Email us at info@servantfinancial.com to talk to a financial advisor today!

Email us at info@servantfinancial.com

Category: Insight

Bitcoin Alchemy

Written by John Heneghan

Alchemy, an ancient philosophical and pre-scientific practice, sought to purify and perfect materials or the human spirit. Practiced in cultures such as China, India, the Muslim world, and Europe, alchemy is best known for chrysopoeia—the attempt to transmute base metals like lead into gold. However, its goals were multifaceted:

  • Transmutation of Metals: Alchemists believed all metals were fundamentally the same substance at different stages of maturity, with gold as the perfected form.
  • Elixir of Life: A key pursuit, especially in Chinese and Indian traditions, was a panacea to cure diseases and extend life indefinitely.
  • Spiritual Transformation: The “Great Work” (magnum opus) symbolized purifying the soul, transforming base human traits into “spiritual gold.”

Earlier in 2025, Forbes dubbed MicroStrategy’s (now Strategy) CEO Michael Saylor, “The Bitcoin Alchemist”, for his innovative approach to corporate treasury management. This article uses this metaphor to explore Bitcoin, the rise of Bitcoin treasury companies, and how to use this esoteric knowledge to add a little magic to traditional investment portfolios.

Overview of Bitcoin

Launched in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin is the first and largest decentralized cryptocurrency, with a market capitalization of approximately $2.2 trillion as of August 31, 2025. Operating on a blockchain (digital ledger), it enables peer-to-peer transactions without intermediaries, often likened to “digital gold” for its store-of-value properties. Bitcoin’s supply is capped at 21 million coins, with 19.91 million in circulation. Its price, influenced by supply and demand, institutional adoption, regulation, and macroeconomic factors, historically surges after “halvings” that reduce mining rewards, the most recent in April 2024.

Strengths and Investment Thesis

Bitcoin is a compelling store of value and entry point for traditional investors into digital assets:

  • Monetary Good: It combines scarcity, durability, and ease of use, akin to gold but with numerous digital advantages.
  • Decentralized Security: Its blockchain and long track record distinguish it from other cryptocurrencies.
  • Inflation Hedge: Growing adoption and macroeconomic conditions, like U.S. dollar depreciation due to Federal Reserve loose monetary policies, enhance Bitcoin’s appeal.

Weaknesses and Challenges

Bitcoin faces several hurdles:

  • Transaction Speed and Cost: Its base layer is slower and costlier than newer blockchains.
  • No Cash Flow: Like gold, Bitcoin’s value relies on perceived scarcity and adoption, not income generation.
  • Volatility and Regulation: High price volatility and evolving regulatory frameworks create uncertainty.

Bitcoin’s Dual Nature: Network vs. Asset

Bitcoin operates as both a decentralized payment network and a digital asset:

  • Network: A global system of computers prevents double-spending/counterfeiting, enabling secure transactions without intermediaries.
  • Asset: Its fixed 21-million-coin supply and scarcity drive its value as a store of value.

Historical Context and Evolution

Bitcoin revolutionized digital cash by introducing a secure, decentralized payment system using proof-of-work to prevent double-spending. Since 2009, it has evolved while maintaining its core principles of decentralization and immutability.

Bitcoin as a Monetary Good

Bitcoin combines the scarcity of commodities like gold with the convenience of a digital fiat currency. Its value stems from tradability, not consumption, and its fixed supply enhances its appeal as a long-term store of value.

Enforced Scarcity and Decentralization

Bitcoin’s 21-million-coin cap, embedded in its code, can only be altered through network consensus, ensuring scarcity. Its censorship-resistant design prevents control by any single entity, reinforcing decentralization.

Proof-of-Work Mechanism

Bitcoin’s proof-of-work consensus ensures security by allowing the network to agree on the ledger’s state without a central authority, preventing double-spending and maintaining transaction integrity.

Halving Events and Monetary Policy

Every 210,000 blocks, Bitcoin’s mining rewards halve, reducing its inflation rate. The April 2024 halving lowered issuance to 0.8%, compared to the Federal Reserve’s 2% target for the U.S. dollar. Historically, halvings correlate with price increases due to reduced supply growth.

Valuation and Market Dynamics

Bitcoin’s value hinges on supply-demand dynamics and network effects. Halvings often drive price surges, while growing adoption fuels exponential potential as more users join its monetary network ecosystem.

Governance and Development

Bitcoin’s decentralized governance relies on community consensus among developers and node operators. While Satoshi Nakamoto initiated the project, control has shifted to this community, ensuring no single entity dictates changes.

Consensus and Hard Forks

Bitcoin’s core rules remain unchanged, with significant alterations leading to hard forks like Bitcoin Cash and Bitcoin SV. Soft forks, which prioritize security and decentralization, are the preferred method for upgrades.

Risks and Uncertainties

Bitcoin shares risks with other digital assets, including:

  • Regulatory Changes: Evolving global regulations can impact adoption and price.
  • Volatility: Large price swings remain a challenge.
  • Technical Risks: Potential software vulnerabilities could undermine confidence, though Bitcoin’s simplicity and scrutiny mitigate this risk.

Evolving Regulatory Landscape

Bitcoin’s regulatory environment is improving:

Bitcoin Treasury Companies

The “Bitcoin Alchemist” metaphor, popularized by Forbes’ cover story on Michael Saylor, reflects Strategy’s transformation into a Bitcoin treasury company. These firms, including Japan’s Metaplanet Inc. (TYO: 3350) and various Bitcoin mining and financial services companies, hold significant Bitcoin as a core reserve asset, departing from traditional treasury assets like cash or U.S. Treasuries. Market participants are speculating that Strategy may enter the S&P 500 shortly.

Key Characteristics of Bitcoin Treasury Companies:

  • Primary Asset: Bitcoin dominates their balance sheets, often surpassing the value of core operations.
  • Acquisition Strategy: Companies actively acquire Bitcoin using cash flow, debt, or equity issuance.
  • Price Exposure: Their stock prices closely track Bitcoin’s, offering investors indirect exposure akin to spot Bitcoin ETFs like FBTC.
  • Distinct from Miners: Unlike miners, who earn Bitcoin through operations, treasury companies purchase it directly.
  • Motivations: These include hedging inflation, seeking capital appreciation, and aligning with the cryptocurrency ecosystem.

Saylor’s Bitcoin Alchemy:

  • Base to Noble Metal: Strategy, once a stagnant software firm, now holds ~632,457 BTC (valued at ~$70 billion at $110,405 per BTC), transforming into a Bitcoin-centric company with a $95 billion market cap.
  • Philosopher’s Stone: Saylor leverages low-interest debt to acquire Bitcoin, capitalizing on its volatility to amplify returns when prices rise.
  • Philosophical Shift: Saylor views Bitcoin as a superior alternative to fiat currencies, citing the U.S. M2 money supply’s growth to $22.1 trillion as evidence of intentions for systemic devaluation of the U.S. dollar.
An ancient library where scrolls and tomes about alchemy and gold sit beside digital tablets and screens displaying bitcoin algorithms and blockchain technology Scholars in traditional robes use augmented reality to study both embodying the pursuit of knowledge across ages and mediums

Portfolio Alchemy

Bitcoin’s price, consolidating between $108,000-$112,000 after peaking at $124,000 in August 2025, remains up over 80% year-over-year. Over the past decade, Bitcoin’s 250x growth ($400 to ~$100,000) vastly outpaces gold (3x) and the S&P 500 (~3x), driven by Federal Reserve policies inflating asset prices.  Even a modest Bitcoin allocation can enhance a traditional 60/40 stock-bond portfolio by acting as a “unique diversifier.” Historical analysis shows Bitcoin improves risk-adjusted returns and counters inflation’s impact on an investor’s purchasing power. Larger allocations increase volatility but also offer higher return potential, transforming a “base” 60/40 portfolio into one with transformational “digital gold” properties.

 

 

 

 

Essential Materials in Focus – Steel, Copper, and Cement

Written by Caitlin Heneghan

This is our last Materials in Focus newsletter. Once again, a reminder below that we categorized raw materials into three investment-relevant groups:

  1. Strategic Materials – Rare Earth Elements (REEs), Semiconductors, and Lithium
    Vital for national defense and advanced technologies, yet heavily reliant on foreign supply chains.
  2. Critical Materials – Cobalt, Graphite, and Aluminum
    Essential for energy storage and transportation, with vulnerable domestic sourcing.
  3. Essential Materials – Steel, Copper, and Cement
    The foundational components of industrial infrastructure.

Spotlight on Essential Materials: Steel, Copper, and Cement

Research suggests that demand from hyper scaled AI data centers, electrification structures, and shipbuilding could increase domestic steel consumption by 2-4 million tons annually through 2030. This equates to a 1-3% CAGR for domestic steel. Similar to other raw materials China dominates global steel production with approximately 54% market share. Our research for “National Champions” identified U.S. Steel (since acquired by Nippon Steel), Nucor Corporation, Worthington Steel, and Arcelor Mittal.

One raw material input to make steel, depending on method used, is metallurgical coal. Metallurgical coal is primarily used in basic oxygen furnaces (BOF), while smaller quantities can be used in electric arc furnaces (EAF). Given cleaner energy regulations and goals domestically, the United States produces the majority of its coal (70%) by EAF process and the other (30%) by BOF. The opposite is the case in many other countries, like Japan (Nippon steel). Details of the Nippon Steel / U.S. Steel acquisition include a National security agreement which gives the standing Presidential administration authority to appoint a board member and a non-economic “golden share” giving veto power over certain production and staffing decisions. The deal also required Nippon to make significant investments in U.S. facilities.

Since our last newsletter, the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. The act contains a number of tax provisions that promote investment in domestic production of raw materials and manufacturing. One provision is an expansion on the list of 45X credits for critical minerals production to include “metallurgical coal” effective in 2026 tax year. If unfamiliar with this credit, it is generally 10% of production costs (excluding labor and overhead), although with metallurgical coal the credit is 2.5%.  In addition to metallurgical coal, the previously approved list of minerals eligible 45X credits at the 10% rate includes several natural resources familiar to newsletter readers – aluminum, cobalt, graphite, lithium, titanium, and, of course, a number of the rare earth elements.   For 45X production tax credit purposes, it doesn’t matter if the coal is used domestically or exported overseas. Given the tax credit and investment of Nippon Steel in US facilities (including basic oxygen furnaces), we thought Alpha Metallurgical Resources and SunCoke Energy were also contenders in the steel sector for taking advantage of the changing geopolitical landscape.

Another element providing some tailwinds to the domestic steel producers is the increases on Section 232 tariffs on steel and aluminum, up from 25%. (Section 232 Tariff Increase)

With regard to our next essential material copper, global demand is expected to increase at a CAGR of 2-3% through 2035. The executive order Section 232 investigation on critical minerals and derivative products put a recent spotlight on copper. President Trump has suggested on social media that the investigation will result in copper materials and products getting a similar 50% sectoral tariff starting in August. (EO: Section 232 Investigation) Its not a surprise that China does the majority of copper refining ~40% globally.  Freeport-McMoRan Inc. and Southern Copper Corporation are two companies we think worth paying attention to.

Lastly, global demand for cement is expected to increase at a CAGR of 4-5% through 2033. China leads global supply of cement with an approximate 51% market share. But the United States domestic production meets about 80-85% of domestic demand, leaving only 15-20% imported from other countries. Canada leads US cement imports with ~40%. A few domestic companies we are watching are Vulcan Materials Company and Martin Marietta Materials.

Nucor Corporation (Ticker: NUE)

  • Location: HQ in Charlotte, North Carolina. Operates 300+ facilities across U.S., Canada, and Mexico. Major steel mills in Alabama, Indiana, and Texas.
  • Focus: Leading steel producer specializing in carbon and alloy steel products and steel recycling.
  • Use Case: Supplies steel for construction, automotive, energy and heavy equipment.
  • Strategic Edge: Largest U.S. steel producer with a low-cost, vertically integrated model.
  • Website

Worthington Steel (Ticker: WS)

  • Location: HQ in Columbus, Ohio. Operates 30 facilities across U.S., Canada, and Mexico. Key processing plants in Ohio, Michigan, and Alabama.
  • Focus: Processes and distributes flat-rolled steel products for automotive, construction and industrial applications.
  • Use Case: Supplies steel for construction.
  • Strategic Edge: Spun off from Worthington Industries in 2023, WS leverages a customer-centric, value-added processing model with just-in-time delivery.
  • Website

ArcelorMittal (Ticker: MT)

  • Location: HQ in Luxembourg City, Luxembourg. Major facilities in Europe, North America, Brazil, and Asia.
  • Focus: World’s second largest steel producer, offering flat and long steel products and a smaller mining segment for iron ore and metallurgical coal.
  • Use Case: Supplies steel for construction, automotive, and energy sectors.
  • Strategic Edge: Global scale and diversified portfolio provide cost advantages and supply chain control.
  • Website

Alpha Metallurgical Resources (Ticker: AMR)

  • Location: HQ in Bristol, Tennessee. Operates 20+ metallurgical coal mines and preparation plants primarily in Virginia and West Virginia.
  • Focus: Produces metallurgical coal for steelmaking, with minor thermal coal output.
  • Use Case: Metallurgical coal is critical for coke production, used in BOF for steel.
  • Strategic Edge: One of the largest U.S. metallurgical coal producers.
  • Website

SunCoke Energy (Ticker: SXC)

  • Location: HQ in Lisle, Illinois. Operates cokemaking facilities in Illinois, Indiana, Ohio, Virginia and Brazil, with logistics terminal in the U.S.
  • Focus: Produces high quality coke for steelmaking and provides coal logistics services.
  • Use Case: Coke is essential for steel production. Logistics services handle coal and other bulk materials for industrial clients.
  • Strategic Edge: One of the largest U.S. coke producers with long term contracts ensuring stable revenue.
  • Website

Freeport-McMoRan (Ticker: FCX)

  • Location: HQ in Phoenix, Arizona. Operates several open pit copper mines in North America, two molybdenum mines in Colorado, and one mine in Indonesia.
  • Focus: Leading international mining company specializing in copper, gold, and molybdenum. World’s largest publicly traded copper producer.
  • Use Case: Supplies copper for electrical infrastructure, construction, and industrial applications.
  • Strategic Edge: Operates long lived, geographically diverse assets with significant reserves.
  • Website

Southern Copper Corporation (Ticker: SCCO)

  • Location: HQ in Phoenix, Arizona. Operates primarily in Peru and Mexico with exploration projects in Chile, Argentina and Ecuador.
  • Focus: One of the largest integrated copper producers, focusing on copper mining, smelting, and refining with by products like molybdenum, silver, and zinc.
  • Use Case: Supplies copper for electrical applications, construction, and infrastructure.
  • Strategic Edge: Industry leading low-cost production. Large copper reserves and expansion projects.
  • Website

Vulcan Materials Company (Ticker: VMC)

  • Location: HQ in Birmingham, Alabama. Operates 400+ facilities, including 240 aggregates quarries, 130 asphalt plants, and 70 concrete plants, across 22 U.S. States and Mexico.
  • Focus: Largest U.S. producer of construction aggregates. With additional production of asphalt and ready-mix concrete.
  • Use Case: Aggregates and concrete are critical for cement intensive construction
  • Strategic Edge: Extensive U.S. quarry network provides proximity to high demand markets, reducing transport costs. Long-life reserves ensure supply stability.
  • Website

Martin Marietta Materials (Ticker: MLM)

  • Location: HQ in Raleigh, North Carolina. Operates 350+ facilities, including 200 aggregate quarries, 120 asphalt/concrete plants, across 28 U.S. states and the Bahamas.
  • Focus: Major producer of construction aggregates with additional operations in asphalt, ready mix concrete and magnesia-based chemicals for industrial applications.
  • Use Case: Supplies aggregates and concrete for cement heavy infrastructure.
  • Strategic Edge: Diversified portfolio and strategic acquisitions expand market reach.
  • Website

Example of National Champion Playbook

We believe recent corporate events with respect to rare earth producer MP Materials (MP) featured in our May article Strategic Materials in Focus – Rare Earth Elements and Lithium are instructive of this Administration’s National Champions strategy for domestic producers of strategic, critical, and essential materials.

In addition to the Administration providing direct financing and facilitating additional financings from supply dependent corporate end users, we believe the Administration will also use tax and tariff policies to promote domestic production.   Tariff policies are mostly self-evident, but within the OBBBA there is a little know provision that encourages domestic production of natural resources, manufacturing, and other production activities.  The OBBA includes a Special Depreciation Allowance for Qualified Production Property.  Think of this as the Build Baby Build provision.

The act allows an additional first-year depreciation deduction equal to 100% of the adjusted basis of “qualified production property (QPP).” Under prior law, owners of nonresidential real property had to depreciate the cost of such property over a 39-year period. A “qualified production activity” is defined in the OBBBA as manufacturing, production (e.g. agricultural production and chemical production) or refining of a “qualified product” which is generally defined as tangible personal property.   Construction of QPP must begin between January 19, 2025, and January 1, 2029; and be placed in service before January 1, 2031.

Forge Ahead

This piece wraps up coverage of our rigorous work to develop an internal Strategic Materials Fund (basket of securities) to align with these perceived long-term structural trends of the U.S. strategic sourcing of raw materials.  We’re pleased to announce that we’ve named this client portfolio sleeve Forge Ahead. Forge Ahead is comprised of sixteen natural resource equities with position sizes ranging from 3% to 7.5% within the sleeve.  Client model allocations to the Forge Ahead basket roughly range from 3% to 7% depending on client risk tolerance with more risk tolerant accounts receiving a higher allocation.    Servant client portfolios were deployed to Forge Ahead this past week beginning on Monday with incremental deployment on Friday.

“I don’t believe in pessimism.

If something doesn’t come up the way you want, forge ahead.”

~ Clint Eastwood

Critical Materials in Focus – Cobalt, Graphite, and Aluminum

Written by Caitlin Heneghan

Above Image: Lithium-ion Battery Minerals: Cobalt, Nickel, Manganese, Graphite, and Lithium

In our last edition, Strategic Materials in Focus: Rare Earths and Lithium, we explored the first category of materials important to America’s industrial resurgence. Once again, a reminder below that we categorized raw materials into three investment-relevant groups:

  1. Strategic Materials – Rare Earth Elements (REEs), Semiconductors, and Lithium
    Vital for national defense and advanced technologies, yet heavily reliant on foreign supply chains.
  2. Critical Materials – Cobalt, Graphite, and Aluminum
    Essential for energy storage and transportation, with vulnerable domestic sourcing.
  3. Essential Materials – Steel, Copper, and Cement
    The foundational components of industrial infrastructure.

Spotlight on Critical Materials: Cobalt, Graphite and Aluminum

Research suggests global cobalt demand is led by batteries and superalloys (~43% and 25% in 2024, respectively), used in automotive, turbine engines and electronics, with a projected growth rate of ~4% CAGR by 2030. For example, cobalt is a component in Lithium-ion batteries, which contain ~10-20% of cobalt and are widely used in Electric Vehicles. An important note is that cobalt is a byproduct of copper mining. In high cobalt deposits, copper yields cobalt at a paltry ratio of .02-.05 metric tons to 1 metric ton of copper mined. The global supply of copper is dominated by the Democratic Republic of Congo (DRC), producing ~70%. Importantly, 65% of cobalt refining is done in China. Given the copper byproduct dependency, very few pure-play cobalt producers exist. Therefore, we concluded the best approach to obtain cobalt exposure is through direct investments in copper miners.

Global graphite demand is also led by batteries ~40%. Lithium-ion batteries for Electric Vehicles require 40-60kg of graphite, for which market growth supports projected graphite use for batteries of 78% by 2035. CAGR for graphite use in the United States is ~7% through 2033. China owns 60% of global graphite mine production and 97% of graphite refining.

Global aluminum demand is led by transportation and packaging (~40% and 20% in 2024, respectively) used in automotive, aerospace, and beverage cans. The US Aluminum market is projected to reach CAGR of ~4.6% through 2030. The US imports most of its Aluminum from Canadian smelters. Canada imports its raw aluminum from Guinea, Australia and Brazil for refining/smelting.

As with strategic raw materials before, China dominance poses significant strategic risk, particularly as it relates to graphite suggesting that the U.S. may benefit from the vertical integration of domestic supply chains for critical minerals.

Four companies in the graphite and aluminum space stand out based upon our research:

Syrah Resources (Ticker: SYAAF)

  • Location: HQ in Melbourne, Australia; operations in Mozambique (Balama) and U.S. (Vidalia, LA)
  • Focus: Natural graphite mining and active anode material (AAM) production for batteries
  • Use Case: EV and grid storage lithium-ion batteries (supplying OEMs like Tesla, Ford, Samsung)
  • Strategic Edge: Only fully vertically integrated graphite-to-anode producer outside of China
  • Website

Alcoa Corporation (Ticker: AA)

  • Location: S. HQ in Pittsburgh with integrated global operations (Canada, Australia, Spain)
  • Focus: Bauxite extraction, aluminum smelting, and fabrication
  • Use Case: Automotive, aerospace, packaging markets with half its smelting powered by low-carbon hydro-electricity
  • Strategic Edge: Vertically integrated, low-carbon production, tariff responsiveness, and joint ventures in Europe (e.g., Spain)
  • Website

Kaiser Aluminum (Ticker: KALU)

  • Location: HQ in Franklin, Tennessee; North American fabrication plants (13 sites across the U.S.)
  • Focus: Rolled, plate, sheet, can-sheet, extruded, and forged aluminum products
  • Use Case: S. aerospace, automotive and packaging industries
  • Strategic Edge: Pure-play downstream fabricator benefiting from reshoring and tariff protections, with stable operating margins
  • Website

Rio Tinto (Ticker: RIO)

  • Location: Dual HQ in London and Melbourne; operates globally (~35 countries)
  • Focus: Mining & processing—including iron ore, copper, bauxite, alumina, aluminum, lithium, and borates
  • Use Case: Broad metals demand—steelmaking, energy transition (copper, lithium), refined aluminum
  • Strategic Edge: Massive scale, diversified portfolio, expanding into lithium via Arcadium acquisition
  • Website

Looking Ahead

Our research suggests the U.S. government, under President Trump as the 47th President, has intensified efforts to secure critical mineral supply chains. Likely actions include executive orders, use of the Defense Production Act, and deep-sea mining initiatives to reduce reliance on foreign sources, especially China. Here are details on few measures under consideration:

Our intensive work to develop an internal Strategic Materials Fund (basket of securities) to align with these perceived long-term structural trends of the U.S. strategic sourcing of raw materials is ongoing.  Our next newsletter will cover remaining essential materials – steel, copper and cement. Followed by a disclosure of the composition our Strategic Materials Fund. Expect to possibly see portfolio transaction activity as we begin to execute on this theme ahead of further newsletter walkthroughs.

 

Strategic Materials in Focus – Rare Earth Elements and Lithium

Written by Caitlin Heneghan

In our last edition, Together We Build: Reindustrialization of America, we explored how historical industrial policies can inform a modern investing methodology in the face of shifting global dynamics. As a reminder, we categorized raw materials into three investment-relevant groups:

  1. Strategic Materials – Rare Earth Elements (REEs), Semiconductors, and Lithium
    Vital for national defense and advanced technologies, yet heavily reliant on foreign supply chains.
  2. Critical Materials – Cobalt, Graphite, and Aluminum
    Essential for energy storage and transportation, with vulnerable domestic sourcing.
  3. Essential Materials – Steel, Copper, and Cement
    The foundational components of industrial infrastructure.

Spotlight on Strategic Materials: Rare Earth Elements & Lithium

This article zeroes in on two highly strategic materials: Rare Earth Elements (REEs) and Lithium. Both are integral to a wide array of technologies, ranging from electric vehicles (EVs) and renewable energy systems to defense equipment and medical devices.

Research suggests rare earth elements (REEs) demand is led by magnets (~33% in 2025), used in automotive, renewable energy, and electronics, with a projected growth rate of 10-12% CAGR by 2032. For example, the rare earth neodymium highlighted in the periodic table above is used to produce magnets used in various everyday applications in audio equipment, mobile phones, and disk drives, and is vital in wind turbine assemblies.  Similarly, lithium demand is dominated by electric vehicles (EVs) at ~38% in 2025, with key sectors including energy storage and consumer electronics, growing at ~18.9% CAGR by 2032.

The U.S. Department of Energy (DOE), in its April 2020 report Critical Materials Rare Earths Supply Chain, identified 17 elements as “rare earths.” These elements are now center stage in national security discourse, as highlighted in a series of recent Executive Orders aiming to revitalize domestic mining and refining capacity.

A Strategic Vulnerability

Currently, China controls over 90% of global rare earth refining and over 60% of global rare earth mining. This dominance poses a significant strategic risk, leading the U.S. to pursue vertical integration of domestic supply chains for critical minerals.

📄 Executive Order: Ensuring National Security and Economic Resilience

Investing in the Future: ETF vs. Direct Exposure

Initially, we considered the VanEck Rare Earth and Strategic Metals ETF (REMX), which offers broad exposure to companies involved in strategic minerals. Its geographic spread is diverse—about 18% U.S. and 10% China. However, in light of the geopolitical landscape, we opted to dig deeper into the individual holdings to identify U.S. and allied “national champions.”

Here are four companies that stand out:

US Rare Earth Elements

MP Materials (Ticker: MP)

  • Location: Mountain Pass, California
  • Focus: Only active U.S. rare earth mining and processing site
  • Use Case: EVs, wind turbines, defense
  • Strategic Edge: Central to U.S. policy goals; competes with Chinese dominance
  • Website

Lynas Rare Earths (Ticker: LYSDY)

  • Location: Australia (mining), Malaysia (processing)
  • Focus: Rare earth oxides for permanent magnets
  • Use Case: EVs, electronics
  • Strategic Edge: Non-Chinese alternative, government-backed supply chain diversification
  • Website

⚡ Lithium

Albemarle Corporation (Ticker: ALB)

  • Location: U.S. HQ with global operations (Chile, Australia, U.S.)
  • Focus: Lithium, bromine, and specialty chemicals
  • Use Case: EV batteries, grid storage
  • Strategic Edge: Integrated operations, policy-aligned U.S. producer
  • Website

Sociedad Química y Minera (Ticker: SQM)

  • Location: Chile
  • Focus: Fertilizers, iodine, and lithium
  • Use Case: EV batteries
  • Strategic Edge: Vast lithium reserves, low-cost production
  • Website

Looking Ahead

As the U.S. government intensifies efforts to secure critical mineral supply chains, investors have an opportunity to align with long-term structural trends. Companies like MP Materials and Albemarle stand to benefit from federal support and shifting global sourcing patterns, while allies like Lynas and SQM offer diversified, non-Chinese exposure.

Servant Financial’s investment research is ongoing on these materials vital for America’s industrial resurgence.  Our intention is to develop a thematic internal fund, or basket of securities, comprised of competitively well-positioned companies with the most attractive risk-adjusted return potential.  Our next newsletter issue will cover critical materials, followed by essential materials, and wrap up with disclosure of the composition of our Strategic Materials Fund.

📄 Executive Order: Unleashing America’s Offshore Critical Minerals
📄 Executive Order: Measures to Increase Domestic Mineral Production

 

Together We Build: Reindustrialization of America

Written by John Heneghan

Researched and written by John Heneghan and Grok AI

 

Inspired by Freedom’s Forge: How American Business Produced Victory in World War II by Arthur Herman, which chronicles America’s WWII industrial mobilization, this article explores how industrialists like William Knudsen and Henry Kaiser offer a blueprint for today’s reindustrialization amid economic and kinetic warfare.  The tale focuses on the pivotal roles played by these two great American industrialists of that era in securing Allied victory.  Kaiser’s “can-do” spirit is captured in our “Together We Build” newsletter title.  Meanwhile, the Knudsen coined “arsenal of democracy” moniker was used by President Franklin Delano Roosevelt to enlist popular support for the transformation of the American industrial sector into a mass production juggernaut the likes of which the world had never seen before.

  • William S. Knudsen: Knudsen, a Danish immigrant, rose to lead GM’s Chevrolet division and later oversaw the mass production of military equipment during WWII.
  • Henry J. Kaiser, known for building Liberty ships at record speed, also spearheaded major infrastructure projects like the Hoover Dam.

Under Knudsen and Kaiser, American industry produced 286,000 planes and 5,600 merchant ships, including Liberty ships built at unprecedented speeds. Their efforts involved drafting talent from companies like Chrysler, Republic Steel, Boeing, Lockheed, GE, and Frigidaire and turning auto plants into aircraft factories and civilian lines into munitions production.

Just as Knudsen and Kaiser turned industrial might into victory in WWII, today’s political and business leaders must harness similar ingenuity to counter economic and security threats.  Freedom’s Forge offers a historical blueprint on how private industry, government collaboration, and innovative leadership can rapidly scale production to meet today’s existential challenges presented by global economic and trade war tensions.  One book review even suggested “relearning government-business partnerships would catalyze a New Gilded (golden) Age.”  The economic and kinetic warfare of the WWII era provides sober perspectives on the geopolitical and competitive aspects of today’s world around strategic technologies, supply chain security and control, and system resilience against natural or man-made disasters.

The Office of Production Management, under Knudsen’s leadership, classified WWII materials based on their importance to national defense, economic stability, and supply chain vulnerabilities. The OPM classified materials as strategic (critical for defense with high foreign dependency), critical (vital but vulnerable), and essential (important with stable supply) – a framework that applies to the leading technologies of today’s modern society.

If we flash forward and look at recent Administration actions, we can see evidence of a similar strategic thought process being applied today. We need only look toward the recent Executive Order on Restoring America’s Maritime Dominance, signed April 9, 2025, to see this with considerable clarity.  This EO aims to revitalize U.S. shipbuilding, countering China’s dominance, with a sharp focus on funding, workforce, and competitiveness.

The two pictures below highlight how strategically ill-prepared we are in this essential aspect of national defense.  Today, the U.S. has limited domestic shipbuilding production and very high foreign dependency.

The U.S. builds less than 1% of global commercial ships, while China builds about 50%, posing intolerable risks to national security and the economy.  Additional statistics highlight further U.S. vulnerabilities: 0% of global containers and ship-to-shore cranes are domestically built, compared to 96% and 80% by China, respectively. (Fact Sheet: President Donald J. Trump Restores America’s Maritime Dominance)

The Executive Order on Restoring America’s Maritime Dominance tackles China’s 50% dominance in global shipbuilding by revitalizing U.S. production through funding, workforce development, and a Maritime Action Plan, plus financial incentives to spur private investment.

For more details, please refer to:

This comprehensive EO aims to restore U.S. leadership in maritime industries, countering China’s dominance and ensuring economic and national security.  Similarly, other strategic dependencies can be considered within the framework of economic warfare, the potential for kinetic warfare, and the technological demands of human evolution.

We came up with the following raw materials categorizations based on the OPM criteria applied to today’s global realities.

  1. Strategic Materials – Rare Earth Elements (REEs), Semiconductors, and Lithium. Strategic materials like rare earths are vital for defense and technology, but are heavily reliant on foreign supply.
  2. Critical Materials – Cobalt, Graphite, and Aluminum. Critical materials like cobalt are essential for batteries, yet their domestic supply chains are vulnerable.
  3. Essential Materials – Steel, Copper, and Cement. These essential elements are the building blocks for manufacturing plants and related infrastructure.

Conclusion

By applying the OPM’s WWII-era categorization to the modern technological age, we have identified several areas that we must build together as a nation.  Rare earths, semiconductors, and lithium are strategic priorities requiring urgent action, while cobalt, graphite, and aluminum need supply chain focus, and steel, copper, and cement demand protection. Investors should carefully watch sectors like rare earth and lithium mining and refining, as well as semiconductor manufacturing, as government policies catalyze growth.

We believe that this fourth reindustrialization of America will offer ample opportunities for investors to build wealth and security for our nation, families, and communities. Which sectors will drive this reindustrialization? Investors, take note.

 

 

Tariff Madness

Written by Ailie Carlene Elmore , John Heneghan

Have you ever wondered where the term “March Madness” comes from? You may think it was a term coined by news broadcasters or advertisers to describe the excitement of the NCAA basketball final showdown. However, the popular phrase is credited to an Illinois high school official, Henry V. Porter, who in 1939 used the term to describe the Illinois High School Basketball Annual Championships. At one time, more than 900 teams would battle it out for the state title at the University of Illinois’ Huff Gymnasium. The term was later made even more illustrious by CBS broadcaster Brent Musburger, who used the term in the 1982 men’s NCAA basketball tournament.

While March Madness usually evokes images of incredible upsets, broken brackets, and history-making moments, it can also describe the current madness unfolding regarding the future direction of the U.S. economy. The first 100 days of a president’s term are typically marked by cabinet confirmations, settling into the White House, collaborating with Congress on legislation, and issuing executive orders. President Donald Trump seems particularly fond of the last item on that list, potentially busting social and economic bracket predictions across the nation. During his first term, Trump signed 24 executive orders in his first 100 days. This time around, he’s signed 96, with more likely before the April 30, 2025, milestone.  By comparison, Joe Biden issued 162 executive orders during his term as President of the United States.

The dreaded T in basketball often connotes angry outbursts and a point-scoring opportunity for opponents. In economic circles, the feared T stands for tariffs, which also creates potential winners and losers within global competitive trade. President Trump has already issued several executive orders surrounding tariffs and is keeping his thumb on the buzzer to increase or decrease tariff levels depending on how market participants react to his defensive and offensive maneuvers. The situation looks quite volatile for the viewers in the grandstands with new matchups and strategies occurring daily. With the Administration coveting the team from Greenland one day while taunting the Canadian team as the 51st draft pick the next.  So far, Trump’s toughest matchups have been with its biggest trading partners – China, Canada, Mexico, Colombia, and the European Union, with each country playing its own defense or sometimes giving in to the full-court pressure. Here is a recap of some of the important tariff definitions and matchups, and what sectors are the key players.

Tariffs are taxes levied by governments on imported or exported goods. The main types of tariffs include: Ad Valorem — calculated as a percentage of the good’s value (e.g., 10% of a car’s price), Specific — a fixed amount per unit (e.g., $5 per ton of steel), and Compound — a combination of both. Tariffs serve various purposes, such as protecting domestic industries from foreign competition, generating government revenue, and responding to unfair trade practices by other countries. Before 1913, the U.S. government relied entirely on tariffs for funding. However, the introduction of the income tax in 1913 fundamentally altered the nation’s revenue structure.

At a high level, pro-tariff arguments suggest that tariffs protect U.S. jobs and promote local businesses by shielding them from international competition. On the other hand, anti-tariff perspectives contend that tariffs drive up costs, reduce market efficiency, and negatively impact global trade.

Match up #1: United States vs. China

It’s no surprise that President Trump’s top rival is the world’s second-largest economy — China. Chinese President Xi Jinping and President Donald Trump have had their share of one-on-one matchups in the past. During Trump’s first term, the United States entered a trade war with its largest trading partner at the time, resulting in a significant decline in Chinese imports since 2018 — a trend that’s likely to continue.

Source: Wall Street Journal

President Biden left many of the tariffs in place from Trump’s first term. Trump’s America First plan includes raising tariffs by another 10%. In retaliation, China has declared it will impose an additional 15% tariff on U.S. chicken, wheat, corn, and cotton products, while American sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products will face an extra 10% tariff. U.S. Agricultural experts are concerned about the additional tariffs as the U.S. farm economy is coming off lower net farm incomes in 2024 and falling commodity prices. China was the largest importer of U.S. agricultural goods in 2023; however, the previous China tariff regime resulted in the emergence of Brazil as a supplier of bulk commodities to China in recent years. U.S. farmers will likely be in the center lane if additional tariffs are levied on China over the next few years.

Source: USDA

On the import side of the equation, several items will likely see price increases in the next few years. You can find the “Made in China” label on everything from your clothing tags to car parts, cell phones, and other tech devices. As one of the dominant producers in the semiconductor industry, China has been running a fast break in the United States on smartphones, computers, and electronic appliances for years. President Trump has vowed to increase domestic chip production during his presidency, a promise that former President Biden also made. While Biden attempted to boost domestic production through subsidies and tax incentives, Trump is taking a more aggressive approach using his entire bench of economic levers. Trump has discussed scrapping the Inflation Reduction Act infrastructure legislation and insisted that higher tariffs would incentivize manufacturers to move production to the United States.   It’s still early days, but some global technology stalwarts have read “the art of the deal” playbook and are making commitments to onshore critical technology manufacturing and services to the U.S.  The boxscore highlights include $1.3 trillion from a) Apple for $500 billion, b) AI infrastructure led by OpenAI, Oracle, and SoftBank of $500 billion, c) Taiwan Semiconductor (TSMC) of $100 billion, and d) Nvidia of $200 billion.

Source: Wall Street Journal

Match up #2: United States vs. Canada

Much like the battles associated with the recent Four Nations Face-Off hockey tournament, the U.S. and Canada are once again clashing amid the ongoing tariff madness — let’s just hope no one loses their teeth this time. Relations with our northern neighbor have been tense, especially after President Trump’s provocative remarks about Canada becoming the U.S.’s 51st state. While that scenario is a bit far-fetched, one thing that’s more certain is that our pancake breakfasts might get pricier from the rising cost of Canadian maple syrup.

Frustrated by immigration issues and the fentanyl crisis, Trump imposed a 25% tariff on goods coming in from both Canada and Mexico, despite Canada contributing only a small fraction of the fentanyl entering the U.S. In response, Canada slapped a 25% duty on select goods, notably steel and aluminum. This back-and-forth is hitting some American car manufacturers hard, even as they’re already grappling with rising costs due to increased tariffs on Chinese semiconductors. Early estimates suggest that the price of a new car could rise by as much as $4,000 to $10,000 — the economic equivalent of watching your #1 seed get knocked out by a #16.

Spectators: The American Consumer

Waiting anxiously in the stands is the American consumer, unsure of how these tariffs will play out. On one hand, tariffs mean increased revenue for the U.S. government — a much-needed boost as it grapples with a growing deficit. President Trump campaigned on promises to reduce the budget deficit and has already cut thousands of federal jobs to rein in government spending. However, the legality of some of these executive branch actions remains subject to judicial challenges.

Historically, increased tariffs are typically passed on to the consumer through price increases, and it is rare for companies to absorb the increased costs entirely. With the volatility of the situation, it is unclear how much, if any, of the tariff burden will be passed along to U.S. consumers, but some consumers are already starting to hold tighter to their playbook. Consumer sentiment took a hard foul in March, with the University of Michigan’s survey showing a 10.5% drop from February, hitting its lowest point since November 2022. Inflation concerns and market volatility played tough defense. The one-year inflation outlook soared to 4.9%, its highest since November 2022, while long-term expectations posted numbers not seen since 1993 — a throwback no one was cheering for. Sentiment fell across political lines, with overall expectations taking a 22% slide since December. It will be interesting to see how future consumer sentiment reports reflect the evolving landscape surrounding tariffs. Despite the rough court conditions, markets have generally held their ground, eyeing the Federal Reserve for potential rate cuts later in the game.

Spectators: Financial Markets

The current tariff strategy has financial markets waiting for the brackets to bust. Initially, stocks showed confidence and optimism, rising 2.5% after the election outcome was announced. However, equity markets have reversed all those gains in recent weeks, with the S&P 500 declining 3.6% since November 5th. The Trump Administration has not ruled out the possibility of a recession as they try to rebalance the budget and the fiscal picture for long-term sustainability by eliminating waste, fraud, and abuse in government spending and boosting revenues sourced from foreigners through tariffs and other means. Investors are looking to real assets like gold as their 6th man, hoping for a solid defense against global volatility from a rebalancing of trade and monetary regimes.

The Final Countdown

As the final buzzer looms on President Trump’s first 100 days back in office, the tariff madness shows no signs of letting up. Each new policy feels like a buzzer-beater, shifting momentum and keeping markets, consumers, and global trade partners on their toes and in a defensive posture. Much like a championship game, every move sparks reactions — from retaliatory tariffs to shifting supply chains and rising costs. Farmers brace for a tougher growing season ahead, manufacturers scramble to adjust sourcing plans, and consumers anxiously await the final score on prices at checkout.

Financial markets remain in a full-court press, with investors hedging bets with flight to safety plays like gold, hoping to avoid getting benched by volatility. Meanwhile, the Federal Reserve stands on the sidelines, watching for signs that the economy needs a timeout — or perhaps a rate cut — to ease mounting economic worries.

Whether these Trump tariff policies lead to long-term gains or a costly turnover is still up for debate. One thing is certain: the tariff madness isn’t over, and the next few quarters promise more surprises, more drama, and plenty of action before the final whistle blows. For now, all we can do is watch the game unfold — brackets busted and all.

Readers looking to sit in on the Team Trump’s sideline huddle on tariffs and economic strategies can watch the All-In Podcast’s Interview of Commerce Secretary Lutnick at https://www.youtube.com/watch?v=182ckTL2KBA.

 

white-arrow