Weekly Update from RLA Tax and Wealth Advisory

“US Department of Defense Buys Shares in MP Materials”

         While this was not widely reported, it happened.  The Defense Department of the United States just bought 15% of the company MP Materials.  (Source:  https://quoththeraven.substack.com/p/the-us-buys-rare-earthsis-gold-or)

         MP Materials is a rare-earth mineral mining company that operates the Mountain Pass Mine, the only operating rare-earth mine and processing facility in the United States.

         Rare earths are used in the manufacturing of electric vehicles, robotics, wind turbines, drones, and other advanced motion technologies.  Through the purchase of $400 million in special issue stock, the Pentagon now owns 15% of the company. 

         As part of the deal, the government has agreed to purchase all the magnets produced by the company’s upcoming “10x Facility”.  The government also contractually committed to minimum prices on the magnets.

         This is essentially a nationalization of a private company.  The government understandably wants to reduce its dependence on China for rare earth minerals; however, one can’t help but wonder if this will set a precedent.

         Will the government do something similar with other industries that produce products that the government deems essential?

         If yes, this could be a slippery slope.  Where does the line get drawn between the public sector and the private sector?  We’ll see where this goes.  But short-term MP Materials shareholders are happy.  Shares advanced more than 50% on the news.

Brace Yourself – Health Insurance Premiums Poised to Pop

         “The Epoch Times” reported that health insurance premiums are set to increase once again in 2026.  (Source:  https://www.theepochtimes.com/business/2026-health-insurance-premiums-could-see-largest-hike-in-5-years-report-5889326)

         The Affordable Care Act (Obamacare) has an enrollment period in November, and insurers that operate in the health-care arena are looking for approval for the largest premium increases in more than five years. That’s according to an analysis by the Peterson Center on Healthcare and Health Policy.

          Driving the rate increases are rising healthcare costs and greater usage of the insurance coverage by insureds.  According to the article, health insurance costs are poised to increase by 7.9% next year.  It’s expected that this will cause many healthier insureds to drop their coverage, leaving those who keep their health insurance in a smaller pool of insureds who are also sicker.

         This will further exacerbate the problem.

Are We Headed for a Crack-Up Boom?

         A crack-up boom is a concept that was advanced by the Austrian economist Ludwig von Mises.  A crack-up boom occurs when enough of the population comes to the realization that the government’s policy is to continue to devalue the currency.  When that realization reaches the tipping point among the population, demand for tangible assets like gold, silver, oil, and farms increases dramatically, fueling inflation, even hyperinflation in some cases historically.

           Past guest on RLA Radio, Mr. John Rubino, who has a widely read Substack newsletter and is the co-author of “The Money Bubble: What to Do Before It Pops”, recently commented on this phenomenon in a podcast appearance with Sprott Money.  Rubino suggested that as the price of these tangible items goes through the proverbial roof, it can trigger a rapid collapse of the currency and eventually force a monetary reset.  Rubino added that this is not only possible but “highly probable”.  (Source:  https://www.sprottmoney.com/blog/economic-storm-trump-vs-fed-gold-silver-effect). He added that the time frame for such a reset could be three to five years.

         This potential outcome suggests that holding some tangible assets like gold and silver in your portfolio is a good idea.  In the interview, Mr. Rubino opined that the silver price rally is just getting started.  He noted that silver is now approaching the key psychological level of $40 per ounce.  He explained, “Gold gets the initial bid and silver lags.  However, once silver’s value proposition becomes clear, it tends to outperform.  Silver is a tiny little thinly traded market…just a little bit of money flowing in sends the price up dramatically.”

         With gold possibly rising to $10,000 or more, Rubino thinks that silver could advance to several hundred dollars per ounce.  He suggested a minimum price target of a couple of hundred dollars per ounce, if not more, in his interview.  He added that silver is no longer cheap but still represents a buying opportunity, and the prior silver highs (of about $50 per ounce) will likely not be much resistance.

Silver – A Technical Perspective

         Technical analysis of markets is the study of price patterns that often repeat.  This type of analysis can be very insightful and can help with market forecasting.  One technical pattern that has been historically very reliable is the ‘cup and handle’ pattern that often precedes big price moves higher.

         “King World News” (Source:  https://kingworldnews.com/colombo-this-could-unleash-the-price-of-silver-hundreds-of-dollars-higher/) published this silver price chart (above) going back to the 1960’s.  It’s a textbook bullish cup and handle pattern.

         Just one more reason to think about re-examining your portfolio allocation.

RLA Radio

         The RLA radio program this week features a "Best-of" replay with guest Mark Jeftovic.  You can listen to the interview by clicking on the "Podcast" tab at the top of this page.  The weekly “Headline Roundup” newscast is also available and just a click away.

Quote of the Week

“Be open minded.  But not so open minded that your brains fall out.”                                    -Groucho Marx