Commodities Trading: Profiting from government stockpiles

Posted March 26, 2008

"In the post-Cold War euphoria of the 1990s and early 2000s, the U.S. government sold off almost all of the strategic stockpile material (The Russians sold a lot as well, but not all of it — characteristically.)." — Byron King

by Byron King

Baltimore – (TFN): One of the lessons of World War II was the vulnerability of international trade. The Germans almost starved Britain with submarine attacks on British and Allied shipping. And the U.S. broke the back of the Japanese economy by sinking over 90% of the Japanese merchant fleet.

So during the Cold War, from the 1940s to the 1980s, the U.S. government was pretty worried about keeping the national economy running in case of a war with the Soviet Union. Thus the U.S. government built up what it called a “strategic stockpile.”

This stockpile contained large quantities of metals, minerals, fuel and other critical commodities. Military planners believed these things were essential for national security. So the government just plain hoarded up metals and minerals in warehouses, and open camps out in the desert.

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It was like a squirrel stocking up on food for a long winter. The stockpile included all sorts of things. There was helium and indium, chrome and cobalt, germanium and beryllium, diamonds, molybdenum and much more. This constituted the U.S. “war reserve.”

In hindsight, it is fair to say that the planners had their basic facts straight. The items in the stockpile were — and remain — the backbone of a modern industrial economy. Without these metals and minerals, you can hardly keep the lights on, let alone build advanced systems like power plants, or war machines like jet aircraft and submarines.

But the Cold War ended in the early 1990s. So in the post-Cold War euphoria of the 1990s and early 2000s, the U.S. government sold off almost all of the strategic stockpile material (The Russians sold a lot as well, but not all of it — characteristically.). So today, the U.S. strategic stockpile is gone. The warehouses are empty. Heck, the U.S. government even sold off many of the warehouses. Read on to learn how you can profit from the government stockpile sell-off.

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