The game of WeiQi that is being played in the Asia Pacific

Hey Chronicle Community, we are going to take a little different approach this week.

But before we do please participate in the poll below. Last week we had 78 votes with 67% bullish and 37% bearish.

I know a lot of you come for the historical company data but if you are involved in commodities then you are knee deep in geopolitics as well - like it or not.

If I were to the mold the perfect commodity investor/analyst, I wouldn’t start with geology, supply demand spreadsheets or finance 101. Rather I would have him or her begin by studying world history and the political constraints surrounding major historical events. I would teach them how to do a DCF years down the road.

One of the defining characteristics of commodity super-cycles is they are often accompanied by a major geopolitical conflict as shown below.

In fact the beginning of the oil industry in the foothills of Pennsylvania was due to record high commodity prices brought about by currency debasement during the Civil War (HERE).

The abundance of Civil War veterans provided ample labor to fuel the boom-bust cycle as well.

Before Rockefeller formed Standard Oil, he was a broker, trading commodities around the major ports of Cleveland.

We all know of the events that are unfolding in Ukraine and the implications it has for NATO and Russia.

But as Graham Alison pointed out in his book Destined for War (HERE) we are in the midst of an even larger conflict brewing in South East Asia.

In his amazing account of the history of China, Henry Kissinger’s book “On China” brings the reader’s attention to the board game known as Weiqi (pronounced “way key”). It is a game whose origins stretch back to the Zhou dynasty and is over 2,500 years old. Unlike chess or checkers where players look to control the center of the board, Weiqi is a strategic game in which players use their pieces (stones) to encircle their opponents.

This week’s post will draw parallels between the Cold War and the current geopolitical events and China’s fear of a Weiqi like encirclement.