Editor’s Note: Our “America’s 250th Birthday” series continues today with this article by Dr. Mark Skousen on a valuable lesson he learned while working at the CIA during the 1970s oil crisis.
Dr. Skousen warns that America could be facing a similar threat right now: a severe weapons shortage caused by the conflicts in Ukraine and the Middle East.
To fix it, President Trump is preparing the largest military buildout in 75 years… which Dr. Skousen believes could result in a huge boom for one set of stocks.
He’ll share more details at a highly anticipated free online event TOMORROW at 2 p.m. ET.
Go here to register for Dr. Skousen’s America Reloading Summit.
– James Ogletree, Senior Managing Editor
“History repeats itself all the time on Wall Street.”
– Edwin Lefevre (quoted in The Maxims of Wall Street, Page 112)
In the early 1970s, I was a young economic analyst at the CIA.
My job was to read intelligence reports most Americans would never see – and look for vulnerabilities other people were missing.
In October 1973, I watched one of those vulnerabilities turn into a crisis almost overnight.
A group of oil-producing nations cut off supply to the United States. Gas lines stretched for miles, inflation spiked, and the economy stalled.
The cause wasn’t a war or a natural disaster. It was a single supply chain America had quietly depended on for years… with no backup plan.
What struck me, even then, was how visible most vulnerabilities are before a crisis arrives.
The oil embargo wasn’t a surprise to everyone. Analysts had been documenting America’s growing oil dependency for years.
The warnings were there, but the response wasn’t.
That experience taught me something I have never forgotten: The biggest risks are usually the ones that have been visible for a long time.
I’m seeing a similar pattern play out today.
Only it’s not oil we’re dependent on…
The Pattern That Keeps Repeating
Recent conflicts in the Middle East and Ukraine burned through American weapons stockpiles faster than the Pentagon ever planned for.
In just the first two months of the latest Iran conflict, the U.S. used up roughly half its Tomahawk missile stockpile − about $6 billion worth of munitions.
Washington also just approved the largest single increase in defense spending in 75 years, pushing the budget to roughly $1.5 trillion.
But there’s a problem…
Almost every modern weapon, from a small drone to a fighter jet, needs certain materials – like rare earth metals – to function. And China controls roughly 90% of the world’s capacity to process these materials into usable form.
Clearly, that is an issue our government would like to solve fast.
“If America loses its unquestioned military edge, no amount of fiscal austerity can maintain this nation’s economic health,” Secretary of Defense Pete Hegseth said. “Our job, in conjunction with Congress, is to stop at nothing… to ensure we deliver on the commander-in-chief’s vision for American defense dominance: a common-sense… ‘America First’ military. The future of America’s economic and fiscal health depends on it.”
The good news is that starting January 1, 2027, a new Pentagon rule will ban the use of these Chinese-made materials in American weapons systems entirely.
The bad news?
We aren’t prepared to meet current demands.
According to government data and analyst estimates, the National Defense Stockpile holds only about 42 days’ worth of one material that’s critical for defense purposes.
That means our government can increase the defense budget as much as it wants, but nothing gets built if the materials inside those weapons are still controlled by the one country they are meant to deter.
But that’s where the opportunity lies.
The Companies Built to Close the Gap
I like to say that major challenges often lead to major investments.
And those investments can reshape industries for years to come.
That’s why I’ve spent the past several weeks digging through SEC filings, Pentagon contract notices, and earnings transcripts to map out the new supply chain and find the companies positioned to benefit from our shortage of rare earths.
I found five that I’m excited about – some of them with government contracts already in hand.
I expect each one to surge higher from the coming government spending surge and the hunt for alternative sources of critical materials.
I’ll be revealing the full story, including more details about the specific companies I’m watching, at a free online event.
It’s called the America Reloading Summit, and it’ll take place tomorrow, June 30, at 2 p.m. ET.
The event is entirely free to attend. All we ask is that you reserve your seat.
During this free presentation, I’ll share the historical patterns that have shaped my thinking, explain why I believe America is entering one of its most important periods of modernization in decades, and discuss the areas of the market that I believe deserve investors’ attention right now.