At this stage of the 18.6-year real estate cycle, the economy expands… the stock market is on fire… growth is everywhere.
But it’s not only about growth. It’s about setting records.
The tallest structures are being built, the fastest trains launched, and the most impressive entertainment events take place (have you heard about Taylor Swift’s billion-dollar “Eras” tour?).
And everything unfolds just as the 18.6-year real estate cycle would predict.
So, what’s the latest “biggest, tallest, record-breaking” event?
Rio Tinto’s $20 Billion Mining Megaproject
Rio Tinto, the global mining conglomerate, has finally (do you notice the timing?) launched its iron ore, rail, and port development in Guinea, West Africa.
The project is finally coming online after 27 years of delays.
And Rio Tinto isn’t the only owner. In fact, one of the world’s biggest mining companies partnered with seven other companies and the government of Guinea to accomplish this.
It’s a massive project with hundreds of kilometers of rail lines and a potential output of 60 million tonnes of iron ore a year.
Why is this significant?
There’s Nothing New Under the Sun
The scale of this project is unprecedented, yes.
But the way it was put together (through a partnership of multiple private and government parties) reminds me of how European bankers, princes, and merchants launched their campaigns to bring high-value goods such as spices from overseas.
Those deals launched a whole new era of exploration and trade.
This project looks just like that, but bigger.
And mind my words, there will be more projects like it. Biggest, most impressive, industry-changing.
And Rio Tinto will need to find a market for the tens of millions of tons of iron ore it wants to produce.
Do you think the company and its partners would spend $20 billion and greenlight the project now if they thought the global economy was going to collapse?
No, they are betting on long-term growth. Growth in iron ore consumption which is tied to the workings of the economy in general.
It’s not a gold mine. You can only sell enough iron ore if the economy grows.
And they think (and I agree) that it will.
This is another reminder of the power of the 18.6-year real estate cycle.
If you understand it, you will know what to make of news like this.
While the rest of the market is obsessed with analyzing the Fed’s latest meeting notes or by how much exactly the economy grew this quarter, I look at the bigger picture.
I hope understanding the 18.6-year real estate cycle helps you, too.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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