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The Pentagon typically does not engage in commodity speculation, but when national security is involved, expect a shift in the usual rules. According to the Financial Times, the U.S. Defense Department has initiated a $1 billion effort to stockpile vital minerals such as rare earths.
This initiative encompasses a range of materials, including rare earth elements and other strategic metals necessary for electric vehicles, fighter jets, and semiconductors. The objective? To enhance domestic resilience and reduce reliance on a Chinese supply chain that has proven unreliable.
The plan to obtain up to $1 billion worth of critical minerals is part of a broader global stockpiling strategy aimed at countering Chinese dominance. This move reflects a strategic shift reminiscent of Cold War-era stockpiling initiatives, which focused on oil back then, and now includes lithium, cobalt, nickel, and rare earths—essentially the materials found in Teslas, missile guidance systems, smart bombs, and high-frequency radars.
Concerns about supply chains have been escalating for years, but the situation reached a critical tipping point after China imposed new export restrictions on rare earths and other strategic materials. This prompted significant disruptions in international markets, including Bitcoin and cryptocurrency, with Donald Trump venting on Truth Social:
“China is becoming very hostile, and sending letters to countries around the world, that they want to impose export controls on every element of production related to rare earths and almost anything else they can think of, even if it’s not produced in China.”
The Pentagon’s actions are not speculative; they represent a defensive strategy. This procurement effort is one of the largest in decades, and Washington is not acting alone. Brussels and other European allies are also racing to stockpile resources in response to war risks and the energy transition.
China provides a market lifeline
In a significant development on Sunday, Beijing seems to have softened its position. China defended its recent export controls as “legitimate,” asserting that they comply with international law and aim to maintain global peace and stability (rather than inciting economic warfare).
Crucially, China has clarified that these controls are not outright bans, noting that export applications that meet certain criteria will continue to be approved, and that dialogue channels with key trading partners are still open. Chinese officials indicated that the controls do not equate to export bans and that qualifying applications will be approved.
This more conciliatory tone should help assuage investor concerns. With China indicating willingness for flexibility and negotiation, analysts are now reevaluating previous risk assessments. The potential for renewed discussions and a less confrontational stance from Beijing could lead to a relief rally in commodities, gold, and even risk-on assets like Bitcoin if supply chain worries diminish and global trade tensions ease.
Implications of the rare earths strategy for gold and Bitcoin
Whenever governments ramp up stockpiling and resource nationalism comes into play, gold’s reputation as the ultimate safe haven is reaffirmed. However, this time the context is more complex. The rush for battery metals and rare earths suggests that “strategic value” is broadening beyond just traditional gold reserves.
Commodity investors may need to adjust their portfolio strategies, with gold continuing as the last-resort hedge, but now accompanied by new “security minerals” to guard against geopolitical risks.
If these measures escalate, gold could see increased safe haven inflows, especially if China reacts reciprocally and financial markets begin to falter. Conversely, if China’s softening approach fosters constructive dialogue and stabilizes supply chains, gold’s rally might be dampened by a general risk-on recovery.
Regarding Bitcoin, its attractiveness as “digital gold” has consistently rested on its scarcity, resistance to censorship, and separation from the physical realm.
However, the Pentagon’s mineral accumulation underscores one of Bitcoin’s contradictions: immune to supply chain challenges, yet vulnerable to broader risk-off sentiment. If trade conflicts intensify, investors may turn to USD, gold, and potentially Bitcoin, as they seek refuge from FX and commodity volatility.
Historically, Bitcoin miners’ reserves increase during periods of macroeconomic uncertainty, even though the asset itself might behave more like a risk-on tech investment in the short term. Meanwhile, disruptions in hardware supply chains (such as chips and semiconductors) could impact Bitcoin mining economics but won’t affect the core scarcity narrative.
If China’s tone remains conciliatory, crypto markets and other risk assets might experience a rebound as dire predictions begin to dissolve. As The Kobeissi Letter noted:
“If President Trump responds and de-escalates on Sunday, markets are poised for a significant jump on Monday.”
With the Pentagon and Europe accumulating minerals, the notion of “store of value” is evolving. Gold is not becoming less significant, but rather facing competition. Bitcoin’s appeal endures, particularly for investors cautious of government control or physical limitations.
And while $1 billion may seem trivial in the grand scheme of global resources, the symbolism carries weight. As Gold Telegraph shared on X commented:
“The race is on”
