreement, calling it a ‘done deal’.

Chinese officials, meanwhile, have kept their cards close, simply promising that China ‘will always honour its commitments’.

These latest trade talks between the US and China reveal just how powerful these minerals have become. As investment strategist Lyn Alden put it:

‘The US is more harmed by rare earth shortages than China is harmed by shortages in high-end semiconductors.’

Here’s why China holds all the cards. They control nearly 90% of global rare earth processing, even though they only hold 37% of the world’s reserves.

Many of these minerals are used in critical sectors such as energy and defence. But they’re also the secret sauce in our newest technologies.

Recent attention has turned to heavy rare earth elements. A basket of metals that are key for production of powerful magnets that China recently restricted.

These magnets are found in EVs, wind generators, advanced fighter jets, warships, missiles, tanks, and lasers. In other words, they are critical to both modern technology and national defence.

And yet, America and Australia import between 80–90% of their rare earth elements directly from China. Hardly a safe pair of hands if tensions rise.

When China restricted rare earth exports to Japan in 2010, prices shot up 3,000% in months. That’s the kind of leverage money can’t buy.

And it’s working. The recent London negotiations were triggered partly by the US’s concern that China was releasing these critical materials too slowly.

Meanwhile, China wanted America to ease semiconductor controls.

This isn’t normal trade negotiation — it’s resource diplomacy.

Beijing’s Strategic Stockpile

While negotiating these trade deals, China has also been quietly building a fortress of gold while selling US Treasuries.

Chinese Treasury holdings fell to US$765 billion in March, down from US$784 billion just one month earlier. It seems the days of China buying US debt could be coming to an end.

Meanwhile, China has been buying gold for seven straight months. Their reserves stand officially at over 2,000 tonnes.

Unofficially, China’s gold reserves are likely double that. Through commercial channels and state-backed purchases, they probably hold over 4,000 tonnes by now.

This matters because China’s rare earth leverage only works if they can operate outside the dollar system.

Every time they threaten to cut off mineral supplies, America could theoretically turn around and freeze them out of the financial system if things escalate.

But gold changes that equation completely. Gold can’t be frozen, sanctioned, or devalued by governments. It’s the ultimate monetary insurance policy for a country planning to use resource leverage against the world’s reserve currency.

They’re essentially building the financial infrastructure to survive any American retaliation while maintaining their mineral chokehold.

For investors, regardless of how the final deal looks, there is a clear play here.

Your Response to This Moment

When commodities become weapons instead of just market goods, traditional investing rules break down.

China’s recent talks with Trump prove that physical resources now trump financial assets when push comes to shove.

Here’s the two-part strategy I recommend:

The Gold Play: As China demonstrates, gold protects against currency debasement and financial weaponisation.

When America prints US$2 trillion deficits annually while promising to ‘never default,’ they’re telegraphing massive currency debasement ahead.

China’s central bank knows this, which is why it’s dumping Treasuries for gold. All while strengthening its position against sanctions.

This marks a great opportunity for gold miners and gold prices longer term.

The Critical Minerals Play: Every geopolitical crisis around these materials creates profit opportunities.

When China restricts rare earth exports, prices explode. When Western countries scramble for alternative supplies, mining companies outside China’s control see sustained demand.

While these companies’ share prices bounce higher and lower in this news cycle, bargains can be found if you get your timing right.

The beauty is that these themes reinforce each other.

Rising geopolitical tensions are increasing demand for gold (as monetary insurance) and alternative mineral supplies (as strategic security).

You’re not betting on separate trends — you’re positioning for the same underlying shift toward resource-based power.

In fact, one of our Washington insiders thinks these resource-based power games could go even further.

Former White House advisor Jim Rickards is hearing rumblings that Donald Trump is considering returning to the gold standard.

If true, the impacts could be massive.

We’ll have to see what comes next. It’s never a dull day in this geopolitical environment.

Regards,

Charlie Ormond,
Editor, Alpha Tech Trader and Altucher’s Early-Stage Crypto Investor