When the global chess game heats up, I seek the right moves from our master player: Scott Chan.

Scott Chan (pictured here) is the lead analyst on two of our premium publications, Real World Investing and The Complete Investor. I interviewed China-born Scott this week, to discuss a range of geopolitical topics as they relate to investments. My questions are in bold.

The Asia Pacific economy is bouncing back faster than other regions. Asian stock markets this month have extended their year-to-date gains. What’s at work here?

China was the first country to deal with the COVID-19 outbreak and it brought the pandemic under control quickly. By containing the spread early, the country was able to get back to economic normalcy first and get a leg up on countries whose COVID outbreaks were worsening.

China lifted all boats. Countries in the vicinity that had economic ties with China benefited. Considering the COVID backdrop, international trade held up well for Asian economies.

Now the developed world is crawling out from under the pandemic as vaccinations accelerate, so the outlook for global trade is improving. A good economic outlook usually leads to a good stock market.

Global economic growth is projected to exceed 6% in 2021, with China outpacing the world at 8.2%. What sort of China-based stocks look appealing now?

The Chinese economy continues to grow at rates that other economies can only envy, so Chinese companies will enjoy an expanding market. However, the Chinese government wants to rein in the big tech companies whose services and products have become ingrained in everyday life for Chinese citizens. Anti-trust buzz is in the air.

Read This Story: Red Dragon Rising: The Profits and Perils of China

In the long run, the big tech companies that symbolize China’s rise on the global stage are still the most attractive. For investors with a long time horizon, those mega-caps are the Chinese stocks to own.

Investors who want to invest in China but avoid stocks under Chinese government scrutiny can check out smaller stocks, but beware because they’re riskier.

We’re witnessing high commodity-driven inflation, not just because of economic recovery but also as an inevitable consequence of the growth of developing economies. What are the perils and opportunities of fast-rising commodities prices?

Since commodities are the building blocks of the global economy, higher commodities prices mean higher costs up and down the supply chain.

The higher cost of commodities gets passed down to consumers, who lose buying power and have less discretionary income, which results in lower sales and profits for businesses, which results in cutbacks and lower demand for their suppliers’ products and services, and so goes the domino effect. Sharply rising commodity prices could be a big contractionary risk to the economy and the market.

Read This Story: The Rise of The Commodities “Super-Cycle”

What I like to see is some commodity inflation, because favorable pricing encourages companies to look for, develop, and produce commodities. This keeps supply and demand in balance.

Low-cost producers with strong growth profiles will likely be among the biggest winners from a protracted commodities bull market. Investors should look for producers with high-grade deposits, preferably in stable jurisdictions with robust legal systems.

Which commodities look the most promising now, as investments?

If the world economy is to grow, if developing nations are to modernize and build infrastructure, if developed countries manage to pass big infrastructure bills, if electric vehicles are to take off, if we are to overhaul the electric grid, and so on, then it means we’ll see significant demand growth for commodities, especially copper.

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On the supply side, copper reserves have been steadily declining for years. This means the cost of production will be higher, which in turn means the price of copper must go up for miners to be willing to spend money to explore and develop new projects. As of May 2021, copper has set an all-time high above $4.50 a pound and I’m confident it will keep rising.

Most industrial commodities probably will rise in price over the next decade. Instead of betting on risky companies that rely on one specific commodity, which can be hit-or-miss propositions, a smart alternative is to invest in diversified miners with strong asset portfolios.

Under the Biden administration, is the China-U.S. trade war dead or merely dormant? How will trade tensions between the two countries pan out, now that Trump is off the scene?

It appears that Biden is no hurry to confront China. He’s probably waiting for the pandemic to wane before turning attention to China.

Make no mistake, the trade war isn’t over. If there’s one issue the two sides of the aisle in Washington can agree on, it’s we must be tough on China. There won’t be a quick thawing of U.S.-China relations.

Read This Story: Trade War: “The New Normal”

However, even if the trade dispute ratchets up again, market action won’t seesaw as much as it did under Trump. Part of the reason the market was so volatile during the peak days of the trade war drama was because the situation was made wilder by the former president’s social media posts that sometimes would contradict what his own lieutenants were saying. I expect a more orderly and orthodox diplomatic approach from Biden.

You’re bullish on gold, for geopolitical reasons and not just financial ones. Explain why.

China has become a serious threat to America’s international hegemony. In areas with important ramifications for the future such as 5G and renewable energies, China is out in front and Washington is trying to find ways to contain it.

Read This Story: 5G: The Fight for the Future

This uneasy relationship between the world’s top two economies will be the international political theater to watch for the next decade. China wants to chip away at the U.S. dollar’s dominance as a reserve currency. China has been buying up a lot of gold in recent years. Whatever Beijing has in mind to eventually rival or even replace the greenback, that plan will have a role for gold.

The shift of financial power to China is happening and if the U.S. dollar does get dethroned, you’ll be glad to hold some gold in your portfolio.

Because “black swans” are by definition unexpected, it’s nearly impossible to prepare for seismic market events. The best alternative is to have hedges in place in case the market does head south. Gold fits that bill.

Editor’s Note: For readers interested in a deeper understanding of the bullish case for gold, check out Dr. Stephen Leeb’s recently published book: China’s Rise and the New Age of Gold.

Dr. Leeb is the chief investment strategist of Real World Investing and The Complete Investor. His right-hand man, Scott Chan, just explained why you should increase your exposure to gold. Leeb and Chan prefer gold mining stocks, which bestow greater potential for outsized gains than physical bullion or gold-linked funds. For details about their favorite gold mining play, click here now.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.