Christian A. DeHaemer - Angel Publishing

More Investors Turn to Gold Coins

Today's jobs report came out better than expected. The unemployment rate fell to 8.3% and nonfarm payrolls climbed 243,000. This was the largest upward move since April of last year and it put more than 100 points on the Dow today.

Gold sold off a bit this morning, but has been strong all week.

The price of gold is climbing because the Federal Reserve said it will keep interest rates at almost zero until late in 2014. Ben Bernanke, the head of the Fed, also said he was thinking about devaluing the dollar again by buying more debt. This is after he already bought $2.3 trillion in bonds.

You know, because two-point-three-trillion-dollars isn't quite enough.

Gold has climbed from below $1,600 an ounce to $1,750 an ounce in the last month. And this move came despite the fact that stocks have had their best-performing January since 1997.

It is obvious that the gold market thinks the Fed is out to destroy the dollar in order to prop up the big banks, which are still carrying massive amounts of housing debt.

Buying Gold Coins

In recent history the buying of gold coins has been restricted to nut-balls like me who have stocked food and planned a way to get out of Dodge. The truth is, most retail investors have never bought a gold coin or bar in their lives. But this is starting to change.

According to Business Insider:

A small minority of retail investors are beginning to diversify into gold in order to protect against systemic risk in the banking and financial sector (MF Global) and from the monetary risk of currency debasement. In Australia, the Perth Mint has reported very strong demand for gold and silver coins in recent weeks. The mint is a major supplier of coins to the UK and Europe.

Sales are up around 80% compared with the same months a year earlier, while silver coin sales have doubled. The mint’s largest markets for coin demand include Germany and the U.S.

Gold sales aren't restricted to Europe and North America. If you count the guesstimates on smuggling, the Chinese are by far the worlds largest buyers of gold.

~~gold_signup~~

According to Forbes:

This month, the Hong Kong Census and Statistics Department reported that China imported 102,779 kilograms of gold from Hong Kong in November, an increase from October’s 86,299 kilograms. Analysts believe China bought as much as 490 tons of gold in 2011, double the estimated 245 tons in 2010.

Four-hundred-and-ninety tons is the official estimate. My sources tell me that you could add 50% to that figure and you would still be undervaluing the real number.

The Chinese are great savers. They are buying gold because they see inflation moving up, the stock market falling down, and a housing bubble that has met a pin. With limited investment options, many Chinese are buying gold in the form of gold panda coins minted by the Peoples Republic of China.

And because of a special partnership, you can buy those coins, too. More information on that here.

Have a great weekend,

~~chris_signoff~~

Natural Gas Infrastructure

Around 1400 B.C., a goat herder saw a burning flame coming out of a spring. He also noticed his animals acted strangely after wandering near a particular chasm on Mount Parnassus.

After investigating, he found himself "agitated like one frantic."

The ancient Greeks named it Delphi.

As you know, the Oracle of Delphi was one of the most powerful beings in the ancient world. Because of her prophetic ramblings, the 300 Spartans fought at Thermopylae, Alexander the Great conquered the known world, and the inventor of gold coinage, Croesus, lost a kingdom.

Recent studies by a team of scientists from Wesleyan University discovered that the source of these brain-altering vapors was a mixture of ethylene and methane.

Ethylene is a natural gas that can be used as a anesthetic. It produces euphoria, excites the nervous system, and has a sweet smell. This matches the descriptions of the historian Plutarch.

Obviously, these effects were attributed to divinity. A temple was built and a young female virgin was placed in charge.

The Oracles grew fabulously rich on their predictions. At one point, the temple was the largest storehouse of gold in the world, and was not surpassed until the rise of the Byzantine Empire a thousand years later.

Thus the earliest known source of natural gas changed the course of empires and created tremendous wealth...

Natural Gas

Right now, the United States is the leader in a world-changing technology called fracking. This technology has allowed the production of natural gas in the U.S. to reach historic levels.

This has driven the price of this clean energy source from $12 to $2.50 Mmbtu.

Underground storage is at record highs, and companies like Chesapeake (CHK) have shut down production. That's because you can't make money from production; no one wants any more natural gas. There is nowhere left to put it.

As you can see by the following chart, the number of drilling rigs in use is dropping to crisis-era lows. And this is happening at a time when unleaded gasoline is selling at $3.50 a gallon.

But this is the best news in the world if you are an American.

The spot price in Japan for Liquefied Natural Gas (LNG) is $18. In Europe, it's $13.60.

For those of you who don't know, LNG is NG that is condensed for easy transport on ships. Obviously, this sets up the mother of all arbitrage plays...

There is a scramble to build new LNG terminals, pipelines, and vehicles. The rental price for LNG shipping has tripled in the past year. Shipping companies are in a mad dash to upgrade ships from the 1970s and build new ones.

Heated competition is leading to fights between industry and NIMBYs in places like Oregon and Maryland to build new export terminals.

Companies like Dow and DuPont are resisting exports because they want to ensure low costs in the U.S.

Government leaders have even called for a ban on exports — that's how you know it's real!

But it won't stop cheap energy...

~~rare-earth-box~~

Of the nation’s 11 LNG receiving facilities, nine have asked for permission to be converted to export terminals.

Regulators have conditionally approved at least two requests. More will come.

This is real.

Share prices are already gaining momentum...

I told you about Chicago Bridge and Iron (CBI), a company that makes LNG infrastructure, back when it was a $8 stock. It is now trading at $44.23 — and hitting new highs.

Forget About Production

This isn't a production play. Producers won't make any money until NG prices become a globally fungible commodity.

But the people who produce the infrastructure will make lots of money.

These “pick-and-shovel” makers can't keep up with demand, and their share prices will end up looking like moon shots.

Those who see what is coming and act can and will make money.

You may not end up as rich as Croesus, but it's hard to ignore a good bet.

I am currently writing a report on natural gas infrastructure plays. I hope to have it to you shortly. Stay tuned.

~~chris_signoff~~

Chinese Record Gold Rush

Publisher's Note: For the past week, we've been telling you about our upcoming free informational seminar about investing in precious metals.

Well, the day is almost here... The seminar begins tomorrow at 6 p.m. (EST). So if you want answers to any gold or silver questions you may have, take a moment to sign up today.

Gold is getting some love.

Last week, the noble metal jumped more than 4% in price as Ben Bernanke fired up his printing press.

If you missed the news, our benevolent Fed head said that he would keep money loose until late 2014.

Everyone likes more money.

Taking him at his word, the market bought gold.

Gold Pops to $1,740

Money is now practicably free.

For example, you could loan money to the government for five years and get a miserly yield of 0.73% in return. That's less than inflation, which means that you are actually losing money.

TIPS — those financial instruments that protect you from inflation — are actually returning a negative yield.

You Need to Buy Gold

It is more than obvious that the way to make a ton of money is to borrow as much as you possibly can at super-low rates, buy gold, and wait for your debt to become worthless.

After all, it is the job of the Federal Reserve to debase the currency.

They are good at it. It's what they do.

The U.S. dollar has lost 97% of its value since the Fed was created in 1913. But mighty Ben and his printing press thinks his predecessors were slackers, ne'er-do-wells, and incompetent noobs. They didn't do their jobs well enough...

Benjamin wants to destroy more dollars, faster.

But alas, the global financial system is a giant web. You pull a thread here, and something happens over there. It is all connected.

And the U.S. printing press is making a mess in China.

~~wd_china~~

Ghost Town Real Estate

According to UWin Real Estate Information Services, prices for new homes in Shanghai fell 40.96% last week. Not only did the floor drop out of the housing market, but nothing is moving. Only 4,400 square meters of transactions closed — that's a fall of almost 90% in a week.

True, it was the Chinese New Year — the Year of the Dragon — but the drop in volume was twice the historical drop of 37%.

One week isn't a long-term trend. Maybe it was just an anomaly, or perhaps investors have run out of greater fools. They may have even seen pictures of the Chinese ghost towns that litter the Internet.

Chinese Gold Rush

What we do know is that the Chinese are buying record amounts of gold.

According to Forbes:

That's a lot of gold. And it will continue.

Chinese gold buying is expected to increase by 25% to 30% in 2012.

It's not the government that's buying this gold; the Chinese central bank is busy buying up foreign currencies to keep the RMB low...

It's the people.

The people are looking at inflation moving above 4%, a stock market that has fallen 20%, and a housing market that is about to go tits up.

The average Chinese person has the world's highest savings rates, but few investment options. So they are buying physical gold.

There are plans set up with banks that allow purchases of as little as a gram of gold a month, worth $55.60.

China is already the world's largest producer of gold, and the Middle Kingdom may have surpassed India as the world's largest buyer of gold.

Right now, the country accounts for 23% of buyers, up from 19% in 2010.

Good luck and good hunting,

~~chris_signoff~~

P.S. In this space on December 31st, I told you to buy CZZ, the Brazilian Sugarcane Ethanol producer. The stock is up about 28% in a month. Time to lock in those gains... Sell it.

Massive Rally in Platinum

For the week ending January 27th, we covered the sectors where we think you can make money this year.

It boils down to hard assets and hydrocarbons — or to be more precise, gold and fracking.

Along the lines of precious metals, I wrote an article a few weeks ago detailing the gold/platinum ratio, and I pointed out that platinum was selling less than gold. See below.

If you'd bought when I told you to at $1,400 an ounce, you'd be sitting pretty.

Platinum is still undervalued, but you might want to wait for a pullback. I'm betting it will bounce south after it hits that green line (200-day moving average) before moving up again.

American Oil Renaissance

The CEO of an American oil corporation says he's found 24 billion barrels right here on U.S. soil...

This will make us a bigger producer than Saudi Arabia in the next five years.

We got him on camera talking about it — and the new wealth it will create for investors.

Click here to watch the video now.

Have You No Pride?

Investors.com ran a nice chart showing the real state of the Union.

We are a food stamp nation.

From the article:

According to the Census Bureau, 49% now live in homes where at least one person gets a federal benefit — Social Security, workers comp, unemployment, subsidized housing, and the like. That's up from 44% the year before Obama took office, and way up from 1983, when fewer than a third were government beneficiaries.

Remember when people used to say stuff like “There's no way I'm accepting handouts from the government or anyone else!”

Does anyone think like that anymore?

This CEO Accidentally Reveals a Big Secret

Experts say North Dakota's Bakken Oil Pool may hold 4-6 billion barrels of sweet, light crude.

But the CEO of the biggest Bakken oil company just let it slip that there's as much as 24 billion barrels.

The thing is, there's very little land left for drilling leases...

And that means Bakken oil companies may be worth 300%-400% more than most investors now believe.

You can watch this CEO's incredible video footage HERE.

We are one percent away from a dangerous situation where the majority will vote themselves more money.

This is exactly what happened in Venezuela, a place where 60% or more receive government subsidizes and 20% of all employees work for the government...

Needless to say, they vote for their boss.

Enjoy your weekend,

Chris DeHaemer
Editor, Wealth Daily

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The Future of Nuclear: Uranium Shortages Loom
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The Only Logical Solution: Buy Gold
Please don't send me hatemail for what you are about to read in this article... What I am going to tell you is true. Your disdain for the facts won't change them; shooting the messenger won't change what's going on.

U.S. to Be Natural Gas Exporter: $30-Billion-per-Year Industry Already Established
Editor Nick Hodge takes a bird's-eye look at America's new natural gas industry and ways investors can profit.

Gold and Silver are Breaking Out: It's Time to Buy Gold and Silver Again
2012 is the Year of the Dragon. According to this year's Dragon prediction, investments will do well "with a steady income throughout the year." Gold and silver will do well, too.

Montana's Second Oil Boom Begins: Why Montana Oil Profits Won't Leave Investors Out in the Cold
Montana's oil industry won't stay in North Dakota's shadow for much longer...

The Only Logical Solution: Buy Gold

Everyone is talking around it, but the fact is the United States is in real trouble.

I realize that this type of information is upsetting.

Back in 2005 and 2006 when I wrote that the housing bubble was untenable, and that you should sell, I was ridiculed.

As if it was my fault that the Fed — in a conspiracy with Congress and the banks — created an enormous and untenable housing bubble...

But please, don't send me hatemail for what you are about to read in this article. What I am going to tell you is true. Your disdain for the facts won't change them.

Shooting the messenger won't change what's going on.

Look, I'm a positive person. I don't want to wallow in the negative.

I am a veteran, a businessman, and someone who believes in America.

And there is still a chance, if the politicians, businessmen, and cultural elite of this country act soon in the best interest of America, it can be saved. We've made it through hard times before...

But judging by the current political season, acting on hard choices will have to wait until there's a crisis.

As I write this, the United States is $15.2 billion in debt. Our Gross Domestic Product (GDP), the total sum of everything produced by every American every year, is $15.1 billion. For every dollar the government takes in the form of taxes, it pays 43 cents for interest on debt.

You will owe more than $11,000 dollars this year in interest alone.

If you include unfunded liabilities like Social Security, military pensions, and Obamacare, the total debt is $117 trillion.

That equals more than $1,038,983 per taxpayer.

This is shocking because for almost two centuries, the U.S. was a creditor nation. We were frugal, hardworking, and pious.

But that all started to change in the 1960s as the lessons of the Great Depression were forgotten and generations of wealth were consumed.

By the 1980s, we borrowed more than we lent. The U.S. is now, by far, the largest debtor in the world.

Obviously, taxpayers won't be able to pay more than a million dollars to fund these debts — even if you stretch it out over their lifetimes. The average taxpayer won't even be able to pay the interest on this debt.

And it is obvious that the current crop of dufus-Americanus won't even think about increasing their tax burden, nor accepting some form of cutback in their pensions, military spending, or other entitlements...

They got theirs, and you can bugger off.

~~gold_signup~~

It's Coming

But it is coming. The numbers are what they are.

There are only three solutions to debt you can't pay off: debase the currency, default, or create inflation.

The solution for the great Ben Bernanke and the House of Fed is to inflate the debt away by printing money...

Only they don't print money anymore; they just increase debt by using the translucent and obfuscating wizardry of Wall Street created by 100 years of Harvard-MBA jibberjabber.

From the Fed press release, released yesterday at 12:30 p.m.:

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy.

In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions — including low rates of resource utilization and a subdued outlook for inflation over the medium run — are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

Money for Nothing

When the news hit, the price of gold jumped from $1,650 an ounce to $1,712.

Today, gold hit $1,730. This was the biggest jump in more than three months.

Last week I told you the number one sell signal for gold is real interest rates (yield minus inflation). When real interest rates are negative — as they are now — gold goes up.

The Fed just told us all that real interest rates will remain negative for two more years...

Add to that the constant debasement of the dollar, and the only logical solution is buy gold, silver, and platinum.

That's why on January 31st, we will be offering a FREE tutorial on precious metals investing. Join us to learn how to enjoy tax-free gold and silver profits, profit from gold's upside, and protect yourself from the downside.

Only five days remain for you to secure your spot for this free online seminar. Space is limited, so sign up now.

~~chris_signoff~~

Oil Exploration Companies

Once every ten to fifteen years, there is a major oil discovery or geopolitical shift that causes earthquakes in the global financial structure.

Tectonic plates shift and a new paradigm is born.

In the process, many people get rich.

During the 1970s, BP found oil in the North Sea off the coast of Scotland. The stock jumped from $3.43 to $30.

When the Soviet Union collapsed, companies like Rosneft, Lukoil, and Gazprom went from being traded for scraps of government paper to over $200 a share, in the case of Rosneft.

PetroKazakhstan (PKZ), which has since been bought out by the Chinese, went from $0.25 in 2001 to $55.00 in 2005 — a massive return by anyone’s standards.

Petrobras (PBR) went from $2 to $65 after it found massive oil in the offshore Tupi fields:

The easiest way to make money — in terms of time spent versus cash returned — is to research and buy oil exploration and development stocks.

When a company finds oil, the share price absolutely explodes to the upside.

Iran Wants a Bomb

There are a number of geopolitical time bombs that could triple the price of oil.

One of these is the EU oil embargo.

According to the Wall Street Journal:

European Union foreign ministers agreed Monday to impose an oil-import embargo on Iran and an asset freeze on the country’s central bank, escalating the confrontation over Tehran’s nuclear program.

The embargo bans the importation of petroleum and crude oil products from Iran, as well as insurance on such products. It goes into effect as of July 1 on existing contracts.

When Iran seized the hostages and Carter put on an oil embargo in November of 1979, the price of oil went from $14.50 a barrel to $38.

A similar jump today would equate to an oil price of $262/barrel.

In response to this embargo, a senior Iranian official said Iran would “definitely” close the Strait of Hormuz if an EU oil embargo disrupted the export of crude oil.

As I write this, the United States, UK, and France are all sending warships through the Straits.

~~vix-box~~

Economy

Iran is experiencing severe currency devaluation as well as inflation and basic material shortages. If the country can’t export oil, it will likely trip over into chaos.

There is a reasonable chance that the theocratic leaders will go to war in a nationalist bid to solidify their grip on power. They have a long history of such actions.

With this backdrop, China has distanced itself from Iran, a traditional supplier of oil, to seek supplies elsewhere; India — which gets 12% of its oil from Iran — has stepped in and is now trading gold for Iranian oil. This avoids the U.S. sanctions and undercuts the global dollar/oil price relationship.

India and China have an unquenchable thirst for energy.

India’s oil demand will increase by 25% over the next four years — all of which and more will be imported, as India’s own production is shrinking.

China is now the largest consumer of hydrocarbons in the world and its oil appetite it accelerating. Oil imports are expected to be up 5.6% this year, up from a 3.8% increase in 2011.

All of this big-picture stuff leads us back to the small picture and making money.

Over the past year, I put my Crisis & Opportunity readers into a series of oil exploration companies...

These companies all had three things in common: They were cheap, no one would touch them, and they were sitting on massive-potential oil finds.

Who's Laughing Now?

I’ve been buying up small microcap oil exploration companies for about 10 months now.

I’m not going to give away all of my picks, but all the charts look basically like this one:

Cove Energy (COV.L) is sitting on a record find of hydrocarbons.

It is close enough to sell this energy to Asia. There is currently a bidding war between Oil India (OINL) and a Thai petroleum company (PTTTEP) for Cove’s assets. Those are the two that have been made public. It would not surprise me to see a company like Sinopec (SHI) or China Petroleum (SNP) win out.

As I said, I’m sitting on about five of these stocks.

Their share prices are moving up rapidly and won’t be undervalued much longer...

~~wd_dividend2~~

All the best,

~~chris_signoff~~

The Secret to Gold Prices: Real Interest Rates

TIPS are Treasury Inflation Protected Securities.

They are financial instruments that are guaranteed to keep up with inflation.

Right now, they are selling at a negative yield.

According to Bloomberg:

“The U.S. sold a record $15 billion in 10-year Treasury Inflation Protected Securities at a negative yield for the first time with investors willing to pay a premium to guard against the threat of rising consumer prices.

The TIPS were auctioned at a so-called high yield of negative 0.046 percent. The last four sales of five- year TIPS were at negative yields.”

Why would a record number of investors pay to lose money?

Could it be they think inflation is coming?

Real Interest Rates

Real interest rates are interest rates minus inflation. Real rates tell you what your return is in terms of buying power. And for U.S. Treasuries, real rates are negative.

The yield you get from a one-year U.S. Treasury bond is 0.00%; a two-year is 0.525%; a three-year is 0.25%; and a ten-year is 2%.

According to the Fed, the rates are going to stay low for a long, long time.

Who here thinks inflation won't go up more than 2% in ten years? Raise your hand.

Bueller. Bueller...

Right, so we can't make money on Treasuries.

Winter is Coming: Inflation

Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase.

As inflation rises, every dollar you own buys a smaller percentage of a good or service. (See my piece on the Fed destroying the dollar.)

As of yesterday, the Bureau of Labor Statistics reported that inflation as measured by the Consumer Price Index for 2011 was 3.0%.

One might think that 3% wasn't so bad — and it's not.

That said, the way the government measures inflation has changed over time.

They would tell you that the new method now reflects the fact that the iPhone 4S costs the same as the iPhone 4, but is more valuable.

But the real reason is that politicians don't have enough money for entitlements, and the electorate won't vote for candidates who tell them the truth: The lower the official inflation rate of inflation, the lower the cost of living increases that are built into programs like Social Security.

~~wd_junior_gold~~

Old-School Realities

If you go by shadowstats.com and use the pre-1990 official methodology for computing the CPI, inflation is running just over 6%.

If you use the pre-1980 methodology that was in fashion when Paul Volcker was Chairman of the Fed, inflation is now over 10%.

Gold Goes Up on Negative Rates

There is only one historically empirical reason to invest in gold and expect a return.

History tells us that gold is inversely correlated to real interest rates: Gold goes up when real interest rates are negative.

Take a look at this chart (the blue is real interest rates, the gold is gold):

And according to the smart money buying TIPS at a negative yield, real interest rates should continue to remain in a downtrend.

Pay Me, Baby: TIPS YieldGold is now down to $1,651 an ounce because the dollar bounced.

If you want a TIPS ETF, Pimco's one- to five- year U.S. TIPS (STPZ) returned 7.70% last year, though you might be late to the party.

All the best,

~~chris_signoff~~

P.S. Want to learn more about buying and holding gold? Take moment to sign up for our educational presentation on silver and gold. It will be held on January 31st and includes a 2012 gold forecast, the best ways to buy, and how to avoid taxes. It's free to all who sign up.

Yap Has No Gold

Publisher's Note: Before you get to Christian's editorial for today, please take moment to sign up for our educational presentation on silver and gold. It will be held on January 31st and includes a 2012 gold forecast, the best ways to buy, and how to avoid taxes. It's free to all who sign up.

Good Investing,

Brian Hicks

They say you can wander the Smithsonian Institution in Washington, D.C., for all of your days and never see every exhibit.

On Saturday, I took my girls to the Natural History Museum to see the dinosaur fossils and the insect zoo. Much to my surprise, I found in the basement on the way to the cafeteria a large example of the fabled stone money of Yap.

Yap, as you well know, is a coral island in Micronesia.

According to their Tourist Bureau: “Yap is so remote it takes a two day journey by plane, but the moment you step off the airplane a topless woman will great (sic) you with a fresh flower lei.”

You can't beat that.

But it's not the topless women that make Yap interesting. It's their money.

What Is Money?

There's no gold or silver on Yap, and all the basics of living — food, clothing, and shelter — are readily available and free for the taking.

This situation leads to an interesting tale...

Centuries ago, explorers found limestone deposits on another island 250 miles away. They carved this limestone into huge stone discs, which they brought back across the sea with canoes towing bamboo rafts.

Those explorers must have been great salesmen, because they convinced the others that these stones were items of wealth.

The people of Yap, being people, took the rare (to them) limestone blocks not just as money, but as a storehouse of wealth.

The small pieces they traded for everyday things like pigs and fish.

But the larger pieces would be used for a large purchase, such as a dowry. Or perhaps if someone found themselves down on their luck, and had a bad crop, they might trade.

One man was towing back an extremely large stone when he was hit by a storm. In order to save himself, he cut the raft free and the stone sank.

This stone — which no one alive has ever seen — still has tremendous value.

It has been traded many times, and is now owned by the richest family of Yap.

Teutonic Terror

When the Germans took over the island around 1900, they wanted to build roads.

But the islanders wouldn't work, and nothing could convince them to leave their idyllic life for the backbreaking work of crushing coral.

The Germans finally put a tax in the form of a black cross on the stones. They claimed ownership as a fine against the roads being built.

This did the trick, and the roads were built. Acknowledging the debt paid, the Germans gave back the money by removing the black crosses.

Most times, the stones remain in the family and don't change hands at all.

Imagine there's this great big stone disc leaning against a tree...

One person gives it to another person. But the stone doesn't move; it's just that everyone in the village knows the stone now has a new owner.

~~gold_signup~~

Federal Reserve Bank of New York

As we all know from that Bruce Willis movie, the largest gold stash in the world is stored under the Federal Reserve Bank of New York.

There are 550,000 bars of gold buried deep in the bedrock of Manhattan.

But the vast majority of this gold doesn't belong to the United States. It belongs to the various countries of the world.

When France, say, owes China a billion dollars, a guard puts some bars on a dolly, an accountant makes a note, and the gold goes from the French closet to the Chinese one and is earmarked, or stamped, for the new owner.

No one from China or France ever sees the gold. The gold does not move from the depths of the earth.

And yet the fortunes of millions of people change in some way by this single action.

When you pay your phone bill online, nothing really moves except for some zeros and ones in a server somewhere. But everyone agrees that the transfer of wealth has taken place.

Today, the stone money of Yap still has value — and the wealth of the village is determined by it.

The rest of the world has vested gold with the sacred property of value.

Gold is the king of metals. It has been since before Hatshepsut of Egypt built two hundred-foot columns capped with gold that could be seen for miles.

If I was a betting man — and I am — I'd say that gold has been and always will be the last storehouse of value for mankind.

Buy gold,

~~chris_signoff~~

P.S. On Monday, I proposed to you that gold was freedom. Today I offered up gold as a storehouse of wealth. On Friday, I will give to you the most valuable gold secret of all... Stay tuned.

Gold Coins and Freedom

Many years ago, when I was young, single, and trying to find my way as a man, I lived on a mountain near Durango, Colorado.

I was poor, worked two jobs, and spent all my money on skis, mountain bikes, and rebuilt transmissions. Gas cost about a buck a gallon and I had a faded red CJ-7.

There were times I would seek out the most deserted road I could find and just get lost...

Red Mountain Pass

On a Tuesday in the spring, you could wind down a bit of bad road heading to Ouray.

At about 12,000 feet, there was nothing but the eagles in the sky and the certitude of death if you drifted over the white line. If you were lucky, they might find your moldy corpse when the snow melted — though it's more likely the coyotes would eat your marrow.

But at times like this, with the wind blowing rust from the quarter panels and "London Calling" blasting away on the Panasonic cassette deck, I would have a fantasy about being the last guy on earth.

I would imagine it was the aftermath of the zombie Armageddon, or we were three years past the Kiev bombings.

Out there on the continental divide, you can drive for an hour and never see another car — nothing but mountains, elk, and mule deer.

“This was what it's like to be the last person on earth — doors off, music up. This is freedom,” I'd think...

I could do anything I want. Anything.

I could take this road as far as it goes. I could drive until the tires burned off and the clutch turned to dust.

I could go anywhere.

That's about the best feeling on earth, that type of freedom.

But then I would see a farm truck or one of those million-dollar motor homes rambling up the switchback out of the valley, and the fantasy would be gone.

There were people left out there. I wasn't alone, not quite free.

So, I'm not the last person on earth. That's alright. I like people.

And when you think about it, does it really matter?

Should I let outside forces like humans and the economy really affect me that much?

Should I care?

The honest truth is you have to care. There are bills to be paid and people you love who need help.

That's what real men do. We provide.

~~gold_signup~~

Now I'm a little older with some cash in my pocket, but I still think of freedom — just in a different way.

Freedom, as Janis Joplin said, can be nothing left to lose.

Or it can be having enough that you don't have to worry about it.

That's why I travel around the world in search of the next great oil stock.

That's why I read the footnotes at the back of 10ks and talk to CEOs.

And it's why I've bought gold coins.

When the great Chinese hoard lands in Long Beach, or the anthrax massacre of 2012 happens, I can grab my coins, pack up my Remington 870, and get on my sailboat. It's already packed with two weeks' worth of food.

Look, you and I both know that the zombie apocalypse isn't going to happen. But it might...

And like a good hedge on an options trade, you look at the cost of insurance versus the reward for having it.

If you don't have physical gold, you should get some.

As Brian pointed out on Friday, gold looks to have put in a double bottom on the chart. I don't know if gold will go up or down over the next six months; but I do know that it's down from $1,900 an ounce to around $1,600.

If you don't own any physical gold, or if you want to stock up, this seems like a good place to start.

You might not get rich, but it is one less thing to worry about...

There's some freedom in that.

Have a great day,

~~chris_signoff~~

What China is Buying Now

In case you haven't been paying attention, you should know that African oil explorers are on the move.

Here is one we own in Crisis & Opportunity that goes by the name of Cove Energy:

Since September 2011, the stock has more than doubled.

Time to Buy the Wildcatters

The stretch of ocean between East Africa and Madagascar, called the Mozambique Channel, is one of the five places on earth that hasn't been adequately explored for oil.

It might have something to do with the fact that the Mozambique flag has an AK47 on it...

But that's old school stuff.

Communist revolutionaries are now hard-core capitalists.

Mozambique's economy grew at 6.7% last quarter and will grow around 7% in 2012.

The currency, the metical, gained 19% against the dollar this year and was the second best performer in the world.

Mozambique — and Africa in general — produces a great deal of resources, from oil to magnetite.

Africa is the last continent that produces more hard commodities than it consumes.

And as East Africa is closer to booming markets such as India and China, it is long-forgotten East Africa that is receiving the lion's share of foreign direct investment.

Biggest Find in a Decade

Andarko Petroleum (APC), the $40 billion dollar Texas oil company, recently found between 15 and 30 trillion cubic feet of recoverable gas in the Mozambique Channel.

That's a lot. It's more than BP's proved reserves.

It might be the biggest gas field found in the last decade.

Andarko's stock is up about 15% since it found this massive energy source. That's a nice return, don't get me wrong; I'll take it.

But Cove Energy, which has the adjacent license, has more than doubled.

And that's because Andarko is a massive company with its fingers in many pots. One gas find — even a huge one — won't move its stock very much.

~~rare-earth-box~~

That's why you buy the pure plays.

A few months ago, Cove Energy was a $500 million company.

It was a small energy exploration company — the type of company known in the business as "a wildcatter."

This type of company takes risks and finds hydrocarbons. It goes where the big dogs fear to tread. It gets there first with the most.

There are a number of these companies around, and I just love them — companies like Kodiak, which is up more than 500% in the last two years...

Or Cheniere Energy (LNG), which makes natural gas infrastructure and is up about 600% in the same time frame.

Sure, it's a volatile sector. Wildcatters are leveraged up to the price of oil.

But if you haven't noticed, oil is now holding steady above $100 a barrel. And because everyone is afraid of the next global economic disaster, these stocks are undervalued.

Imagine what would happen if the economy starts to improve...

The motto of my trading service Crisis & Opportunity is “Buy fear and sell greed.”

Right now, the global investment community is in transition, switching from the psychology of fear due to the great recession to one of increased risk-taking.

Investors are looking at their bonds, which are returning yields well below the rate of inflation, and thinking:

What happens when people start hiring again?

What happens if we go to war with Iran?

What happens if Libya, Iraq, and Nigeria descend into petroleum-destroying civil wars?

There are any number of supply-and-demand scenarios that could put oil back at an all-time high.

Lundin Companies

I've found one small wildcatter that owns a great deal of oil properties in East Africa.

This stock is starting to move — and is up $0.50 in the past few months to $1.70...

And the best part is that it is in partnership with The Lundin Group.

If you don't know The Lundin Group, you should. They have the best track record of any investment capitalist I know off.

Check out the deals they've done over the past nine years:
Out of seven companies, The Lundin Group is averaging returns in excess of 10,600% over a nine-year period. Those are facts.

A $852 investment in 2002 would be worth $1 million today.

It is no wonder the Lundin name is spoken with whispered awe in the oil and mining community...

The Lundin Group is now going full force in East Africa.

As I mentioned above, the way to get the most returns is to buy the small “pure play.”

~~wd_options2~~

All the best,

~~chris_signoff~~

Ron Paul's Gold

“Nothing good can come from the Federal Reserve. It is the biggest taxer of them all. Diluting the value of the dollar by increasing its supply is a vicious, sinister tax on the poor and middle class." — Ron Paul, End the Fed

You know Dr. Paul as the only clearheaded guy now running for president.

Which is why the mainstream media calls him insane.

Ron Paul tells the emperor that he is wandering around naked and gets lambasted by the mainstream (both Left and Right) because of it.

Paul would like you to know that the Fed is responsible for the ongoing and everlasting economic crisis we are living through.

The Fed has a long history of bad policies that supply cheap credit to insiders and of printing money that destroys the value of the dollar.

"Prosperity can never be achieved by cheap credit," Paul explains.

"If that were so, no one would have to work for a living. Inflated prices only deceive one into believing that real wealth has been created."

In his book, End the Fed, Paul goes on to say: "The worse the economy gets, the more power Congress is willing to grant to the Federal Reserve. Trillions of dollars created and distributed by the Fed with no requirement to submit to any oversight."

~~gold_signup~~

We Are All Austrians Now

In a recent stump speech, Paul declared: “We are all Austrians now.”

Of course, there was little coverage of what he meant by that other than a sad, wistful shaking of the head by the Botoxed anchors on TV.

The vast hordes of dufus-Americanus couldn't — or wouldn't — understand...

The Austrians believe stimulus and government intervention of the type we've seen for the past fifteen years allocates funds to where they aren't needed, and allows those who created the crisis (read: those who failed) to live on as zombie banks and car companies.

These colossi of failure are connected to insiders, get special deals, limit competition, reduce growth, and live to fail another day.

This is what has been going on in Japan since 1990.

Money likes to go where it is treated best. And since the Fed was created in 1913, it has wanted to leave the U.S. dollar.

Paul writes:

The Fed is using all its power to drive the monetary base to unprecedented heights, creating trillions in new money out of thin air. From April 2008 to April 2009, the adjusted monetary base shot up from $856 billion to an unbelievable $1.749 trillion.

Was there any new wealth created? New production?

No, this was the Ben Bernanke printing press at work. If you and I did anything similar, we would be called counterfeiters and be sent away for a lifetime in prison. But, when the Fed does it — complete with a scientific gloss — it is seen as the perfectly legal and responsible conduct of monetary policy...

Manipulating the money supply and interest rates rejects all the principles of the free market, and so it cannot be said that too free a market caused this mess.

The market was not free at all. It was manipulated and distorted.

On the inflation front, Paul adds:

It's as if we still believe that money can be grown on trees, and we don't stop to realize that if it did grow on trees, it would take on the value of leaves in the fall, to be either mulched or bagged and put in a landfill. That is to say, it would be worthless...

When we unplug the Fed, the dollar will stop its long depreciating trend, international currency values will stop fluctuating wildly, banking will no longer be a dice game, and financial power will cease to gravitate toward a small circle of government-connected insiders.

Well said.

Paul's Investments

Ron Paul is the type of guy who buys his own order book.

According to a Wall Street Journal report last month:

The presidential candidate has 64% of his portfolio allocated to gold and silver commodity-related investments. What’s more, he has no love lost for bonds (0% of his portfolio) and a dismal outlook on the stock market.

Only .1% of Representative Paul’s portfolio is allocated to stock funds, and all of those funds are bearish — inversely correlated to the performance of the market.

Among the 26 gold and silver mining companies held by Rep. Paul are large companies — Barrick Gold, Goldcorp and Newmont Mining — as well as a slate of small-cap miners. His non-mining portfolio holdings also include 14% cash and 21% real estate investments.

Paul’s portfolio is worth something roughly between $2.5 and $5.5 million.

~~vix_3~~

All the best,

~~chris_signoff~~

The Gold/Platinum Ratio

About a month ago, a friend of mine was jewelry shopping for a Christmas gift.

She wanted to buy a gold locket for her daughter, but went into price shock at the Macy's counter...

It seemed the piece she was looking at had doubled in price from the last time she was browsing.

She decided to go with “white gold” — or platinum — instead.

As an investor, I always keep an ear to the ground when it comes to the shopping stories of the fairer sex. Many a dollar has been made on booming ten-baggers such as Pokémon, Crocs, and Jimmy Choo.

I was reminded of my friend's anecdote when I came across a story in the Business Standard of India...

Jewelry makers in Gujarat are selling a lot more platinum-based jewelry than they have in the past.

From the article:

"There is an increasing interest among domestic consumers for platinum jewellery. Frequent price fluctuations in gold and silver seems to have drew attention of jewellery buyers towards platinum-based diamond jewellery. However, the trend is at its nascent stage, but we can see this trend rising over a period of time," said a Surat-based diamond jewellery maker.

Platinum jewelry is expected to make up 25%-30% of the total Indian jewelry sales in 2012. This comes in a market in which total jewelry sales in India are growing about 12 percent a year, though gold jewelry is slowing.

This is backed by the fact that gold imports to India in the last quarter fell by 52% to 125 metric tons.

The article went on to say:

With gold prices rising, jewellery makers' business would rise too, but on the value front, while number of units sold may not rise. White gold or platinum is the new craze among the domestic consumers. Hence there is increasing focus for platinum jewellery in the new year.

The Wall Street Journal backs this trend, reporting: “India's gold imports have crashed to around 20 metric tons in November from 75-80 tons a year earlier, and demand during December is also expected to be weak unless prices come down.”

Indian mothers have recycled their old gold for the November/December wedding season... or have turned to platinum.

~~rare-earth-box~~

The Bullish Case for Platinum

Platinum is rarer than gold, but due to the fact that it can withstand high temperatures and it is resistant to corrosion, it is useful in industry.

The largest (40%) and most obvious use of the heavy metal is for catalytic converters in automobiles.

Due to the Japanese tsunami and subsequent auto production drop, the price of platinum has crashed from $1,900 per ounce to $1,400.

This chart shows the spread between gold and platinum:
Platinum has fallen below the 1:1 historical average — and well below the 1:1.75 average it held in the past decade. It now trades at less than 1.

Here is how gold versus platinum ETFs have performed over the past year:

Couple increased jewelry sales with the idea that Japan will be back in the auto business, and you have a bullish demand scenario.

The Polk company has forecast global car sales will hit 77.7 million units in 2012, up about 7% over 2011.

Scotia Economics expects global sales to increase 4% this year; LMC Automotive puts the increase at 6.5%.

Morgan Stanley estimates “about 3.82 million ounces of platinum will go into auto catalysts, 17 percent more than this year and the most since 2007.”

The Supply Side: South Africa

South Africa produces around 75% of the world's platinum.

The country's mines are getting hit with growing electricity costs and deteriorating margins. Mining expenses were up 30% in 2011.

Research from Barclays Capital noted on December 3, 2011: “at levels of about $1,530 an ounce, platinum is trading close to or below the price at which some miners break even and that high-cost producers are already losing money.”

Costs for Anglo American Platinum (AMS) are running at $1,567 an ounce.

Today's spot price in New York was $1,410 an ounce.

The crash in platinum from $1,900 an ounce in August to $1,410 per ounce has created a bearish psychology.

This in turn will lead South African mines to cut unprofitable production.

If you add into this scenario the idea that the global economies will rebound and car sales will increase, it would be a solid bet to buy the physical metal.

Just stay away from the miners...

~~chris_signoff~~

The Two-Faced God of Money

Welcome to 2012.

I trust everyone had a memorable New Year's Eve.

I myself spent the night with six children for an evening that culminated in watching the zombie Dick Clark count down as the ball dropped...

The kids honked horns, shot silly string, bickered, and ate.

In all, my demon offspring and their friends expended a lot of energy in a dedicated effort to engorge that throbbing vein in my right temple.

At times like these, the idea of sticking them with the future bill for current entitlements seems like a good plan. There is a certain need for revenge that is assuaged.

Oddities of Calendars

But this is a new year. We are renewed by an ancient circumstance of the Greco-Roman calendar.

There is optimism.

Today we awake and the Dow has the character of the two-faced Roman deity for which January is named: Janus, the god of transitions, doors and gates.

As ruler of Latium, Janus was said to have invented money and ruled over a golden age. He solved the problem with the Fed in a simple manner: His money wasn't based on gold — nor was it based on the full faith and credit of Latium — but rather, money was gold.

Market's Flying

Yesterday the Dow was up 222.21 points. Gold is up 2.49%. And oil, that salve of finance, is up 4.23% to $103 for West Texas crude.

Our god stock, Janus Capital Group (JNS), has fallen from $15 to $6.50 due to negative earnings growth (-15.70%) last year.

The retail investor, having grown tired of the rigged game on Wall Street, has cashed out and gone home. (Perhaps this is why you don't see Janus advertising during football games anymore.)

The upside is that the mutual fund company now has a P/E of 6.95 and pays a 3.20% dividend. And at least one insider thinks it's a bargain. Bruce Koepfgen, a company officer, bought $100,000 worth of shares on December 21st.

Taking this market situation to heart, Janus has launched a series of protected funds.

It uses cash, Treasuries, and U.S. large caps coupled with short index futures. It hopes this will appeal to those who want steady returns with a safety net.

The company says if the fund hits 80% of NAV, it would be liquidated — which, I suppose, is something. The company also launched an international dividend fund.

I don't know if these are the products that will return mutual funds to their former glory, but I do like that chart... Check out the capitulation low when someone puked out 50 million shares in late November.

~~vix-box~~

The Past is Dead to Me

But the past is behind us.

Bullishness is everywhere. Reports are pointing to growth.

The Institute for Supply Management said the U.S. manufacturing sector expanded in December from November. The manufacturing report (the ISM PMI gauge) rose to 53.9 in December from 52.7 in November.

Construction spending rose 1.2% in November.

A gauge of Chinese manufacturing activity showed the world's second-biggest economy began expanding in December after contracting the prior month.

And in Germany, unemployment fell 0.1% to 6.8% — a new record for unified Germany.

Manufacturing reports from Australia and India also came in strong.

Risk On

In addition to this good news in the basic economy, the composition of the Federal Open Market Committee (FOMC) has changed dramatically with the New Year.

You'll remember the FOMC as the unelected technocrats who decide how much money to create and who to give it to.

Zerohedge reports fiscal hawks “Fisher, Kocherlakota and Plosser now out of the voting rotation, and replacing them will be the gaggle of ferocious doves Pianalto, Lockhart and Williams. In fact the only hawk left in the Fed as of today through the end of the year is Richmond Fed's Jeffrey Lacker who has shown substantial dovishness in the past. In other words, from a rotation of 7 and 3, the Fed is now uber-dovish by a 9 to 1 majority. So does this mean that printing is imminent?”

Look for the next FOMC statement to come out on January 25th.

Though bad for my offspring and their friends, more printing is good for stocks... in the short run, anyway.

Here's to a profitable new year,

~~chris_signoff~~

Putin Resigns, Gold Goes Down and More...

Gold Will Go Down, Then Up

Look for gold to flat-line around $1,500 an ounce in the first half of the year and bounce heading into the 2nd half.

As you can see by this one year chart we've been in a down-trend since August.

There is support around $1,497 an ounce. If the price falls through that level we are getting to $1,000 real fast. Remember, no one ever went broke taking profits. Gold won't cry if you sell it.

Buy Poland

My paternal grandmother was from Lithuania. Family lore has it that she was carried as a baby over the border – with the help of a well-paid guard – to escape the communist threat in 1919. When I was in the Navy a guy named Miles from Philly told me “a Lithuanian is like a Pollock with his head kicked in.”

For that reason and none other, I'm a fan of Poland. I'm glad to see them on the rise. Poland has low debt, strong growth, a solid balance sheet and a large population of 38 million.

The government deficit was 5.9% of GDP in 2011 and will drop below 2.9% in 2012. Government debt as a percentage of GDP will fall to 52% next year. Poland will grow by 2.5% in 2012.

More Flash Mob Riots

The Mall of America was overrun last week by Bloods or Crips – I can't tell the difference between these thugs. One group wears a blue handkerchief and the other wears a red one. They are like sneetches with glocks and bad aim. Alas, look for this type of twitter generated mayhem to continue. (By the way I am selling flashmobriot.com if you are interested.)

~~wd_dividend~~

Vladimir Putin Resigns

There are hundreds of thousands of people marching in the streets of Moscow. The shoe in for the next president of Russia is looking vulnerable. He will cheat his way at the ballot box to garner a majority of the vote, but the backlash among the population will force him to resign citing his health.

This will set up the best “blood in the streets” play of the year on cheap Russian stocks. Vimpelcom (VIP:NYSE) – my favorite Russian telecom – pays a 15.80% dividend, has a PEG of 0.76 and $3.56 billion in cash. Look to buy at the height of unrest. The riots will be bad for its share price but great for its balance sheet. It will make even more money as the mob texts their righteous anger.

The U.S. Will Embrace Hydrocarbons

Next year the Bakken will pass Ecuador in production output. As Brian Hicks wrote yesterday, “The Bakken, Marcellus, Eagle Ford, Utica, Piceance, and the Greater Green River Basins will be the buzzwords in energy for 2012 — and quite frankly — for the years to come.

The United States is literally swimming in an ocean of natural gas thanks to hydraulic fracturing. In fact, four years ago, the U.S. was the ninth-largest global producer of natural gas. Today? Thanks to formations like the Marcellus, the U.S. is now the #1 global producer of natural gas.”

Cheap energy, less power to OPEC, jobs and growth — what's not to like?

Iceland Tells the Banks to Stick it

The scare tactics used by Wall Street and Washington to bail out the banks at the top of the credit crunch ensured that they'd live to rob another day. But in Iceland they said enough was enough and decided to let the banksters stew in their own juices. It's paid off.

Iceland defaulted on $85 billion of debt. The pundits and talking heads said their country was finished. They were wrong. This year, Iceland GDP grew by 2.5%, and it is forecast to grow by 1.5% next year. That's pretty good. Capital controls are being relaxed, and the currency is strengthening. It seems you don't need to bailout the banks after all.

Blue Chip Tech Stocks Become the New Defense Plays

Intel, Microsoft, Qualcomm, IBM, Texas Instruments, Taiwan Semiconductor, American Software, Microship Technology and the list goes on and on...

All these companies have lots of cash, solid businesses and pay a nice dividend. In the 1930s the companies that paid a dividend produced the highest returns over the decade. Make sure some of your safe retirement cash like your IRA and 401k is in blue-chip tech stocks that pay a dividend. It's a good feeling to know you'll make 7% next year.

East African Oil

The price of West Texas Crude was up 13 percent last year. Look for the price to continue to bounce around $100 in the first half of the year. In the second half, growth in China, Brazil and Germany – coupled with Iran sanctions - will push the price of Brent Crude to $135.

Chinese national oil companies will continue to court East African countries in order to secure their energy needs. East African oil is one of the seven last under-explored places with evidence of huge hydrocarbon deposits. It's the next international oil boom.

Dow Hits All Time High

It seems like everyone I talk to is in cash. No one believes in equities anymore.

And for good reason, in ten years we've gone through two stomach-churning drops. The P/E on the Dow Industrial Average is 13.21 and the dividend yield is 2.60%. The P/E on the NASDAQ 100 is 11.21. Granted in 1942, after Pearl Harbor, the P/E on the Dow was 6 and the dividend yield was 9.5% - but then again we aren't in World War III.

You can make a strong case that in 2012 unemployment will drop, housing will tick up, South America will boom, and Europe will calm down.

It's not hard to envision a string of positive market events that put 1,700 points on the Dow. A drop of unemployment from 8.6% to 7.6% would add 1,000 points alone. Toss in some M&A activity, stronger banks, and some increased exports and we are right back at the old high.

I'm not guaranteeing it will happen – but there's a good shot it will.

Have a great 2012,

~~chris_signoff~~

By Doing Nothing, Congress Does Some Good

Sometimes I wonder whether the world is being run by smart people who are putting us on... or by imbeciles who really mean it."
— Mark Twain

A hoary old trader once told me to never buy something based on a government subsidy because sometimes those subsidies end.

In the case of Pacific Ethanol Inc. (PEIX), he would have been correct.

Something funny happened on the way to the annual feeding frenzy at the government trough...

Congress has quietly ended subsidies on ethanol fuel and dropped import tariffs on Brazilian ethanol. The subsidy had been paying companies 45 cents per gallon to make E10. The tariff added 54 cents a gallon to the Brazilian imports.

This program has been costing taxpayers $6 billion a year — and Congress let it expire by not acting to renew it.

But don't worry about the survival of the ethanol industry...

It will still benefit from Congressional mandates that call for 15 billion gallons of renewable fuels by 2015 and 36 billion gallons by 2022.

(Congress should cut that mandate as well, but we'll take what we can get.)

The argument for ethanol never made sense. It takes corn away from hungry people and puts it in gas tanks. Not only does it cost more energy to grow and convert corn into fuel than it does to simply burn hydrocarbons, but it also raises the price of food.

In Brazil, they use sugarcane, which does a much better job. In fact, it works eight times as well as corn.

It might be a good time to take a look at Brazilian ethanol producers like Cosan (NYSE: CZZ).

The Most Disruptive Energy Technology Ever Invented Is

Being developed at this remote location just minutes from Washington D.C.

The mainstream media doesn't have a clue!

But this company is perfecting a new energy technology that could soon put every

electric utility company out of business for good!

Click here to see this ground-breaking technology for yourself...

Best of the Week

Below you will find the best articles from Wealth Daily and Energy and Capital this week, just in case you were too busy drinking eggnog to read them.

On behalf of Wealth Daily, I'd like to wish you and yours a happy and prosperous New Year.

~~chris_signoff~~

Profit from Options in the New Year: How a Single Options Formula is Making People Rich
The real moneymakers on Wall Street have an ace up their sleeves when it comes to turning a profit in a chaotic market: options. Let Ian Cooper lead you to easy profits this year with his proven R-4 Trigger System... Invest this week and you could be laughing all the way to the bank as soon as January 25th!

"Biggest Gold Discovery in Decades": 13-Year Metals Veteran Greg McCoach Tells All
Discover what's being called "the biggest gold discovery in decades" in this groundbreaking FREE video investment conference.

2012 Energy Stock Predictions: Domestic Oil to Reign in 2012
Editor Jeff Siegel offers his energy predictions for 2012.

The One Answer Smith Really Wanted: Will Next Year Be Better?
Washington and Wall Street can't stop the rest of us from doing biz!

Dangerous Rare Earth Supply Risk: Urgent: U.S. Energy Department Issues Stark Warning
Analyst Ian Cooper takes a look at the latest warning out of the U.S. Department of Energy and offers a way to profit handsomely.

2011 Predictions Recap: What I Got Right, and a Few I Missed
The fall of Chinese housing has been a slow motion train wreck for about six months now. Newly-built Chinese ghost cities are a common topic on the web. Real estate prices are down in most major cities.

What's Really Behind the Solar Sell-off: And Why Did Warren Buffett Just Buy Them
Brian Hicks talks about what is really behind the solar stock sell-off and why Warren Buffett is buying them.

Another Date Which Will Live in Infamy?: This Could Be The Big One for the Middle East
There are people hard at work to make sure that we never need to depend on things like the Strait of Hormuz, Iran, or any Middle Eastern oil-peddling nation ever again... right here in the Midwest.

Tesla Electric Car Investing: Is It Time to Buy an Electric Car?
Editor Jeff Siegel discusses whether or not it makes economic sense to buy an electric car.

Taken for a Ride: Year-end Recap and 2012 Anticipation
I think next year will be a year of drastic transformation, of political awakening, of balance sheet resetting, of a return to real value over hyped illusions.

Bullish on America in 2012: Don't Worry, Be Happy
Brian Hicks reviews the year in commodities and comments on the bullish New Year ahead for investors.

Personal Responsibility: Taking Control and Moving Ahead
Instead of remaining oblivious to global markets and continuing to wallow in a sea of self-loathing while continuing to blame everyone and everything but yourself... Why don't you read up, get invested, exploit tax loopholes, pay down debt, save, and take control of your financial destiny?

2011 Predictions Recap

Last year at this time I wrote up my predictions for 2011. It turns out I missed a few but got a lot right.

Here is the short recap:

1. China real estate bubble pops

This was spot on.

The fall of Chinese housing has been a slow motion train wreck for about six months now. Newly-built Chinese ghost cities are a common topic on the web. Real estate prices are down in most major cities.

(Click Image for Slideshow)

2. Spain defaults

I was early on this one. But the game's not over yet.

According to Reggie Middleton via Zerohedge:

“As it stands now, the government expects to increase its debt from 55.2% of GDP in 2009 to 74.3% in 2012. In absolute terms, the government debt is expected to grow from €580.4 billion in 2009 to €848.3 billion in 2012. However, we expect the debt to increase much more owing to a shortfall in government’s targeted fiscal consolidation, primarily on
account of lower-than-expected economic recovery. Spain is expected to reach a debt/GDP ratio of over 100%, and that is using its highly optimistic numbers...”

Spain's unemployment is officially at 21.5%, coupled with the worst real estate hangover in the world.

3. Decade of natural gas

We are getting there. The U.S. is awash in cheap natural gas. So much so that we have become an exporter of the energy. Chicago Bridge and Iron (NYSE: CBI) – a company that builds NG infrastructure – is up about 21% since I told you about them in this space last year. Natural gas prices in the U.S. remain below $4 – in defiance of the usual winter pop.

4. Uranium companies surge

This forecast was undone by the Tsunami that hit Japan and caused an atomic crisis at the Fukushima plant. This disaster has taken the glow out of nuclear power. The spot price for uranium has bounced back from its low and has flat-lined at $52 a pound. There are bargain hunters out there, but it looks too soon to me.

5. China clings to dollar, riots ensue

This prediction was spot on. The dollar is still pegged to the RMB and Google trends shows a huge spike “China riots” news references. It is not unthinkable that a hard economic landing could create a “China Spring,” or a Glasnost type political situation.

6. Farmland jumps in price

Again, this call was correct.

Farmland across the world has surged. In the Midwest many are saying we are in a bubble as prices are hitting new records monthly – in some cases going for more than $10,000 an acre.

As my cohort Andrew Mickey says: “This is done. When an Iowa farm sells for $20,000 an acre when the same farm sold for $1,900 an acre in 2001, something is wrong. Trends that can't continue, don't.”

7. Dow has four 10% correction in 2011 — ends the year up 9.7%

Looks like I got close with this one – and could still pull it off.

I was basing my prediction on 2004, which was a year of consolidation after a big market-rally year. The Dow closed last Friday up 6.19% for the year.

And if you look at this chart it looks like we've broken out of a wedge formation to the upside, so another 3% gain by the end of the week isn't out of the question – especially given the massive daily moves we've seen all year.

Dow 2011, good riddance:

8. The Year of the Electric Car

Last year I wrote: “Look for EVs to sell out this year. The Nissan LEAF, the Chevy Volt, and the Fisker Karma will hit the ground rolling, giving early adopters all sorts of smug happiness.”

Early adopters did jump on-board the coal-powered car with élan. The problem was that there weren't any late adopters. Only 6,142 Volts have been sold through November – much less than the 120,000 that President Obama talked about.

9. Dead tech revival

Last year I wrote: “Old companies like Intel (NASDAQ: INTC) (which had its best year ever), Cisco (NASDAQ: CSCO), IBM (NYSE: IBM) and Corning (NYSE: GLW) will break out of their ten-year sideways range based on the revival of business spending.”

Two for four. IBM went from $145 to $195, Intel climbed about 30%, Cisco had an off year, and Corning got crushed.

I am still putting my money in blue chip tech stocks. They are cheap, have lots of cash, pay healthy dividends and are growing nicely.

10. Fidel Castro dies

This was a dumb prediction. Clearly, Castro will never die.

Look for my next brilliant, prescient, shocking, forward-thinking 2012 predictions coming soon to an inbox near you.

Have a great New Years,

~~chris_signoff~~

P.S. And while we are going through past predictions I came across what I wrote in 2000:

“America is beautiful. Inflation is at a historic low of 2.7 percent for 1999. Unemployment is running below 4 percent, unprecedented since the fifties. Interest rates are running around 6 percent – low enough so everyone and his mother can buy that dream house in the country. The Federal government, as well as most state and local governments, is in surplus. Even the endless bipartisan haggling means that this surplus will go to reducing the deficit.”

Times have changed. The only economic indicator on that list that can be called better is that you can still buy your dream house for about the same price and thirty-year mortgages are running below 4%. Cheap debt and the probability of double-digit inflation in the next five years makes buying a house seem like a good idea.

3 Oil Supply Events that Could Spike Brent

The recent price for Nymex crude was $99.49. Brent has fallen to $109.38, and WTI Cushing spot price is trading at $98.72.

The price for European-traded oil, or Brent, has been dropping for the past few months — and the spread between Brent and WTI has narrowed as the Eurozone GDP slows and Libya comes back online.

The price of crude in the United States is climbing as the jobless number falls and consumer confidence picks up. (The jobless number came in at 364,000 last week, which was below the expected 380,000.)

The price of WTI crude is up 25% in the fourth quarter. Last week, crude supplies in the U.S. fell 10.6 million barrels — or 3.2 percent.

According to Bloomberg's experts, WTI is expected to average around $100 a barrel for 2012. This is what Nymex has priced in.

What isn't priced in is more chaos from oil-producing regions...

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Bombs in Iran

Someone is still setting off bombs in Iran.

There was a large explosion at a big refinery in Isfahan last week — and a second at a Revolutionary Guards base in Kerman, the headquarters of the Guards operations in Afghanistan.

This comes on top of several previous blasts at army stations as well as at least four nuclear scientists who were blown up, poisoned, or shot to death.

It is not widely known who is responsible. It could be an Iranian faction, the U.S., Israel, or the Saudis. There is no shortage of powers that don't want Iran to get a nuke.

Now Iran has announced they will hold a naval warfare game near the Straits of Hormuz. This is the number one shipping lane for crude oil.

All the while, the Iranian economy is being squeezed...

The currency, the rial, is in a death spiral after four rounds of UN sanctions. It has dropped from 13,000 to the dollar to 15,000 to the dollar in just a few weeks. It fell 15% in just three days after UAE-Iranian trade was cut due to new sanctions.

In fear of their currency, Iranians have been lining up to buy gold. As a result, the government halted all direct official sales last week.

Iraq: No Longer Our Problem

The U.S. forces recently left Iraq, leaving a power vacuum.

On Thursday more than a dozen explosions were set off, killing 63 people and wounding more than 180 others in the worst violence in months.

According to Voice of America:

The apparent coordinated blasts Thursday struck across the city, mainly in Shi'ite areas, days after the final withdrawal of U.S. troops from Iraq.

The attacks come amid a political crisis, as the Shi'ite-led government pursues the arrest of Vice President Tariq al-Hashemi on charges that he plotted to kill other government officials.

But Hashemi, a Sunni, said Wednesday the allegations are politically motivated by the prime minister, who Hashemi says wanted to consolidate power when U.S. troops left this month.

Iraq exported 64.8 million barrels of oil in October and brought in $70 billion in revenue. The country has hopes of exporting 4.5 million barrels a day by 2014. A sharp increase in violence or even civil war will take this supply off the market.

Kazakhstan Riots

Sixteen people were left dead and hundreds injured in Kazakhstan over the weekend.

Kazakhstan is the second-biggest oil producer in the former Soviet Union behind Russia. It pumped out 1.76 million barrels a day last year.

News is now leaking of a riot in Western Kazakhstan during the 20-year anniversary of independence celebrations. This is the worst violence in this autocratic country in two decades.

Many believe these riots were started by oil workers who have been striking since May.

Oil production has fallen 8.5 percent this year due to the strikes.

If this turns into a Central Asian Spring, Brent oil could spike 20 percent. That's what happened after the Libya revolution, when its 1.66 million barrels a day were pulled off the market...

Brent crude jumped more than 20 percent in the first two months of the rebellion against Libyan leader Muammar Qaddafi, rising to as high as $127.02 a barrel on April 11th.

That would put Brent crude at $130.80.

Ideas on how to profit in the New Year below.

Have a great holiday,

~~chris_signoff~~

Saudi Oil Minister's Calm Breaks: OPEC's $7 Trillion Mistake
You don't see Saudi oil ministers lose their calm often, but this time they have good reason... And all it took was losing $7 trillion worth of energy revenue. Efforts to develop this massive resource of natural gas are only now underway, and the smart investors are getting a piece of this play early.

127% in the Next Few Months: It Starts with One Little Rock...
The company that owns the small, plain-looking rock I'm going to show you is in the process of building a major multi-million-ounce gold resource. It currently trades in the $3 to $4 range... but in the next few months, results from exploration drilling could take this stock to the $8 to $10 range — or higher.

Canadian Zinc Permit Looming: Great Timing Beats the Market Every Time
I like the odds and the potential payoff. And I'd be buying shares of Canadian Zinc (TSX: CZN)(OTC: CZICF) ahead of that looming permit decision.

Q1 2012: The Safest Places to Invest: 2012 Stock Market Outlook
Analyst Ian Cooper takes a look at the investing year ahead, and offers to simple ways to turn a profit in 2012.

North Korea Profit Opportunities: North Korea Open for Business?
Editor Jeff Siegel discusses North Korea's massive bounty of mineral resources... and the potential for investors to profit from it.

India Energy Investing: The Next Energy Bull Market
Editor Jeff Siegel discusses India's aggressive new energy policies.

Yes, American Oil Is Coming Back: But Canada is Still America's Largest Supplier
With all the recent brouhaha about America's oil and gas resurgence, I want to remind you that Canada is still the largest foreign supplier of energy to the United States... and that trend will continue as part of the prolific Bakken formation resides in Canada.

Will Euro Slosh Drown Gold?: Nailing the Lid on the Coffin
Adam Lass explains how to ride out the tempest in Europe's bathtub.

2012 Economic Forecast: 5 Charts Reveal the REAL State of the U.S. Economy
2012 is shaping up to be a year with many more economic surprises. Be prepared: They may be better than most expect...

The Shale Gas "Echo Boom" Gains Momentum: More Gains Ahead from Surging Follow-On Growth
Guest editor Andrew Mickey explains why shale gas is going to get much bigger, thanks to one overlooked investment poised to benefit from it all.

Housing Bust in China: Stick a Fork in Her, China's Done
For the past fifteen years or so, we've been reading about how China was going to take over the world... In many ways, this has come to pass.

Housing Bust in China

For the past fifteen years or so, we've been reading about how China was destined to take over the world.

China had the highest GDP growth of around 10% a year for more than three decades...

It had the most people, including 92 million citizens with the surname Wang.

The country produced the most scientists.

It had the biggest market; every Chinese person was going to buy a PC, car, or watch.

China uses the most fuel and has the most construction cranes.

China imports and exports more products than any other country, and had a GDP of $7.5 trillion in 2010, second to the U.S.

But an ill wind has blown in of late...

As you can see by the chart of the Shanghai Index, the market doesn't expect China's dominant growth trend of the last 30 years to continue.

Almost any bet on China over the last five years would have cost you money.

No Exports

After the 2008 financial crisis, the Chinese ramped up stimulus spending ($586 billion) and cut rates. This nearly doubled the market, but didn't come close to hitting new highs...

The Shanghai Index has since rolled over and sold off.

No one expects the United States and Europe will save them. There is too much debt to support Chinese exports now. Even the New York and London carpetbaggers are slinking out of town.

According to Bloomberg, foreign investment in China fell 10 percent in November. This is because China's biggest export market is the European Union, and the EU is in rough shape.

Keeping Up with the Wangs

To combat these problems, the Chinese government has tried to develop a consumer culture in its own country.

It wants the average Liu and Chen to buy shiny things like Americans do.

There is room for growth because in 2010, business investment was 50% of the GDP. In most developed countries, consumer spending represents two-thirds of the economy.

The problem is that China makes stuff... but it doesn't buy stuff. This is changing — but too slowly.

As the Economic Times wrote recently, “Despite the double-digit growth in retail sales, partly because it is coming from a low base, spending remains too low to make up for the demand lost from the no longer free-spending American baby boomers.”

~~wd_junior_gold~~

Real Estate Crash

Falling demand could help explain why the Chinese real estate bubble found a pin.

New home sales in Shanghai totaled 98,000 square meters at an average price of ¥24,121 per square meter in the week through December 11, 2011 — down 34.3% and up 24% respectively from the previous week.

Eleven of China's 30 largest cities saw residential property sales decline this month. This comes after years of booming.

Take a look at this chart from Business Insider:

In addition to falling demand, China has also had trouble with inflation. This has caused the Central Bank to reduce the money supply.

This has let some of the air out of the housing bubble (M2 money supply fell 12.7% in November).

The Central Bank has recently reversed course, and is now flipping back to easing.

You Can't Bank on It

Central banks have a long history of creating bubbles and mismanaging the recessions that follow. I don't expect that the brain trust in the Middle Kingdom will do any better than the ones in Japan or the United States.

The Shanghai Index is in a clear downtrend. It has fallen 33 percent for the year, and is off 60 percent from the peak. It looks like the NASDAQ circa 2004.

China was the hot investment for decades. Every investor has put money there at some point. And in markets where every buyer must have a seller, that defines the top.

I think it was Warren Buffett who said when the tide goes out, you discover who is wearing a bathing suit.

I expect there will be a lot of naked swimmers in the East China Sea...

Dead Money

The list of names of investments that were "the greatest ever" is long and notable.

This one little-known company made Bill Gates the richest guy in the world for awhile.

About 10 years ago, it was in every portfolio — much like China was in 2007.

Since then, it's been between 25 and 30 dollars.

Thirteen-year gold guru Greg McCoach is offering a free online seminar on how to invest in gold in the coming years.

As much as $160 billion worth of gold lies in an isolated region in Canada. Greg is calling it the “biggest gold discovery in decades.”

A few places remain for you to take part in this video investment conference...

All the Best,
~~chris_signoff~~

African Oil Boom Town

Stocks have been slogging through muck for a number of years.

The market has been discounting earnings and rewarding surprise statements from the Fed.

It is the outward sign of a corrupt, inbred kleptocracy. And you'd be right to wonder why you should bother with the markets at all.

Perhaps you'd be better off dumping all the 401k and 509 plans and going long beachfront vacations, jumbo TVs, and new Porsche 911s.

Heck, at least you'd have a good story at the end of the day.

But just when you think you're ready to cash in, the market surges...

Over the past week, we've seen an 800-point move on the Dow 30 based on a coordinated bank action to supply liquidity to the Europeans banks.

There are very few people who know what this means in systematic terms, but to the market it meant Europe wasn't going to go down in a blazing ball of credit default contagion. And this was good news for the short term.

Cash on the sidelines was put back to work, and just about every stock went up. But much like the bottom in 2009, this didn't solve the underlying debt problem.

It's just another case of printing money. And sooner or later, excess money will lead to inflation. It always has in the past.

In the United States, inflation means debt goes down and the price of housing will (eventually) go up.

But in places like Germany — where many investors put their money in insurance programs and the majority of people rent — inflation means savings go down and rent goes up.

Despite the Prevailing View

Wealth Daily provides savvy investors like you — investors who aren't afraid to take control of their financial future — with actionable wealth-building advice.

You don't fall for Wall Street hype or depend on government programs to provide financial freedom...

That's why I can go against the dominant paradigm and say that now is the time to both get in debt and buy assets that will go up with inflation.

As Andrew Mickey wrote on Friday, the fear of inflation is such that investors are willing to take a negative yield on TIPS to insure most of their money will come back to them.

Steve Christ is also bucking the Wall Street mantra. He wrote “8 Reasons to Be Bullish Next Year” on Tuesday, explaining that high dividend-paying blue chips are where you need to make money in 2012.

It should be noted that Steve has been bearish for years.

Brian Hicks on Monday gave us his “Five Rules for Successful Investing.” He pointed out that cash and gold are extremely important... and that when a solid trend arrives, you will have ammunition to buy.

Many believe assets like silver and gold are the best bet in hard times. I like oil, which is now over $100 a barrel for WTC. And the trend I like best is one of the last places where oil is plentiful enough to be exported.

~~silver_signup~~

Africa Rising

People laugh about Africa — just as they used to laugh about Japan, China, India, Vietnam, Brazil, Indonesia, and South Korea...

They think that because Africa is a Third World hellhole, it will always be so.

But you might want to consider the Dark Continent if you are looking for a clear trend with a lot of potential.

Last week's Economist cover story sums it up:

Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan.

Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.

In Kenya, shopping mall company Actis has sold out of its $20m Junction mall, which houses everything from whiskey bars to sushi restaurants in one spot in Nairobi. The company made three times its initial investment.

Actis is planning its third Kenyan real estate project: another mall on the Nairobi road out to Thika.

General growth aside, most of the boom is due to commodities.

A $15 Million Bet

On Friday, Pancontinental Oil & Gas (ASX: PCL) announced it will sell shares to fund seismic programs at its African operations — to the tune of A$15 million. The fields in question are Pancontinental’s Kenyan tenements L10A, L10B and L6, as well as its EL37 tenement in Namibia.

The L8 area offshore Kenya holds the giant Mbawa Prospect, which has the potential for more than 4.9 billion barrels of oil. Pancontinental plans to drill L8 in mid-2012.

Double Gas Find

Earlier in the week, Anadarko's Mozambique reported that its gas reserves doubled.

The blue chip oil company Anadarko Petroleum (APC) announced it found twice as much gas in East Africa as earlier forecast. This pushed recoverable reserves from 15 trillion cubic feet to 30 trillion cubic feet.

"This could be one of the most important natural gas fields discovered in the last 10 years," said Anadarko Chairman Jim Hackett.

It is important to note that natural gas isn't fungible the way crude is.* NG is priced around $4 mmbtu in the United States, but it is more than $8 in East Africa and $20 in Japan.

*The global NG network is being built to take advantage of this arbitrage, but that's another article.

Stocks Jump

When Anadarko announced its new reserves, the stock went up 14% in three trading days.

A small partner, micro-cap Cove Energy (COV.L), went up 26% on the news. (Full disclosure: I've recommended Cove as a buy to my Crisis and Opportunity readers.)

Last month, Italian major Eni (ENI) made the largest gas discovery in its history very close to the Anadarko fields. These newfound gas reserves prove yet again that there are massive amounts of hydrocarbons in East Africa.

This is one of the most undeveloped areas of the world's seven remaining under-explored regions.

I've been to Kenya and seen the plans for drilling and refineries firsthand. Things are heating up...

~~vix_3~~

Sincerely,

Christian DeHaemer
Editor, Wealth Daily

WTC Ramps, LNG to Follow?

Common wisdom would tell you that we are still in the market aftermath of the great Greenspan bubbles of the past fifteen years.

It was a time when the price of housing went off the rails in the United States due to extreme liquidity, exemplified with falling interest rates and free loans from despicable mortgage brokers...

How, then, do you explain this chart?

It would seem that the rest of the world wanted to live in overpriced McMansion cul-de-sac developments just like the boys from Las Vegas.

There are several things I find interesting about this chart.

The first is that by comparison, the U.S. isn't that bad. And from what I'm hearing about Australia, America is a lot closer to the bottom than they are Down Under.

It was reported today that mortgage delinquencies are at their lowest levels since the fourth quarter of 2008 at 7.99%. They were at ten percent; four to five percent is about normal.

Secondly, I'd like to point out the flatline that is Japan.

If you know your history, you'll remember that in 1990 — before the Japanese real estate bubble popped — one square block of Tokyo was worth more than all of California.

Japan circa 1990 is the poster child of real estate debacles. On this chart, it looks rather modest. Though in Japan, prices have been falling for 20 years.

~~vix-box~~

Oil Hits $102 — Don't Cross the Streams!

The price of West Texas Crude hit $102 last week.

The price of WTC jumped because a company called Enbridge is going to purchase ConocoPhillips' stake in the Seaway Pipeline, which runs from the Gulf of Mexico to Cushing, Oklahoma.

Cushing is where all the big refineries are. It is being flooded with crude from North Dakota.

But the interesting news is that Enbridge will reverse the flow of oil so that it goes away from the glut in Cushing and flows toward the Gulf...

This plan will move 150,000 barrels a day in Q2 2012 and 400,000 bbl/day by 2013.

This is a direct repose to Obama's job-killing delay on the Keystone XL Pipeline.

The upshot of all of this is that Cushing oil can now get a global price.

Brent crude priced in London has been at $120 a barrel. The spread between WTC and Brent was higher than $25 just last month. Now it has returned to historical norms below $10 — where it will likely remain — unless...

Bunker Buster

The Air Force has taken delivery of a new 30,000-pound bomb capable of penetrating targets buried 200 feet underground.

The Air Force is saying it is for use against hardened targets such as North Korea, and can be dropped by a stealth bomber. But it is obvious that this new conventional bomb — which is six times bigger than its last bunker buster — is meant to intimidate the Iranians.

Flush With Gas

In case you haven't noticed, the United States is now flush with natural gas.

Gas in the U.S. is running around $4/MMBTu. The same gas in Japan is around $18.

And a new report by A.T. Kearney says that due to Germany closing its nuclear power plants, it expects European gas prices to rise 30 to 60 percent a year until 2015. This sets up an arbitrage possibility...

Bloomberg is reporting LNG tanker day rates are now over $112,000, and utilization rates are above 95%. The price has tripled from $42,000 a year ago.

The LNG fleet contains 355 ships with 65 on order.

UNG, the natural gas ETF, has been falling for four years now — from $120 to under $8:

Someday, it might bounce...

But I'm not buying until I see a double bottom or an uptrend or some sign that it's not a falling knife.

Until then, you are better off buying the companies that make LNG terminals (like CBI) or the tanker companies, like Golar LNG, which has tripled this year to $42.09.

All the best,

Christian DeHaemer
Editor, Wealth Daily