Who is the greatest real estate investor of all time?
Some might say Sam Zell. The “grave dancer” made a fortune with distressed properties and was a pioneer for the real estate investment trust (“REIT”) model.
Another popular name is Donald Bren, owner of the Irvine Company, which is believed to hold some 100 million square feet of prime real estate in Southern California.
Maybe it’s John Malone, the cable and media billionaire. The “cable cowboy” was, at one point, the largest private landowner in the United States.
But a name that probably deserves consideration on that list is William Seward.
Seward wasn’t an investor per se. He was America’s Secretary of State from 1861 to 1869, serving under Abraham Lincoln and Andrew Johnson. All the same, Seward pulled off one heck of a real estate deal in that role.
He was the architect of America’s purchase of Alaska from the Russian Empire in 1867. The U.S. paid $0.02 per acre, or $7.2 million all-in. That would be somewhere in the neighborhood of $150 million today.
At the time, this was considered a bad deal. Alaska was thought to be little more than an icy tundra. The deal was “Seward’s folly.” Alaska itself was “Seward’s icebox.”
Of course, the opposite was true. Alaska has an abundance of resources – gold, oil, timber, not to mention beautiful vistas and wildlife. It’s difficult to put a precise value on the state of Alaska. But, I promise, it’s significantly more than $150 million. Heck, the oil produced in Alaska in a single week is worth more than the purchase price.
I couldn’t help but think of William Seward recently.
And that’s because…
Trump Wants Greenland
You’ve probably heard how things have gotten pretty heated about the Arctic island. Trump isn’t backing down on his demand to take it over, telling reporters last week that:
We are going to do something on Greenland whether they like it or not. Because if we don’t do it, Russia or China will take over Greenland, and we’re not going to have Russia or China as a neighbor.
I would like to make a deal the easy way. But if we don’t do it the easy way, we’re going to do it the hard way.
Also last week, Greenland and its technical owner, Denmark, got into an online spat about who gets to decide its ultimate fate. Though this week, Prime Minister Jens-Frederik Nielsen made it clear which “colonial” overlord he would prefer.
His office released a statement on Monday, saying, “The United States has once again reiterated its desire to take over Greenland. This is something the government coalition in Greenland cannot accept under any circumstance.” It then added:
Greenland is part of the Kingdom of Denmark. As a part of the Realm, Greenland is a member of [the North Atlantic Treaty Organization, or] NATO, and the defense of Greenland must therefore be insured through NATO.
In short, Trump wants Greenland. The feeling doesn’t seem to be mutual.
Ultimately, I do think the president is going to get his way. The United States has vast resources that Denmark can’t compete with. If the White House really believes Greenland is of vital national importance, it will find a way.
And if that does happen, it might not be the worst idea.
The Icy Gem That Is Greenland
At first glance, Greenland might seem a strange subject of interest. Sure, it’s the world’s largest island outside of the continent of Australia.
But, unlike what its name suggests, most of it is barely habitable – or not at all.
Greenland spans 836,331 square miles, which is about the same size as (the much warmer) Saudi Arabia, or 10% larger than Mexico. However, around 80% of that massive space is literally covered in ice… some of it 1.9 miles thick.
Fun fact: That makes up about 8% of the Earth’s fresh water.
Not-so-fun fact: Anything under that ice is practically inaccessible.
The remaining 101,120,000 acres of Greenland are mostly coastal territory that includes barren rock, tundra, and green valleys. And while all of it can be absolutely gorgeous, it’s still not an easy place to live.
The island’s population is around 56,500, which equates to about one person every 13 square miles. To put it in perspective, Alaska has 9 million people, or one person every square mile.
So even that “barren” state is more than 15 times denser than Greenland!
What it lacks in populace, however, it more than makes up for in rare earth elements (“REEs”). The Kvanefjeld, or Kuannersuit, region in the south was once considered the largest undeveloped REE deposit on planet Earth.
Australian miner Greenland Minerals and the Danish Geological Survey estimate its gross value could be $130 billion thanks to all the uranium and zinc there. Then there are iron ore deposits, gold, nickel, and diamonds, which could collectively fetch another $500 billion…
If you can access them.
When you factor in ice cover and weather – to say nothing of the island’s intense mining restrictions due to environmental concerns – that value drops down much closer to $150 billion.
It’s still a lot, mind you. Just probably not enough to cause World War III.
But more important than the resources, at least according to Trump, is its strategic location.
America’s Arctic Staging Ground
America has a longer history in Greenland than most imagine.
Seward actually attempted to buy the island back in 1867 as part of the Alaska deal.
During the Second World War, there were several American air bases on the island (Denmark was occupied by the Nazis, leaving Greenland isolated). And President Truman made his own offer to buy the land after World War II. Truman’s offer was $100 million in gold, which would be the equivalent of $6.9 billion now.
During the Cold War, the island was also home to several radar bases as part of the Ballistic Missile Early Warning System (“BMEWS”).
The point is that Greenland’s geopolitical value isn’t a new idea. America has known it for years. That’s a big reason why Donald Trump seems so eager to have it.
Now, Trump hasn’t mentioned any specific price, as of this writing. Perhaps Vice President J.D. Vance and Secretary of State Marco Rubio talked specifics earlier today while hosting Danish and Greenlandic foreign ministers Lars Løkke Rasmussen and Vivian Motzfeldt.
They might have also shown proof of Trump’s claims that there are “Russian destroyers and submarines, and China destroyers and submarines all over the place.”
Of course, Chinese Foreign Ministry Spokesperson Mao Ning said the other day that, “The Arctic involves the collective interests of the international community.” And that China’s presence there is all about “promoting peace, stability, and sustainable development.”
But if you believe that one, I’ve got a lovely bridge to sell you.
Trump’s Icebox
Again, I think Trump might actually pull off this whole Greenland acquisition – if that’s what he’s really after. There’s a decent chance he’s just trying to pressure Europe to step up its own defense of the island.
And if that is the goal, it might be working.
NATO Secretary General and former Dutch Prime Minister Mark Rutte, for one, admitted there was a threat that probably needed more consideration. On Monday, he noted how:
All allies agree on the importance of the Arctic and Arctic security because we know that with sea lanes opening up, there is a risk that the Russians and the Chinese will be more active.
And Belgium Defense Minister Theo Francken told Reuters the day prior that NATO should, in fact, act on Trump’s security concerns on Greenland.
Moreover, German Chancellor Friedrich Merz acknowledged earlier this week that the U.S. is already spending millions every year on protective measures for Greenland – which he expects will continue.
One way or the other, something feels like it’s bound to happen with Greenland.
It’s just a matter of what. And how much it’s going to cost.
Regards,
Brad Thomas
Editor, Wide Moat Daily
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