morning in makeup and recites that mantra before he steps out and does "squawk box." >> you think so? >> but i digress. >> gordon gekko is out of prison. oliver stone begins shooting his sequel to "wall street" which introduced the mantra greed is good. michael douglas is back and shia le bouf plays a trader. he's doing research to get ready for all of that. we look forward to the movie. jim cramer has a cameo i'm told as well. >> becky, nice to see you. >> great to have you. >> that's it for "power lunch." >> "street signs" coming up in 30 seconds. >> this is cnbc.com news now. cvs will refund nearly $2.8

million to customers. the payment settles charges of unsubstantiated advertising of air shield. the treasury has completed a strong auction of $38 billion in three-year notes. the first of three auctions selling a total of $3 billion in debt. and sprint nextel is offering a $100 service credit to customers who buy the new palm pre smart phone. that's it for cnbc.com news. i'm scott cohn. we are live from the floor of the new york stock exchange. this is "street signs" on a tuesday. the markets off the highs of the session. they still though are higher, celebrate that as long as you can get it. gold though really the big story spiking above $1,000. right now we're at $1,000 even for gold. takeover news keeping traders very interested. the price tag and the president's hotly anticipated

details. we're talking about health care reform. a special guest with us today. the ceo of schering-plough speaking for the first time since the merger with merck. we'll talk about a public option. yea or nay. and then hedge funds are partying like it's 1999. on track for their best year since 1999. and america's big bet, alternative energy. but you can't build electric cars to get rid of those foul emissions without rare metals. the problem is as "street signs" viewers know, china controls those metals. we found the one american company in the game. they're with us exclusively. that's our show, it starts now. let's show you the market trade. right now up about 31 points for the dow jones industrial average. obviously, the deal story related to food. kraft with his hostile bid for

cadbury. cadbury says go take a hike. but nonetheless people are encouraged there could be active activity in the food sector for deals. we have two key speeches from president obama in just two days now that everyone is back to school. today is education. tomorrow a joint address to congress on health care. now, in health care obviously a lot of talk is going to be on the public option. we have the ceo of schering-plough. fred, i want to bring you in here just to give your throw, your take on a public option. as someone who has run several big pharmaceutical companies, is that the right way to go? >> we've talked about public option in the past. you may recall that we were -- when we were talking about the part "d" medicare part "d" drug benefit in '03, we were also talking about something like a public option. i think we should give the private sector a chance. it's surprising how well the

private sector can do when they're allowed to run the way they can, and -- >> so what did they do in that case. you're talking about the prescription drug benefit, right? >> yeah. >> what did they do here, if you had to say in a nutshell, here is why i would say the public sector got it right? >> there was a lot of distrust about the private sectors ability to deliver. now we look back it's amazing how good the results have been. coverage for seniors, drug coverage for seniors has gone up from 60% to 90%. >> to 90%. >> the premium per month for 2010 is estimated to be $30 a month, but the original estimate was going to be $47 a month. and in this morning's papers we're hearing the savings are coming in at $26 billion compared to the original estimates. so i think the private sector has done a great job. there's been no need for that

fallback plan in that case. and i hope that there would be no need for a fallback plan in this case. >> all right. well, we're going to talk much more about that. i know howard dean may beg to differ, but we'll talk about that. i want to bring in melody barnes right now, the president's director of domestic policy, to talk about that issue and also, of course, the education topic which is at the front of so many people's minds this week. thank you so much for being with us. we appreciate it, miss barnes. >> great. thank you for having me. >> let's just start off, one point on education here before we go to health care. the president talked about students and how they have -- they need to play a role, shall we say, in the economic recovery in creativity and innovation. how? >> well, the president has always said that if we don't educate our students today, they won't be able to compete tomorrow, particularly in a global economy. so he is focused on everything from early education to reform in our elementary and high

schools, to college affordability and accessibility. what he said today to students is that you have to work hard, you have to stay in school. you can't be among those, the 30%, who are dropping out of school. we'll do all we can to give you the tools you need. at the same time we need you to stay in school, to study hard, and to get that diploma and go on to get higher education. >> and what about on the alternative energy front? do you feel that the administration has done everything its going to do to make sure people are trained for all of these, for lack of a better word, alternative energy jobs? >> well, the president has focused quite robustly on job training. we certainly recognize that alternative energy, this new generation of energy alternatives, will provide not only the kind of energy sustainability that we need, but also it's a job creator. so making sure that students

have the kind of map, science, engineering, and other background they need to be able to go into these jobs and, in fact, to make sure that people who right now may be out of work or who are watching the economy shift and seeing the opportunity that lies ahead, that they're able to participate in the energy economy as well. he recognizes that all that is important and part of america's growth and part of the security that the american people need. >> and, of course, he will quickly turn had his attention again to health care. what sort of detail is he going to give us? >> well, the president realizes that summer is over and this is a critical phase in the health care debate. so what he wants to do is to go to congress, to talk to the american people tomorrow evening about what he sees being the next step. the next steps to making sure a bill gets on his desk. he's going to talk to people about security and stability. he's going to talk again and very clearly as he has in the past about the importance of

keeping costs down, driving them down. about making sure pre-existing conditions are not a way of keeping people out of the health care insurance market. also, to make sure that people who are sick don't get tossed out of the market at the time that they need it the most. so he's going to talk very specifically about those important principles and what needs to happen next to make sure he can sign a bill this year. >> a big question obviously has to do with the public option. the ceo of schering-plough is here and was just giving an example of medicare part "d" which the private sector was in charge of and that they have come out -- it's cost $26 billion fewer dollars than we thought it would to give drug coverage to seniors. is that in your view an example of the private sector working and does it mean the public option may come off the table tomorrow night? >> well, the president has said, and he will say again, that choice and competition are paramount for him, and he's believed and continues to believe that the public option is an excellent way to ensure

that we have that kind of choice and that kind of competition for people. think about it, we have markets like north dakota and alabama where one insurer can controls 90% of the market. think about it. if you were in a town and there was only one gas station, would you assume that you were getting the best price on gas? he wants to make sure those kinds of options are available because it will also make sure we're keeping costs low. that's a priority for him. >> all right. miss barnes, thank you very much. we appreciate it. melanie barnes from the white house joining us. and a programming note, president obama will be addressing congress tomorrow night on health care at 8:00 eastern. we'll have special coverage beginning at 7:00 p.m. with larry kudlow. with us this hour the man you heard talking about the public option or whether we need it or not, our guest host in the thick of the health care debate, the ceo of schering-plough. also talk about his $46 billion merger with merck which is imminently about to conclude. we also have with us howard

dean, author of "howard dean's prescription for real health care reform." good to have both of you with us. howard, feel free to react to anything miss barnes had to say. i wanted to get straight to what i believe is going to be the meat of the debate in this conversation which is fred just said medicare part "d" was proof the private sector can get it done, better coverage, beater satisfaction, lower costs. we don't need a public option. >> look, there is nobody who knows more about the pharmaceutical option in this country than fred. he's had an incredible record, but the pharmaceutical industry is not the problem. it's the insurance companies that are the problem. they are the ones kicking people off their insurance. refusing to insure people. they're the ones whose premiums have gone up 2.5 times the rate of inflation for 20 years. we need a public option. we've had a public option for a long time in this country. it's for people over 65. it's called medicare. it works very well. administrative costs are far lower than anything in the private sector. so i do think part "d" has worked very well. i think the pharmaceutical

industry and i also think pharmaceutical benefit managing firms have had -- created the kind of equilibrium that make that is work. and that's under budget. that's not true in the insurance industry. we need to give the american people the choice. if the american people don't think that the public option is worthwhile, then they don't have to choose it. they can choose the private option. they need and deserve a choice. >> fred, can you react to what -- he did just raise an interesting point, which is he gave you drugs. he said the drug plan has worked, but on the insurance front we don't see that. and melody just raised a fair point. insurance companies are not operating in a free market. it's ol lig oply at best. >> why not give the private sector is chance here also. have a fallback option and senator nelson has come up with a very good plan which says let the private sector take root. if they don't deliver, then have a fallback option. wouldn't that be a good idea in this case, too? >> except -- i have already got

a plan in vermont, we put it in 15 years ago. it did the president's insurance reforms. 15 years ago we put in community rating and guaranteed issue, and got rid of these terrible practices that the insurance company used to kick sick people off the rolls. then we created a public option essentially for people under 18. today 96% of all our kids under 18 have health insurance. 99% are eligible. and so we essentially have universal health care. now, we've already tried that. the insurance companies -- no insurance company anywhere has come up with anything like that with the exception of massachusetts where they have a mandate and they have guaranteed issuing community rating, but they do not have a public option and as a result their costs are completely out of control. >> right. >> a public option is the only way you can control costs. >> howard, hold on for one second. fred, when he's talking specifically about insurance, do you really think the insurance companies can get this right and are you basically saying the government should come in and say here is the basic things that have to be provided at

united health care. here is your shot. see if you can get it right or is that not what you're saying? >> i think everybody has to work together. all the stakeholders in the system, the doctors, the patients, the insurance companies, the drug companies, the device companies, everybody has to be brought together to make this system work. >> you think they'll do it? i believe they can do it. i believe the president is doing his best to make the people come together. i think we need to do more to get people to work together, but i really think the system can be made to work. our present system is based on insurance companies primarily. >> right. >> and i don't think americans are prepared to see the whole system get turned upside down. >> nobody is asking to turn the system upside down. just asking to give american counsel sum ae consumers a better choice. >> let's get to scott cohn. i believe this is linked to bernie madoff.

>> cnbc has learned that the massachusetts secretary of state has just reached a settlement with the largest madoff feeder fund, fairfield greenwich group. this settlement according to secretary of state william galvin will provide total restitution for the massachusetts investors in fairfield greenwich group which had lost some $7 billion in the madoff scandal. the massachusetts investors share of this was relatively small. galvin tells us it should be roughly about $8 million or so. remember that fairfield greenwich had proposed a settlement. galvin rejected it a few weeks ago and this now includes apparently some more investors that they found through ads in the papers and so on and galvin tells us that he hopes that this will provide a template for future settlements with other regulators and other feeder funds. we'll see how that goes. again, fairfield greenwich group in a settlement with the massachusetts secretary of state. >> thank you very much. if there's more, scott will have it, and we will have more with fred coming up on the other side

of this break. gold crossing $1,000. will it stay there? we'll take you live to the other side of the world where they know a whole lot about where it's going. that's south africa, and we have an exclusive interview with a ceo of one of the largest gold miners. that's coming up today here on "street signs." geico's been saving people money on car insurance for over 70 years. and who doesn't want value for their dollar? been true since the day i made my first dollar. where is that dollar? i got it out to show you...

uhh... was it rather old and wrinkly? yeah, you saw it? umm fancy a crisp? geico. fifteen minutes could save you fifteen percent or more on car insurance.

let's get straight to the

trading floors. the market is up 37. let's begin with matt nesto. >> this is interesting. 30 points is all we can get done in this market here today, so we've got plenty of firewood to fuel a rally, but the market just concerned with are there issues. if you look at what's working here today, continues to be the energy, the materials, and industrials. you will see names like peabody and chesapeake and transocean. the material names like alcoa, unfortunately, because of their low share price you be abunable the dow very much. same day for general electric. big day for uncle "g." almost 5% move on the day. the problem is that $14 share price makes it the second smallest weighted stock in the dow. also worth a note here today, going to be some strength in the reits. a couple analysts talking up the sector. they say the rate of decent has

slowed. they like that. i'm going to rick out of the cme. >> thanks, matt. as we look at the aftermath of 29 and 29, so $58 billion in three and six-month bills and the three-years that were auctioned, the markets haven't really changed. an intr day three-year, you can't discern too much from this one. it's pretty much -- with slightly lower yields. you can make an argument rates went down after 1:00. the next chart dollar index hasn't improved at all. the last chart, the gold futures, isn't it prophetic it settles on the open outcry right at $1,000 an ounce to make the issue even more confusing. at the end of the day, something valuable did occur. maybe you need an "a" action in terms of a grade just to keep all the markets at their current levels. the real information is there were no negative surprises.

and i totally am not sure where we're going next so i'm just going to leave it -- you know what? let's go to scott wapner. >> rick, thanks so much. tight range for the last several hours for the nasdaq. you'll see it's a mostly mixed picture. oracle, intel, google, and cisco. chips are strong today. semi-conductor index is good for 1.5% or so. the real strength today is on the hardware side, the computer hardware side. those company that is sell into that space. morgan stanley upgraded the enterpri enterprise. then they raised the price target of apple shares to 200 bucks. apple shares have been up throughout the session. even as many of the other large cap technology shares have pulled back, apple has not. it stayed positive by better than 1% for much of the session. dell is ahead as well. costco got an upgrade today by about 2%. so, erin, that's your story from the nasdaq today. >> thank you very much, scott

wapner. new york attorney general andrew cuomo moving closer to possible legal action involving bank of america's acquisition of merrill lynch. big names could be involved. mary thompson has details. >> in a letter we have the new york attorney general asking for more information from bank of america as it seeks to decide whether or not to charge executives at the bank. essentially the attorney general says in the letter its investigation has uncovered four instances where the bank did not disclose material information to shareholders, including they actually sought advice of counsel to see whether they wanted to invoke the material adverse change clause, something that is contrary to what bank of america has asserted recently, that it didn't do so something after the vote to approve this deal. the attorney general says that bank of america has been asserting a legal defense which is advice of counsel when it gives its reason as to why it did not disclose this material information to shareholders. the new york attorney general

says you cannot assert that legal defense without providing some substance of what those conversation -- or providing the substance of what those conversations were with counsel so they would like bank of america to disclose more about those conversations. if it doesn't by september 14th, the new york attorney general says it will proceed in charging executives without considering this legal defense that the bank has asserted. erin, back to you. >> mary, thank you very much. let's get back to schering-plough's ceo. let's talk about the merck deal. it does raise the question when you look at the two biggest deals. pfizer/merck -- i'm sorry pfizer wyeth and merck/schering-plough. will we see a lot more health care deals especially with the reform on the table? >> i don't think there will be a lot more. we already have now about eight

or ten very large companies on a global basis, and i think we're going to see a more stable situation until new stresses develop in the industry. the biggest stress is that the industry iving difficulty replenishing the products that are going off patent with new products. new efforts are being made there to improve the product flow. if the industry succeeds in doing that, then i think the system will remain stable. if the industry does not succeed in doing that, we are going to see more -- >> you will see more:wh. what about this other issue. people talk to direct to consumer advertising for drugs. only two countries in the world where you can do that, ours and new zealand. everywhere else they have said that isn't right because it biases patients and makes drug companies spent more money on the viagras of the world than life-saving drugs. do you think we could abandon it? >> as the president has said

many times, this is america. americans demand the right to know. this is something that cannot be taken away from them. if americans want to know about new medicines that might help them in some way, then they have a right to know. i do not think they can take that away from the american public. >> and you're saying doing that through advertising is a fair way. >> it's a fair way. it needs to have restraints and rules and regulations, but people expect to be informed about new drugs. >> you have run many health care companies, and now after selling shering people want to know what you're going to do next. you're not retiring. any sense of what you're going to do? >> i'm an active person and i'm very passionate about our industry and about the health care in general. i'm focused on schering-plough. we have already been situating for six months. >> until this deal is closed. >> and it's not easy going through a transitional period. you also have to spend a lot of time with your people. at the same time you have to

focus on delivering results. i plan to remain active. i plan to use my knowledge and i plan to use my skills. >> and the bottom line on health care, medicare, howard dean was talking about how it's worked. in a nutshell, do you think medicare is a model we can follow, especially given that it is widely known that if we continue on the track we're on with it, the country will be bankrupt in 2019? >> so we need to keep medicare stable. people who access it are happy with that system in general. we should not take things away from medicare to fund other parts of the system. at the same time we should not be adding new populations to medicare because, as you said, it's likely to become insol vent after a certain period, maybe eight years, nine years, the way it's going. so the key is let's talk about medicare making it stronger and let's not add new problems to medicare. >> fred, thaup very mucnk you v.

we look forward to having you on when the deal closes. >> thank you very much. >> thank you. just ahead on the show, gold bowls around the world popping the champagne corks. how is the world's third largest gold producer playing it? they are making a big bet on the gold market. the ceo with us exclusively next. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick.

(announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

when thistheir employeect addebenefits package,ment guess who became the new teacher's pet? aflac, aflac, aflac, aflac, aflac find out more at... aflac! for business.com and the duck says... aflac!

and ge still the biggest mover on the dow. up 5%. 1455. well, you got to start somewhere to move from low to high. the third largest gold producer in the world is riding high today. gold prices have been north of $1,000. right now just barely shy of that. is gold going to keep going up? we have the ceo from johannesburg, which many consider to be the capital of gold around the world. good to have you with us, sir. we appreciate it. recently you came out and said -- >> thank you very much. >> you said you're hedging and you were doing that because you wanted to take advantage of gold spot prices, meaning where it's

trading on any given day. is that your way of saying you think gold is going up? >> absolutely. we've been restructuring our hedge book over the last couple years. we've invested about $3 billion, and today that investment is worth about $4.4 billion. you could say we're putting our money where our mouth is. >> and why is gold going higher? i mean you could say central banks are buying more or you could say indians are going to buy more in wedding season. is it one of those things or something less obvious? >> i think it's a number of things. i think indians are buying more. i think the chinese are starting to buy more. banks are selling less. investors are buying gold instead of investing in sur ren

s -- currencies. the good thing for us is i think gold has been rediscovered as the only real hard currency. if you had to back the u.s. dollar, the euro, or any other number of currencies, or you had a choice of gold, which one would you choose? >> a loaded question and a fair point. so how much higher, when you talk about the stock market, there's so much money you'd commit to betting on that market for lack of a better word. how much higher do you think gold will go? >> first thing i would say, we don't think we're betting. we think we're making a very prudent investment decision. >> yes. >> we've been guessing that the price would probably trade between $950 and $1,000 in the second half of the year. what surprised us a little is how quickly it's moved up to $1,000. so that's encouraging. whether it will keep moving through will depend on sentiment in the next few days, but we've

been encouraged by how quickly it's going there. it's held the position and gold has been pretty strong the last couple months. so we're optimistic, but we're still a bit cautious. >> thank you very much. anglo gold, laying out the reasons why they think gold prices are going higher. pretty clear they're putting their money where their mouth is. jim cramer going to react to that. we know he's got a lot of strong passions on gold. he's also paback from the beach ready to talk deals. jim is next.ay e seeing the whole picture. ask your doctor about trilipix. if you're at high risk of heart disease and taking a statin to lower bad cholesterol, along with diet, adding trilipix can lower fatty triglycerides and raise good cholesterol to help improve all three cholesterol numbers. trilipix has not been shown to prevent heart attacks or stroke more than a statin alone. trilipix is not for everyone, including people with liver, gallbladder, or severe kidney disease, or nursing women. tell your doctor about all the medicines you take and

if you are pregnant or may become pregnant. blood tests are needed before and during treatment to check for liver problems. contact your doctor if you develop unexplained muscle pain or weakness, as this can be a sign of a rare but serious side effect. this risk may be increased when trilipix is used with a statin. if you cannot afford your medication, call 1-866-4-trilipix for more information. trilipix. there's more to cholesterol. get the picture.

2008 was the worst year on record for hedge funds. data released shows 2009 so far very different. they're having their sixth

consecutive monthly gain, on course for their best year since 1999. is this vindication? are hedge funds back. we have the president of hedge fund research. ken, best since 1999. what's that? >> the industry has gained about 14% in the first eight months, and obviously that gain extended through the end of the year were those to continue would show the strongest gain since a gain of over 31% in 1999. it has been interesting that in the month of august the leadership changed a little bit with regard to the strategies which were the strongest contributors. certainly credit focus strategies across relative value event, driven and convertible arbitrage were the strongest performers. thus far on the year the influence of emerging markets and emergency and basic

materials were not so pronounced in the month of august. >> so it's sort of what stunk the worst now smells the best. >> certainly convert arb is an example. after heavy losses in 2008 and significant withdrawals which occurred after a year in which the strategy declined, over 33% that. strategy has now gained over 41% in the first eight months of the year. certainly the dislocations that really characterized what that strategy was at the end of 2008 have certainly gone the other direction thus far for 2009. >> so is this performance turning into investors keeping their money in hedge funds? last year they seemed so disenchanted they all wanted to pull them out, and has it also meant that the fee structure will remain unchanged? they'll still get to charge 2% of the money you put in, 20% of the money they make? >> two separate questions there.

on the first investor withdrawals were most significant in the fourth and the first quarter. that was about $250 billion of withdrawals. they continued, but subsided in the second quarter as overall assets true on the basis of strong performance. we expect the influence to resume no later than the end of the year. it's possible the third quarter may see investors coming back into the industry as risk toll ran h has increased. with regard to fee structure that's -- there's many -- as you know there's many different areas of the industry. what we have seen thus far is that the average management fee is closer to 155 when you look across all of the hedge you understand. and that has been pretty constant even through the

performance we have seen. i know people commonly refer to it as 2 and 20. the reality is the average is a bit lower. many of the larger funds do charge 2% management fee. but we have seen that somewhat steady. we expect to see that to continue to be steady through the end of the year. >> so 1.6 is the new and was the old, too. thank you very much ken, we appreciate it. >> thanks. and will that performance this year make you any more likely to make money in a hedge fu fund. next, jim cramer. while everybody is talking about energy independence, we think the real conversation is element independence. china controls more than 90% of the key minerals we need to make lick trek c electric cars.

♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions...

we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire.

hey, jim. >> how you been? >> i'm so excited you're back. we really did miss you. >> thank you, thank you. >> it was a gaping hole every day. >> oh, man, i missed you. i missed you, and now i'm going right through to clahristmas.

>> we basically are, too. >> so i wanted to throw up a stock chart of schering-plough. we just had fred here. it's the fifth best performing stock in the s&p 500 since lehman's collapse. it's up 46%. obviously, it was acquired in that time and that's why. but, jim, quick quiz for you before you talk about that one, what is the best performing stock in the s&p 500 since lehman's fall? >> best performing stock. i don't know. vance micro? >> very close. >> sprint. >> it is invid ya.. >> nvidia. >> up 51%. also in the top five micron. >> micron, nvidia is element discretionary chip company because it does graphics. he only need it if you want a big video. >> micron hasn't moved like this in a decade. these are cyclical stocks.

this is what you buy when you think there's a strong worldwide economy. >> the other one is whole foods. >> totally agree with that. >> nvidia, whole foods, and micron. would you buy them now? >> whole foods has been stalled after that great quarter. yes, i would buy. i prefer advance microup 10% to micron. nvidia, yes. nvidia i would buy it. i also think by the way, is technologically so superior somebody should take a run at them. >> anglo gold have taken nearly $1 billion and said we're going to go in the gold spot market. that's how confident they are gold is going up. he's either right or wrong. what do you think? >> i think he knows gold better than we do. i think the fact that there's a lot of money going from actual

asset class money into gold tells me once again i don't think gold is done. however, i am not a believer that this is necessarily bad. i want a weak dollar, unlike a lot of people who come on tv, and i think gold is a sign of economic progress and robust growth around the world. >> last question. kraft. a company which, jim, by many measures has not been a top performer. >> true. >> ceo incredibly highly compensated. just laying the facts outs. are they doing this deal buying cadbury for $17 billion, is this a sign of strength as the market would like to think or a sign of weakness as in they can't get their own growth? >> i have seen all my life food companies not getting growth. i would buy kraft. i think it's a good decision by irene -- jo are you confident in the management? >> no, not at all. i have not felt good things about them.

if i were cadbury, i would turn around and see if the new management at hershey wouldn't be willing to do a deal to sell hershey and let the trust say let's cash out. >> there is that key trust issue, hershey -- cadbury should buy hershey. kraft you by on the short term but not confident in management. >> i don't think rosenfeld -- she obviously haesn't done a god job. there's a pulse at kraft beyond mac and sleaze. >> thank you. >> good to be back. >> talk to you tomorrow. much more of jim tonight at 6:00 and 11:00 eastern right here on cnbc. now, let's talk about america's newest addiction. if we can get rid of the oil one, we've got another one. it's in a lot of minerals we don't know how to pronounce. china is the leader in rare earth elements. they are used for flat screen televisions, cell phones, other things with batteries,

electroni electronics. sort of modern life. china has more than 90% of those minerals. good to have both of you with us. you have two different perspectives on this. mark, let's start with you. molly corp as we discovered when we started looking at these minerals is really the only u.s. company with a mine that produces these things. is it fair to say that china has got it locked up or do we have a shot? >> we absolutely have a shot. we always have had a shot. molly corp has been in business for 57 years, and we plan to be in business for many, many more years. the problem is that we sat on our hind legs a little too long. there's no reason why we cannot recover from this situation and produce the elements that we need in the united states and really outside of china. >> so you're saying technically you know for sure that we have them, whether it's dysprosium,

turbium or others? >> we believe those elements are around. molycorp is looking in vietnam, africa, canada, the united states. we're looking right in our backyard at our mine for these heavier rare earth elements. we believe they do exist. we need to find them and we know how to process them. so we just need to get everything moving in the right direction. china has given us a very good preannouncement on what they're going to do, and now we need to make sure we're ready. >> all right. and i know you have a mine in california. donald, you're a little less confident in america's ability to get adequate supply of these key rare earth. >> a key point is that supply source does not exist right now. it needs to be developed to provide that source. >> developed or discovered? >> well, we've discovered one already we think we can develop and be that next big supply source for heavy rare earths for the rest of the world outside of china. >> and where is it? >> it's in the northwest territories of canada. >> well, the canadians don't

always like the americans. i am kidding hereby, but obviously it's a north american supply. does the capital exist to get this out of the ground? >> there's a lot of interest right now in seeing this -- these resources developed, so the sources of capital are starting to emerge. it's not looking like an extremely expensive proposition. these are growing markets but not huge markets yet in the context of more familiar base metals. so the capital required to do if is not at an unachievable target. >> what about the other key issue which we said when we were in the congo, that cobalt doesn't get refined in the united states. why don't we refine a lot of these minerals or rare earth materials that are required for batteries in modern life the united states? >> well, about 15 to 20 years

ago a lot of this business actually did move from the united states over to china. we had those capabilities in our country. the whole strategy that molycorp has in place right now is to make sure the complete supply chain for the rare earth business is available outside of china. we want to go what we say minino to magnets. that means that we're going to be mining the rare earths that are required for the permanentm. we're going to convert those. go through the alloying and powdering process and manufacture the magnets which are indispensable for hybrid cars, electric wars, and the new wind turbines coming out. >> do you think it's fair when we raise the issue of replacing one addiction with another. america considers canada to be a friend, but when you're talking about your mine, that comes from canada. a lot of these that are less rare, say lithium, some come

from u.s., but a lot comes from places like bolivia. do we run the risk of getting rid of oil and replacing it with batteries, and then, wow, were we thinking it through? >> canada is the united states trading partner. we have be friendly to deliver e raw materials united states needs. >> until canada needs more. i'm only making the point we have to think, everyone has to think where things come from. replacing one with another, you are confident. >> mark is right. we haven't thought about that enough in the past and need to think of it going forward as a global scramble to secure supplies and raw materials and need to think longer term than in the past. >> gentlemen, we appreciate you both being with us. we look forward to having you back. coming up, america is no longer the most competitive economy in the world according

to one source. we will tell you the source, what they are saying, why the are saying it and traders will give their take. and a quick reminder, all the recommendations expressed by jim cramer are solely his and are not the opinions of cnbc. before acting on a recommendation consider its suitability for your circumstances and consider seeking advice from your own financial adviser. eseseseseseses

the big story today, oil off to a big story. crude is up $71.38. gold is just shy of $1,000 an ounce. okay. here is the survey that came out. the world economic forum and, yes, they do a lot out of dabo, but for the first time tus is booted out of that survey's ranking as number one in economic competitiveness. you can discount that, switzerland, singapore, sweden, den marc, the uk is at number 13. china at number 30. should the u.s. have lost its top spot. let's bring in our trader.

join kinehan. and bernie mcsherry on the floor. what do you say? >> it depends on how things play out in the next several months. we are going to be examining the financial services industry and regulations are going to be posed. hopefully those regulations aren't too onerous and we can return to the number one spot. >> joe, would you say america is number one in market competitiveness? >> i think we are number one. i don't think they are scaleable. we are scaleable worldwide. i don't believe they are. if we went from that point besides the fact our financial industry returning to its place where it was a few years ago we will be back to number one, no problem. >> joe, given you focus on derivatives what is the bet if gold can hold $1,000 and crude keeps going up? >> people want to see gold

higher. it would be foolish to fade it. i tell people if you are going to fade those one way or another use a call spread or something like for instance if people want to fade equities use the spdrs, an etf. the 101, 103 call spread. the biggest reason, your risk is defined. too many retail traders don't do thank you joe and barney. brief break. vo: 'course, geckos don't literally sweat... it's just not our thing... gecko vo: ...but i do work hard, mind you. gecko vo: first rule of "hard work equals success." gecko vo: that's why geico is consistently rated excellent or better in terms of financial strength. gecko vo: second rule: "don't steal a coworker's egg salad, 'specially if it's marked "the gecko." come on people.

if saving money happened as automatically as everything else? at bank of america, it practically does. use the bankamericard power rewards visa credit card and earn rewards like cash back with every purchase. cash you can put into savings. or even use to help pay down your credit card balance. it's one of the many ways we make saving money in tough times a whole lot easier.