Energy Stocks - Energy and Capital

The Future of Nuclear

With all the talk about shale gas, I want to make sure you don't forget about other energy bull markets that are forming.

We all know oil's back over $100 as the economy starts to rebound.

And natural gas prices are at decade lows because of abundant new supply.

But what's up with uranium?

If you remember, there was a mania-stage bull market back in 2007 when per-pound uranium prices ran from $70 to $135 in six months.

The financial collapse brought prices back below $80 by the end of that year, and they continued to skid for three years, settling in the low $40s by summer 2010.

A rebound in uranium prices started in late 2010, and they rose to $65 by March 2011.

Then the Japanese earthquake happened and prices fell back to $50, where they stayed until very recently.

All this is better represented in a chart, so take a look at uranium prices since December 2006:

click chart to enlarge

In recent sessions, uranium spot prices have started drifting higher.

This is part of a larger trend I've been telling you about since last August (here and here), and I want to discuss it again today to make sure you're in a position to profit.

The Uranium Bull Case

For starters, the U.S. Energy Information Administration recently leaked some figures from its Annual Energy Outlook 2012, which is due out in full later this year.

They show that “total electricity consumption, including both purchases from electric power producers and on-site generation, grows from 3879 terawatt-hours (TWh) in 2010 to 4775 TWh in 2035.”

That's a 23% increase — and that electricity has to come from somewhere.

The EIA forecast shows “electricity generation from nuclear power plants is predicted to rise by 11%, from 807 TWh in 2010 to 894 TWh in 2035, accounting for some 18% of total generation in 2035.”

And that's just here in the United States...

I recapped the global picture for you last month, saying:

There are 433 working reactors already in existence, 62 under construction, 156 planned, and 343 proposed. "Planned" means they'll be operable in 8-10 years; "proposed" means operation within 15 years. (Click here for a full list.)

And even with Germany planning to decommission its nine remaining reactors by 2022, there will still be net 93 new reactors by the end of this decade. China alone — with 26 reactors under construction — will offset the German loss nearly three times over.

That's without mentioning India, which has committed to growing nuclear to 25% of its energy mix up from 2.5%, and its uranium demand will climb tenfold in the process. Already, more than half of India's nukes aren't running at full throttle because they can't secure enough uranium.

Tim Gitzel, CEO of Cameco (NYSE: CCJ), the largest uranium producer in the world, summed the uranium demand situation up best when he recently said:

The game these days, the growth game at least, is over in Asia. And that's a change for everyone. China has not blinked an eye. They have today 14 reactors in operation, 26 under construction, and then another 20 in addition to that, planned by 2020. That's growth we haven't seen, oh boy, since the 1970s.

The uranium demand picture is clear: It's growing.

~~eac_nuclear1~~

Supply Isn't Growing

I've gone on record saying there could be a uranium shortage by 2014.

In reality, there already is a shortfall — and that's part of the reason uranium prices are starting to climb.

You see, in 2010 the world needed 65,000 tonnes of uranium. Only 53,663 tonnes were mined.

The difference was made up through an agreement with Russia that turns demilitarized uranium into nuclear fuel. But that program ends next year, and over 10,000 tonnes of uranium will disappear with it.

It doesn't look like miners will be able to ramp up supply fast enough to make up the difference, so prices will necessarily rise.

All these reasons are why I've been calling for a uranium bull for months.

We're starting to see it now.

A New Way to Play

The standard ways to play, as I've told you many times before, are through uranium miners or uranium ETFs.

But there's a more interesting way to reap profits from rising uranium prices you may not be aware of.

You see, many long-standing uranium mines are starting to see declining output levels. So no matter how high the price climbs, they can only sell what they have.

But new research has shown a way to get more energy from existing uranium supplies...

By bonding certain metal oxides to the uranium fuel, utilities can generate more electricity with the same amount of uranium. And as the price of uranium continues to climb, the technology will only become more valuable.

Instead of having to find, mine, and buy expensive uranium, the nuclear industry can turn to this technology to get more from what they have.

~~nuclear_signup~~

~~nicks_signoff~~

Solar Competes with Natural Gas

From 2005 to 2008, I made an absolute fortune in solar.

And it was insanely easy, too.

Hell, back then you could pretty much just pick any random company with the word “solar” attached to it, and watch your money double, triple, even quadruple.

Yes, those were three great years. And I live very comfortably today because of those three years.

But the solar market isn't what it used to be.

Last year, solar stocks got slammed. And while most expect to see a recovery in the space this year, the sector remains as volatile as ever.

Now just a few weeks ago, solar stocks were soaring after some new data came out that indicated a rise in solar installations in Germany in Q4.

The result was a quick run on solar stocks, and certainly traders made out...

But then there were those poor souls who didn't read the fine print, ponied up a few thousand, and are now wondering what happened to the solar run all those analysts on television were talking about.

Yes, a few weeks ago there was some positive data, which apparently cast a shadow over the fact that cell and panel prices were still continuing to fall.

And it didn't take long for the sector to shed its recent gains, then fall even further after Germany's Energy Minister announced that the country's Feed-In Tariff should be adjusted every month instead of twice a year.

In a matter of minutes, we watched solar stocks fall off 10%, 15%, even 20%.

While I continue to remain bullish on the long-term growth picture for solar, unless you can stomach the risk and volatility, the solar space is no space to be right now.

Truth is until we see next quarter's forecasts, I'd be very hesitant about playing solar.

This Will Blow Your Mind!

As the last remaining solar manufacturers struggle with depressing margins and intense competition, one little solar tech company continues to pay off for investors.

And the reasons are simple: This solar stock has zero competition, it has no exposure to the euro, and it isn't even really affected by the potential loss of subsidies.

Truth is, this company's technology allows it to reach profitability without a single penny in subsidies.

This technology is truly ground-breaking. It will enable the cost of solar to come down so much, it could actually compete with all the dirt-cheap natural gas we have at our finger tips. I'm completely serious.

And here's the most fascinating part... this particular solar technology doesn't actually need the sun's rays to work.

Natural Gas is Still King

There's no doubt that there's still plenty of money to be made in solar.

You just have to know where to look, and of course, not get caught up in all the hype generated by those know-nothing media buffoons who couldn't even tell you the difference between solar thermal and solar PV, much less know how to play the solar market...

Hell, these are the same guys who were telling us just a few years ago that natural gas would never fall below $5.00.

Last Friday, it fell below $2.30.

And now they're scrambling to dig up any bearish news they can find. But nothing they say can stop the natural gas boom.

~~eac_alt_energy~~

I've said it a thousand times before, and I'll say it again: Natural gas is king.

And right now, it doesn't take much to make money from this sector. In fact, it reminds me a lot of the solar sector from 2005 to 2008. It's just so easy to make a killing.

Just ask my colleague Keith Kohl, who was touring today's biggest natural gas properties back when the word “hydrofracking” was a term only used by insiders and roughnecks.

This guy's made me — and his readers — some serious coin in the natural gas space...

Especially with his latest find at the Three Forks location in North Dakota. Check it out:

I know it may not look like much. And I know it may not sound as sexy as solar...

~~nat_gas2~~

~~jeffs_signoff~~

Gold Buffalo Tribute Proof is a SCAM

Avoid disappointment and future regret.

That's the last line of a gold coin commercial I saw on television the other night.

I knew right then I wanted to tell you about it, but I wanted to see the commercial once more to get all the details.

And while it may be obvious to some — or even most — who've seen it, I thought it was worth 600 words of our time to air out this stinky mess.

Avoid This Gold Coin Scam

The two-minute ad starts off with a neighborly male voice telling you:

The original $50 Buffalo gold piece is America's purest gold coin ever. It was the first one ever struck using .9999 — that's four nines! — pure 24k gold. Its design was based on the famous Buffalo nickel of 1913 to 1938.

It's true, the original was a beauty. Take a look:

The only catch is, this is not the coin the commercial is selling.

The neighborly voice continues:

Now you can reserve your own tribute copy of the $50 gold Buffalo, clad in 14 mg of pure gold. National Collector's Mint's private nonmonetary minting recreates James Earl Frasier's American Buffalo.

Did you catch the multiple red flags there?

Tribute copy
14 mg of pure gold
Private nonmonetary minting

And if that isn't enough to scare you away, the closing pitch should be:

The final issue price was to be set at $50 per proof, but during our special release, this 24k pure gold clad masterpiece can be yours for only $9.95.

I think the only disappointment and future regret you'd have is if you actually bought these coins.

~~eac_rare_earth2~~

The Rub

The National Collector's Mint is taking advantage of record-high gold prices and naïve customers to turn a profit for themselves.

What they are selling is a “tribute copy.” It's a cheap replica, plain and simple.

It's clad (read: thinly coated) with 14 mg of pure gold.

There's no difference between this coin and a commemorative NASCAR plate. Both are junk.

How much is 14 mg of gold?

Well, there are 31.1 grams in a troy ounce, so we must divide 14 milligrams by 31.1 grams. A few keypunches tell us the coin is clad in 0.00045 troy ounces of gold (0.014 / 31.1 = 0.00045016).

How much is that worth?

Simple: Multiply that number by gold's current price of $1,660 per ounce and you get $0.747.

That $50 Buffalo gold piece is worth less than three quarters.

The More You Know

I certainly hope you haven't been taken advantage of by this ruse.

I know plenty of people have already fallen victim, because I came across quite a few complaints while trying to find the commercial again online.

The best thing to do if you're interested in investing or protecting your wealth with precious metals is to get educated.

Talk to your friends and family. Read up. Drop in on some reputable dealers and ask questions.

There's a lot of misinformation out there and, as we've just seen, some outright deception. And I don't want any of you to do anything foolish with your money.

Gold and silver have a place in every portfolio, but you have to make sure you do it correctly.

Because of record prices, record interest, and sadly, record scams, we've put together a complete gold and silver buyers guide.

It will be held in seminar form on January 31st at 6 p.m. It's free to anyone who signs up.

So take a moment to do that now — and make it a point to invite anyone else you think would be interested.

And if you must see the commercial, you can find it here (for entertainment purposes only).

~~nicks_signoff~~

Energy, Agriculture, Metals All Drifting Higher

I told you a few weeks ago you'd be hearing more about my recent trip to a graphite mine in the Ontario wilderness...

Many things I saw and learned on that trip are worthy of passing along.

Today I'd like to focus on the conversation I had with the CEO of the company I went to visit during our three-hour ride to the mine from Ottawa.

The Commodity Supercycle

“We've all seen what the commodity supercycle has done to copper, gold, and many other resources,” he said as we pulled out of the hotel parking lot.

“Copper traded between $0.50 and $1.00 per pound for decades. And then, because of the commodity supercycle, it went over $4.00. Same with gold... It used to sell for between $250 and $500 per ounce. Now it's $1,600 per ounce.”

That isn't inflation.

That's the commodity supercycle.

Many things have caused this change, the big one being China, with India soon to follow.

And in the mining industry, the deposits we've lived off for years have been the big low-cost, easy-to-find mines — just like with oil.

But those mines are all getting deeper and older, so costs are increasing.

Engineering and environmental standards have gone up and there's been capital and cost inflation.

So gold can't go back to $400 per ounce... and copper can't go back to $1.00 per pound.

Next in Line

Graphite has been one of the last minerals to respond to this commodity supercycle. And the reason for that is there was excess production capacity from China.

From 1990 until 2005, graphite prices were in the tank.

Gradually, the growth in automobile and steel demand began to eat up that spare capacity, and prices began to rise. They grew steadily through 2008. Then something else happened...

China got tired of selling the world cheap graphite.

They control 70% of the market, and just as they did with rare earths, they started imposing export duties and value-added taxes to manipulate the market.

~~eac_rare_earth2~~

Currently, China is adding a 20% export duty and a 17% value-added tax to graphite produced there.

And, just like with rare earths, graphite prices have started to soar:

They're up more than 120% in the past few years.

But valuations of companies and deposits were slow to catch up.

When the company I went to see got going in 2008, it only had a market cap of $2 million — and it's potentially the largest graphite mine in the world.

It's since grown to about $40 million...

But with hundreds of millions — if not billions — of dollars worth of graphite in the ground, it certainly won't stop there.

I can't wait to tell you more about it.

Rising Tide

I'm sure you've taken notice of the “commodity supercycle,” even if you didn't know what it was called.

Copper, nickel, gold, wheat, corn and, of course, oil will never again see the prices of the nineties and early oughts.

I break these commodities down into three categories: energy, agriculture, metals. Some may split metals into two categories: precious and industrial.

We've been showing you how to profit from the energy side via oil and natural gas producers. Last week, I showed you how to buy energy and agricultural commodities directly.

To help get you up to speed and profit from the metals side, I've been researching and taking as many hands-on trips as possible.

I firmly believe physical materials will be one of the best ways to grow your wealth over the next few years.

~~nat_gas2~~

~~nicks_signoff~~

Safe, Secure Income in an Unsure Market

Investors love certainty.

If I offered you two choices — taking a hundred dollar bill in exactly thirty days, or the possibility of that same hundred dollars tomorrow — which would you pick?

Though many investors tend to have a speculative streak in them, hoping to hit the next ten-bagger, it's highly doubtful even they would choose the latter option, given the current market climate.

One of the simplest and most efficient ways to earn a safe annual return in an unsure market is through solid, high-paying companies offering an attractive annual yield.

Today, I'll give you four safe energy plays that offer us a such a safe haven.

Fact is, there's no safer place than energy.

After all, demand growth is practically guaranteed.

And when the IEA's International Energy Outlook 2011 was released, we got an idea of exactly how much...

Global energy consumption between now and 2035 will increase by about 53%.

The overall mix isn't terribly difficult to see — especially when oil, gas, and coal make up roughly more than 81% of our current energy mix.

And that mix isn't going to change much in the decades to come. Twenty-five years from now, that same IEA report still expects fossil fuels to make up three-quarters of our energy consumption.

Sure, it's a slight decrease (natural gas is the only fossil fuel projected to increase its share in the global mix), but it's certainly not the drastic change that a few expect — or would hope for.

Let me show you why things here in the United States aren't all that different from the global outlook:

Already this week, Nick Hodge and myself mentioned two high-yielding energy stocks, PetroBakken Energy (TSX: PBN) and Enerplus Corp. (NYSE: ERF).

Both are returning safe annual dividends over 7% to shareholders.

And I'll give you four more right now:

Company	Symbol	Market Value	Annual Yield
Enbridge Energy Partners	NYSE: EEP	$9.3 billion	6.54%
Pioneer South West Energy Partners	NYSE: PSE	$962.5 million	7.50%
Pembina Pipeline Corp.	TSX: PPL	$4.5 billion	5.60%
Kinder Morgan Energy Partners	NYSE: KMP	$27.6 billion	5.60%

Even though nothing in this market comes with a guarantee, this is the closest we'll find to a safety net.

The risk, as you may know, would be sudden (and in our opinion, inexplicable) declines in oil and gas prices.

Throughout 2011, the average spot price of Brent crude was more than $100 a barrel, with the light sweet crude from Texas not far behind:

Of course, these high-yielding income stocks are only one way for you to take this coming energy bull by the horns.

Here are a few more ideas to help you profit...

What China is Buying Now: AK47s, Rhino Horns, and Black Gold
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. It might be the biggest gas field found in the last decade... and as good a reason as any to buy the wildcatters.

Youngstown Fracturing Earthquake: Did Fracturing Really Cause 11 Earthquakes in Ohio?
Editor Jeff Siegel discusses how recent earthquakes in Youngstown, Ohio, will shape the future of fracturing.

Investors Can Find It All in the Bakken: A Little Oil Rivalry Goes a Long Way
There's a piece of Bakken profits for every type of investor.

Natural Gas, the New King of Energy: "It's Essentially Free Energy"
"Everything we do now is based on natural gas. Everything. It's a major shift that'll last for decades..."

Ron Paul's Gold: What Ron Paul's Buying
In his book, End the Fed, Ron Paul says: "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." Plus, what Dr. Paul has in his portfolio...

Invest in What You Know: Stay Away from the New Dot-Com Stuff
If you don't understand it, don't invest in it. Nick Hodge explains how to stick to the stuff you know best.

North American Oil Production On the Rise: OPEC Isn't Cutting It
As demand for oil increases, once-dominant oil-producing nations are producing less while North America picks up the slack.

Protect Yourself Against Higher Gasoline Prices: Chart Suggests Oil Going to $125 a Barrel
Some energy analysts are predicting a 50% jump in the price of oil if the situation in Iran turns into an armed conflict or an oil blockade... As a technical analyst, I'm starting to think that either scenario is baked in the cake, according to one oil chart.

Our Natural Gas Investments for 2012: Alaska's Last Chance at Redemption
Why Alaska is about to turn its back on the United States.

Gold Going to $2,200?: Morgan Stanley Predicts Gold to Hit $2,200 in 2012... Maybe as High as $2,464
I’ve been long gold for several years. I’m still long this year.

~~keiths_signoff~~

Invest in What You Know

To me, free music is just that: free.

I'm not sure how you make money giving stuff away.

So when Pandora (NYSE: P) IPOed, I advised anyone who would listen to stay away.

The market is still valuing the company at $1.93 billion, but it's down some 35% from its ballyhooed IPO price:

The same goes for a service that lets people network online for no charge...

I told people to stay away from LinkedIn (NASDAQ: LNKD) when it spread its wings as well.

It's fallen from the nest more than 30% since August.

And while some new dot-com plays like Groupon (NASDAQ: GRPN) and Zynga (NASDAQ: ZNGA) aren't totally free, I'm not sure how lucrative selling yoga classes at a discount or simulated Facebook farm games are...

Neither is the market. Each is down more than 20% since November.

While I employ and enjoy the services of all these companies (except Zynga), I don't pay a dime for them.

So why would you as an investor?

~~eac_cyber_box~~

Shot of the Hard Stuff

The age-old wisdom is to invest in what you know. And, like I said, I don't know how to make money offering products for free.

What I do know is that everyone eats. And I know most everyone uses oil in one form or another.

I understand the basic fundamentals of those markets, namely supply and demand.

On Wednesday, we talked a bit about oil supply and demand, why prices would head higher, and which companies you could invest in for profit.

But you don't always have to invest in a company...

The simplest way to invest in the things you know is to invest in the things themselves.

Take oil, for example. I think it's headed higher, so I can either buy oil contracts or a fund that tracks the price, like ProShares Ultra DJ-AIG Crude (NYSE: UCO).

Look how that's performed next to the Dow, Exxon (NYSE: XOM), and the free music company:

You can buy a short ETF, like the ProShares Short Oil & Gas (NYSE: DDG), if you think prices are headed lower.

Same goes for nearly any commodity out there.

I'm also big on agriculture.

But I know during harvest time, prices are suppressed because supply is high.

That said, you should start to short around September. If you did that with the DB Agriculture Short ETN (NYSE: ADZ), here's what your return would look like:

The More They Stay the Same

Many of the catalysts for these plays you know well.

And they happen year in and year out without fail: the summer driving season; the winter heating season; the fall harvest.

Some aren't seasonal, but are predictable nonetheless: gold up when the dollar's down; uranium's down on any negative nuclear news.

You get the idea.

No matter how crazy the market gets, how partisan the politics get, how hostile the Middle East gets, or how high unemployment goes...

You can always trade the things you know.

Physical assets should be a part of everyone's portfolio, and we'll be expanding on that topic in the next few weeks.

~~nicks_signoff~~

See What the Billionaires Buy

We knew our phones would start ringing off the hook.

And they are.

Last week we sent a special alert to members of our paid advisories like Keith Kohl's Energy Investor and my Alternative Energy Speculator.

It revealed a new method of investing that allows anyone with the right information to access the personal trading accounts of stock market legends.

Once we learned of an ordinary group of people already using this legal loophole to watch the private investments of guys like Phil Falcone and Carl Ichan, we knew we had to tell our loyal readers how they could do it for themselves.

But we also knew there'd be many people in New York and D.C. who preferred we keep the information to ourselves...

And we were right.

A Massive Solar Glut Destroyed Solar Stocks in 2011

Well, except for one...

It's a tiny little engineering firm in D.C. that developed a new technology that's
300% more powerful than regular solar panels... can be sprayed onto any surface... and it doesn't even need direct sunlight to work.

— Here's how it works —

Over the past few days, we've received a number of, shall we say, interesting phone calls from concerned investors inside (and even outside) the United States.

“I have a lot of concerned people calling and emailing,” one of our editors said to me in an email.

Some of the calls we expected — like the “Why in the hell are you telling people this?” calls.

Other calls came from those who heard about it from the few thousand people we sent it to. They wanted to know how they could get the information they needed to access the trading accounts of market mavens for themselves.

I'll tell you the same thing our Customer Service team has been telling the Energy & Capital readers who called in all week:

You will have the chance to view the same special alert on Tuesday, January 10th, at 9 a.m. EST.

It will contain the information you need to get a look at some of the most sought-after portfolios on the planet.

Until then, you can catch up on the rest of this week's coverage below.

~~nicks_signoff~~

Energy Investments for 2012: Where to Invest in 2012
Editor Jeff Siegel offers his take on the future of energy investing.

Investing in Oil and Gas Infrastructure: Pipeline Stocks with a Kick
There's a safer way for investors to find oil profits...

The Gold/Platinum Ratio: Indian Mother-in-Laws Turn to Platinum
Platinum jewelry is expected to make up to 25%-30% of total Indian jewelry sales in 2012. This comes in a market in which total jewelry sales in India are growing about 12% a year.

Oil Price Forecast for 2012: Why I Think Byron Wien is Wrong on Oil
Yesterday legendary market strategist and forecaster Byron Wien released his Top 10 Predictions for the coming year. He went eight for ten last year... a solid reason you should listen to what this guy has to say for 2012.

The Two-Faced God of Money: Old Gods, New Funds, and Doves at the Fed
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 on the full faith and credit of Latium, but rather was gold.

U.S. New Top Natural Gas Destination: All Hail the Shale King
The advent of fracturing and the discovery of shale formations mean proven reserves of natural gas could be several times more than once thought.

6 Stocks that Outperformed the Dow in 2011: This Baby Boomer Stock Even Beat McDonald's
This stock's performance underscores a major trend that will be here for the next two decades...

Putin Resigns, Gold Goes Down, and More: Putin Out, Poland Up, Brent Jumps
There is support around $1,497 an ounce. If the price falls through that level, we are getting to $1,000 real fast.

Let the Chinese Invasion Continue: Fueling an Energy War
Why China is scrambling to secure its future energy supplies now... while they still can.

International Oil Investments: Put Global Events to Use for You
No one is going to capitalize on the opportunities for you. You have to do it yourself.

Investing in Oil and Gas Infrastructure

If the thought of holding on to a stock for more than a few months is daunting, then this is the perfect opportunity for you to take control...

Many of my friends fall into this category. Most of them believe beyond all doubt that holding an energy stock in this market is suicide.

Of course, that line of thinking has never made much sense to me.

And I always have to point out that these same friends are the ones being killed in this recession — not long-term energy investors.

Their silence is golden.

The reality is energy offers us a very profitable run over the long term...

Some of the safest investments available are found in building our future infrastructure.

The Long-Term Value in Infrastructure

Last year, nearly $550 billion was spent globally on oil and gas exploration and production.

According to Barclays Capital, that budget is going up another 10% in 2012.

We can't blame companies for shelling out more cash — especially considering a barrel of crude is still treading above $100/barrel:

click to enlarge image

We'd be crazy not to take a closer look at pipeline stocks.

If we took all of the oil and gas pipelines crisscrossing the United States, we'd have enough pipe to circle the globe more than 100 times. That's about 2.5 million miles.

And as demand recovers, we can expect many more miles to be built:

click to enlarge image

The Long-term Value in Infrastructure

So, just how are these infrastructure investments stacking up?

~~oil-sign-up~~

Several times this year, we've seen how the small-cap drillers have consistently crushed Big Oil's performance.

In fact, most of the major oil companies out there are now playing catch-up to what we've known for years, spending billions of dollars in new acquisitions to make up for that folly.

And those small caps aren't alone in their success:

As you can see from the chart above, some of the biggest pipeline players — like Enbridge (NYSE: ENB) — are also putting the supermajors to shame.

Despite all the market volatility in 2011, Enbridge still delivered more than 36% gains to investors.

It's simply part of the long-term equation: There's a spur of investment happening to develop North America's oil and gas resources.

Even the latest delay in TransCanada's Keystone XL pipeline is just a bump in the road.

A new route is already being planned: the $13 billion project designed to transport 1.5 million barrels per day of Canadian oil to Cushing.

Meanwhile, more pipeline projects are being added to the mix...

Enterprise Products Partners (NYSE: EPD) and Genesis Energy LP (NYSE: GEL) just announced a 149-mile pipeline in the Gulf of Mexico.

It's the reason Kinder Morgan Energy Partners (NYSE: KMP) spent $38 billion to buy El Paso Corp., which controls a 43,000-mile interstate pipeline system.

Some of the MLPs (like Enbridge Energy Partners, L.P. (NYSE: EEP), which owns the Canadian portion of one of the largest crude oil pipeline systems in the world) currently offer a yield of 6.4%.

The bottom line here is the resurgence in our domestic oil and gas development will require a remarkable amount of new infrastructure to transport production to market.

And that's not just speculation...

Because if these investments aren't made now, we'll soon be back to begging the Saudi Kingdom for more oil. (Let's hope it won't come to that.)

What's more, we're not the only country fighting to meet future energy needs.

This energy race is only now starting to heat up. And later this week, I'll tell you exactly what — and who — we're up against.

~~keiths_signoff~~

2011: Taken for a Ride

A lot happened this year.

The world ended – twice. Your Zodiac sign may have changed. Don Gorske of Super Size Me fame ate his 25,000^th Big Mac.

Casey Anthony is not guilty?

The princess isn't as cute as her sister.

And corporations are people, my friend.

But the year was much more complex and tumultuous than those water cooler events.

Given the multitude of high-impact occurrences, you should be grateful if you and your family made it through unscathed. It was a mere bonus to grow your portfolio.

End of an Era

The Dow opened the year at 11,577.

Since then, it's been as high as 12,928 and as low as 10,362.

It's up for the year, but volatility killed most investors' profits.

The S&P 500 is down 1.4%. USA Today reports 92% of diversified U.S. mutual funds will turn in a loss, “and some of them are doozies.”

With that kind of muted performance and so much else going on around the world, most people will leave this year with lessons, not profits.

And since none of the major events of the year were forecasted or anticipated, I find it better to learn from them rather than shoot in the dark at next year's predictions.

I think Pulitzer-winning hisorian David M. Kennedy has said it best:

What seems most compelling about so many of the events of 2011 is their uncanny similarity to the narrative that began to unspool in 1932, when the full shock of the Great Depression’s impact began to be fully absorbed. The implosion of over-stressed established regimes, the demonstrated obsolescence of vested ways of thinking, the emergence of new leaders, new ideas, new institutions, new ways of life -- the ‘new normal’ in realm after realm around the world.

He suggests “the age of American global hegemony is almost certainly winding down,” and it:

Might mark the definitive end of the the post-World War II and post-Cold War eras, and prove the portal to a future in which there are many more powerful and ambitious players on the world stage, more bitter political contestation at home, and more uncertainty everywhere than at any time since the 1930s.

By that measure, 2012 is going to be very interesting.

End of the World, Again

Not only was the world supposed to end twice this year, in May and October per that nutjob Harold Camping... it's also supposed to end next year.

If the Mayans are correct, December 21^st will be your last day here.

Of course, they aren't and it won't.

But if this year was the year of drastic events, I think next year will be the year of drastic transformation.

Think about what Kennedy said above. Regimes are collapsing, conventional ways of thinking are changing.

Mubarek's out. Berlusconi's out. Osama's out. Qaddafi's out. Kim Jong is out. U.S. troops in Iraq are out. Our AAA credit rating is out.

The rest of the Middle East is on the brink. So is the 18-year-old Eurozone.

Unrest abounds, and though they haven't quite put their collective finger on it yet, the masses know there's something wrong with the current “system,” and the Age of Information is allowing them to do something about it.

Citizens of North Africa and the Middle East realized their way of life was a sham.

Similarly, citizens of the Western world are awakening to the shams in their own lives: reporting by hacking, rampant corporatism and egregious lobbying, faux social conservatism, the revolving door between banking and government institutions, and the emptiness of fiat currency.

No, the world won't end in 2012.

But the world as you know it might.

Global Shift

I didn't realize until this weekend, but I'm anticipating a shift in global thinking and, therefore, in global markets.

Looking at all my accounts over the holiday, I noticed I'm only 25% invested. And 98% of that is in my individual retirement account.

Nearly 75% of my liquid assets are sitting in cash.

Almost subconsciously, this year's volatility has put me on the sidelines. I made a few trades I had a strong hunch on, but I've mostly migrated out of the market.

The only stock I currently own is Transocean (NYSE: RIG), for the nearly 8% dividend.

Why?

Because, like I said, 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.

And I want to be in a position to drive when it happens, not be taken for a ride.

~~nicks_signoff~~

2012 Energy Stock Predictions

Last December, I made three predictions for 2011:

The mounting solar glut problem would be rectified by the end of the year;

Domestic oil and gas production would increase significantly, regardless of environmental concerns related to fracking and tar sands production; and

With the introduction of the Chevy Volt and the Nissan LEAF, domestic sales of electric cars would reach no less than 10,000 units.

Well, two out of three ain't bad!

A Sad Season for Solar

Toward the end of 2010, we saw the writing on the wall...

Inventories of solar modules and cells were piling up just as the world's strongest solar market, Germany, was chipping away at its very generous subsidy mechanisms.

The country's feed-in tariff did exactly what it was designed to do: accelerate investment into solar. It did that — and more.

The fact is Germany is responsible for launching the solar industry from niche player to multi-billion-dollar revenue generator.

And unlike some countries (this one in particular) where energy subsidies never seem get phased out, thereby putting a major burden on taxpayers and disallowing a free market to flourish, Germany stuck to its guns this year, told the lobbyists to stand in a corner, and began the process of phasing out those feed-in tariffs.

Of course at the start of the year, many analysts (including this one) believed that even with the phasing out of subsidies in Germany, the sector would continue to chug along.

You see, in an effort to move excess inventory out the door, solar manufacturers began to lower selling prices. The expected result was that this would allow for a pickup in demand.

That never happened.

Despite prices falling by as much as 50%, the hard truth is that it ain't easy selling cheaper solar panels to consumers when the entire global economy is going down the crapper.

This year, nearly every major solar stock has fallen by more than 60 percent. It was an absolutely horrible year for solar stocks.

Fortunately, most energy investors don't put all their eggs in one basket. And while I personally ate it on some solar stocks, my call on domestic oil and gas production more than makes up for it...

4.3 Billion Barrels

If you're a regular reader of these pages, you know I'm not a huge fan of the heavily-subsidized oil and gas industry.

The billion-dollar welfare check we hand the industry every year is a slap in the face to every real free market thinker.

No matter how the bureaucrats in Washington try to spin it, there is no justification for forcing hard-working taxpayers to foot the bill for a profitable and mature industry to do business.

That being said, I can't afford to buy a senator. I'm one guy without a K Street connection, and I don't expect many on the Hill to trade their campaign contributions for my vote. So while I would love nothing more than to see a real, honest free market in energy, I know it's not going to happen anytime soon...

And as a seeker of profits, I'll take my gains where I can get them.

Which is why we'll continue to play this angle in 2012.

Now we've been discussing domestic oil and gas production all year. We've covered the Bakken story dozens of times. And we'll continue to cover it. After all, we're talking about more than 4.3 billion barrels up for grabs.

That ain't chump change, my friend. And if you think for a second that every ounce of the oil won't be produced, you're out of your mind.

And don't forget, there's another 2 billion barrels sitting at the Three Forks location. Of the wealthiest investors I know, not a single one of them is ignoring this opportunity — and you shouldn't, either.

Not the Failure They Hoped For...

Throughout the course of 2011, I felt like I had become a representative for the electric car market, defending it from an avalanche of unfair attacks.

It still amazes me that at a time when we're trying to displace as much foreign oil as we can, there are so many knuckle-draggers cheering for the failure of a vehicle that doesn't need a drop of gasoline or diesel to operate.

I'm not going to sit here today and defend the electric car from all the bogus arguments we hear time and time again from the media whores and partisan slaves. (Feel free to check out this article I wrote back in 2010, where I responded to some of the more common criticisms.)

But consider my prediction from last year: With the introduction of the Chevy Volt and the Nissan LEAF, domestic sales of just these two electric cars will reach no less than 10,000 units.

Not including December sales (which we won't see until January), 8,738 LEAFs and 6,142 Volts have been sold in the United States.

That's nearly 15,000 electric vehicles — roughly 5,000 above my initial estimate. And this is just domestic sales. Globally, more than 20,000 Nissan LEAFs have been sold.

Just to put this in perspective, consider this: When Toyota first launched the Prius Hybrid in 1997, the Japanese automaker sold 3,000 units.

In 2011, the first year Nissan starting selling the all-electric LEAF, more than 20,000 will have been sold. Not too shabby — especially considering the LEAF carries with it the burden of range anxiety, something Prius owners have never had to deal with.

(I didn't include the Volt in this comparison because there is no range anxiety with that vehicle. Once the initial charge is depleted after 30 to 40 miles, the engine kicks in, and you can go another 300 miles or so.)

Yes, the electric vehicle market's best days are still ahead. And that brings me to the first of my...

Predictions for 2012

It is clear that Nissan has taken the early lead in electric vehicle development, much in the same way Toyota took (and maintains) the lead in conventional hybrid vehicles.

In fact, the company announced a couple of months ago it has set a goal of selling 1.5 million electric vehicles by 2016. That's only four years away.

As for next year, the major automakers will continue to produce and roll out their new electric offerings.

In addition to the Chevy Volt and Nissan LEAF, we'll start to see Mitsubishi's electric car — the “i” — hit the highways in 2012. Ford's all-electric Focus is also expected to make its debut. That particular vehicle looks like it could be a real crowd-pleaser.

Of course, it will still carry with it a price premium. And that will likely limit early sales to early adopters...

But most analysts know that this early round of electric cars is really only intended to serve as the building blocks for future electric offerings.

Because like it or not, electric vehicles are going to be part of every major automakers' lineup going forward.

I'm not saying electric cars will overtake the conventional internal combustion engine anytime soon. But from a growth perspective, the opportunities for investors are undeniable.

A recent Pike Research study showed there will be more than one million plug-in electric cars on the roads in just three years. And by 2017, just about five years from now, that number will grow to 5.2 million.

By the end of this year, total plug-in sales will be around 21,000.

Considering the overall vehicle market is expected to grow 3.7 percent between 2011 and 2017, this is a massive growth story.

But as I said, the conventional internal combustion engine will still own most of the auto market for decades to come. And that means our reliance on oil is not going anywhere. As a result, expect to see a continued run on domestic oil and gas production.

Where Natural Gas is King

Moving onto utility-scale power generation, natural gas will continue to pick up where coal leaves off.

The fact is conventional coal has reached the end of its usefulness — at least here in the United States. It simply cannot compete with low-cost natural gas, and as older plants retire, don't count on utilities building many new ones that'll comply with new regulations. It simply doesn't make economic sense.

No, the preference for utilities will be natural gas. Although many will continue to develop their wind holdings, too...

Just last week, Duke Energy Corp (NYSE: DUK) and American Transmission bought a $3.5 billion power line project that will move wind power from Wyoming to California and the Southwest.

Most of the wind action next year will happen in the Midwest, Texas (now the leader in installed wind capacity), and Hawaii, which is desperate to transition away from having nearly 90 percent of its power generation come from diesel generators.

So to recap...

2012 will bring us:

More domestic oil and gas production
More installed wind capacity
More electric car production and sales

Also worth noting:

We'll start to see significant depletion of the world's solar glut by Q2 or Q3. Solar stocks will remain risky, but many are trading so low that if you can stomach the risk, it might be worth picking up a few of the more solid players in the early part of the year.
Despite some obstacles, the Keystone XL pipeline is going to happen. Don't let these recent bumps in the road convince you otherwise. There's a market for Canada's dirtiest of oils, and it will be supplied.
The move to pony up more nuclear power in the U.S. will continue, although I'm not convinced it'll get very far in 2012. Regardless of your take on nuclear, it is prohibitively expensive without massive government support. And there ain't much of that right now. That being said, I remain bullish on new nuclear fuel technologies that enable lower cost production and safer power generation.

Overall, I'm cautiously bullish on 2012.

I don't buy for a second that we're going to have some miraculous recovery next year...

But I also don't believe we're going to be pushing wheelbarrows full of dollars and trading gold coins for bread, at least not yet.

Either way, don't let it weigh on you. Because regardless of how things turn out in 2012 — there's always a bull market somewhere!

~~jeffs_signoff~~

Shale Gas Investing: The "Echo Boom" Gains Momentum

How big is the shale gas boom going to get?

All you have to do is talk to Letha Webster, the latest winner in the shale gas boom, to get an idea...

Letha’s lived in Valley Junction, Wisconsin, since 1955.

Her hometown sits at the intersection of Highway N and Concord Avenue, about 100 miles west of Sheboygan.

But Valley Junction has no shale gas underneath it. There are about 300 miles and a Great Lake between Valley Junction and the nearest shale gas zone.

Instead, the town is at the heart of an “echo boom” spreading throughout the country.

And it’s proof of how big the shale boom is going to eventually get — and where investors can find safe, consistent gains as the next leg of shale gas growth unfolds.

Peak Sand

You see, Letha is one of a number of landowners in the area.

She is part of a group that collectively holds 436 acres, estimated to be worth $1.1 million.

That land, however, was just sold for a total of $5.3 million — more than four times higher than the appraised value.

The reason? Sand.

This area of Wisconsin has the right kind of high-quality sand used in the fracking process. And the high-quality sand is growing right alongside shale gas exploration.

There are currently 16 sand mining operations producing high-demand sand that’s helping to unlock trapped gas across the country. According to the Wisconsin Center for Investigative Journalism, there are proposals to build another 25 sand mines in the area.

That kind of sand demand shows how much bigger the shale gas and fracking boom is going to get.

But it’s just the start of a major follow-on — or "echo" — boom resulting from the shale gas boom...

Shale Gas “Echo Boom” Underway

Now that the shale gas boom is in full swing, big-money investors are moving in aggressively to capitalize on it in every conceivable way.

Considering the billions of dollars they’re investing, you can bet they’ve done their due diligence on how big the shale gas boom is going to be... and it’s going to be big.

A few of the deep-pocketed companies cutting eight- and nine-figure checks include:

Nucor (NYSE: NU) is completing a $750 million plant in Louisiana due to the advantageous costs of operating in an area awash in shale gas. The facility could be expanded to include a total capital investment of $3.4 billion.
U.S. Steel (NYSE: X) has announced it’s investing $95 million into Ohio steel production assets to meet the specific needs of shale gas developers in the region.
Vallourec (Paris: VK) is investing $650 million in a new Ohio plant, and expanding another to make the tubes and pipes necessary for natural gas production, processing, and transportation.

Those are just three of the hundreds of companies seeing how they can use shale gas to improve their bottom lines. There are plenty more, and the opportunities are just as big.

Consider this...

All of the gas produced from shale is going to have to get to the end user somehow. And that means miles and miles of more pipelines will have to be laid.

Thousands of compressors, miles of pipe, and brand-new processing facilities still have to be built and installed to build out all the necessary infrastructure.

The shale gas boom is great for natural gas producers, processors, and fully-integrated oil and gas companies.

As it grows, it’s reverberating through the nation’s manufacturing sector and elsewhere.

From an investment perspective, it’s important to consider the latter part of the echo boom. That’s where the financial community is still playing catch-up.

~~shale_gas~~

Safety and Profits, Sam Brannan Style

If Sam Brannan were alive today, he’d likely have shops across the country by now.

Brannan was the owner of the general store next to Sutter’s Mill. He was the biggest promoter of the California Gold Rush.

Brannan knew how booms worked and profited handsomely. He became the wealthiest man in San Francisco during the Gold Rush. But he never prospected; he amassed his fortune by selling picks and shovels to the waves of prospectors.

That’s why, in this next stage of the shale gas boom, there will be a lot more money made in a variety of different sectors on top of the direct shale gas plays...

The shale gas boom will drive years of earnings growth in manufacturing and gas processing, to pipeline builders and operators...

Just take Keith’s Kohl’s shale gas plays. His picks have paid off extraordinarily well over the years.

Keith has managed to find profits in the shale gas echo boom by showing his readers a company that doesn’t drill for, produce, or own any shale gas assets anywhere in the country — yet its shares have risen more than 500% by selling the essential and specialized processed sand to the shale gas companies, which are devouring all the company can produce.

Companies like these are the picks and shovels of shale gas.

You get all the profits without the risks of drilling dry holes.

If history is any example, this boom will be bigger than anyone expects. Its impact will ripple through many sectors.

And it will make investors a lot more money in the years ahead, in everything close enough to shale gas to derive benefits from it.

Letha Webster may have sold out and taken her profits...

But I’m still a buyer — and you should be, too.

~~andrews_signoff~~

One Gas Investment that Will Triple Your Money

With the holidays right around the corner, everyone's looking for a deal.

The writing is already on the wall for us...

Within the next three years, you absolutely cannot say we didn't see this coming:

There's only one destination for the upcoming surge in LNG exports.

Earlier this week, we talked about the dramatic increase in energy consumption that's on its way to China. By 2035, China will be consuming more natural gas than all of Europe.

The question I always ask my readers is: How are you preparing for this investment surge?

Preparing for the Gas Surge

The bears tell us LNG will never catch on, and if it does, it'll be years — even decades — before the impact is felt and the profits start rolling toward investors.

Those sentiments couldn't be further from the truth.

One future LNG exporter already experienced that move:

That spike you see above happened when Cheniere Energy Inc. (AMEX: LNG) announced a 20-year deal with BG Group to export LNG to international gas markets.

One month later, the company inked another 20-year deal, this time to ship 3.5 million tons per year to LNG Spain's Gas Natural Fenosa.

That deal alone is worth $9 billion for Cheniere, and not many would expect a third deal to come so quickly...

But it happened.

Hoping to secure its piece of the shale gas boom going on right now in North America, India's state-run energy company GAIL reported a $15 billion deal with Cheniere Energy to supply 3.5 million tons of LNG per year from their Sabine Pass LNG terminal.

If you're trying to secure long-term profits, the opportunity doesn't get much better than this.

In fact, Cheniere Energy is about to take things a step further...

The company is now making plans to build a second LNG export plant on the U.S. Gulf Coast, this time in Corpus Christi, Texas. The facility will have an export capacity of 1.8 billion cubic feet of natural gas per day by 2017.

Assuming the development doesn't hit many snags, you can expect to see these guys inking more long-term supply deals.

By the time the first shipments of LNG leave their Sabine LNG Terminal, this stock may have already tripled your money.

Below you'll find some of the hottest investment stories to cross my desk this week.

Getting started is easier than you might think...

Saudi Oil Minister's Calm Breaks: OPEC's $7 Trillion Dollar 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.

The Secret Behind the R-4 Trigger: 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. The problem for average investors is in learning the ins and outs of options investing. It can be tricky and confusing... And that's exactly why Ian Cooper developed his R-4 Trigger System.

Iran Oil Opportunities: Iran Can't Stop the Oil
Editor Jeff Siegel discusses the end of Kyoto and how to invest from Iranian threats.

2011 Hedge Funds in Review: We're Sorry...
Analyst Ian Cooper takes a look at hedge fund performances in 2011, and explains how they can improve for 2012.

Farmland Blows Up in 2011: Ethanol Sets Fire to Farmland Stocks
Forget "Correlation": This sector just scored historically high profits and is swimming in cash.

FREE Video Seminar with Gold Guru: Just 4 Days Left to Sign Up
There could be as much as $160 billion worth of gold in this isolated Canadian region. Thirteen-year gold investor and bullion dealer Greg McCoach calls it the “…biggest gold discovery in decades.” Join us December 21 at 6 p.m. for a groundbreaking FREE video investment conference.

The Common Sense in Energy Investing: Finding Value in the World's Cheapest Energy Stocks
The long-term investment value in today's cheapest oil and gas stocks.

Uranium Supply in Question: Shortage Expected in Next Two Years
As everyone gushes about America's newfound abundance of oil and natural gas, another energy dilemma has slipped our collective minds...

Iran Threatens to Send Oil to $200 a Barrel: War in the Economic Jugular Vein of the World
Editor Steve Christ takes a look at the latest saber rattling in the Strait of Hormuz, and explains why predictions of $200 a barrel might actually be on the light side...

Exposing the Bakken Boom: The Epicenter of America's Industrial Rebirth
If you were to ask me about my concept of the American dream, I'd tell you about what's happening to people in Williston, North Dakota, the cradle of the North American oil shale revolution... and how you can build your own version of this dream for yourself, your children, and your grandchildren.

Warren Buffett's Solar Investment: Big Bets on Alternative Energy
Warren Buffett just ponied up $2 billion for a 550 megawatt solar farm... but that doesn't mean the bottom for solar is in just yet.

Generational Investment Opportunity: Your 1830s Moment
The resolution of global balance sheet imbalances will eventually result in complete panic where we'll likely see yields of 8%-10% on great stocks. Finally, buy and hold will begin to work again — just when most people abandon stocks altogether.

~~keiths_signoff~~

Uranium Supply in Question

As everyone gushes about America's newfound abundance of oil and natural gas, another energy dilemma has slipped our collective minds.

I mentioned it as a possibility several months ago.

Now, with more information coming to light daily, it's looking more and more like a uranium supply crunch is going to be a reality.

Consider this: In 2010, the world needed about 65,000 tonnes of uranium to power its 433 operating reactors. But globally, only 53,663 tonnes were mined in 2010.

So where'd the remaining 11,337 tonnes of uranium come from?

A tiny bit of it came from commercial reprocessing in France.

But the bulk of it — 10,600 tonnes — came from weapons repurposing via an agreement between the United States and Russia. The warheads you were supposed to hide under your desk from are now powering the same cities they were once meant to destroy.

The Russians have already announced they are withdrawing from the program, called Megatons to Megawatts, at the end of 2013.

When that happens, the world will instantly lose over 10,000 tonnes of uranium supply per year... and the amount mined won't be enough to cover the amount needed.

In other words, there's a high probability the world will face a uranium supply shortfall by 2014.

And given that we're less than three weeks away from 2012, the time to start considering this investment scenario is now.

So What's the Scenario?

And even with Germany planning to decommission its nine remaining reactors by 2022, there will still be net 93 new reactors by the end of this decade.

China alone — with 26 reactors under construction — will offset the German loss nearly three times over.

Tim Gitzel, CEO of Cameco (NYSE: CCJ), the largest uranium producer in the world, took to the airwaves this week to help explain the looming threat to uranium supply, saying on Bloomberg TV:

"The game these days, the growth game at least, is over in Asia. And that's a change for everyone. China has not blinked an eye. They have today 14 reactors in operation, 26 under construction, and then another 20 in addition to that, planned by 2020. That's growth we haven't seen, oh boy, since the 1970s."

~~eac_nuclear1~~

It isn't hard to see the growing supply gap, which will only be worsened after we stop repurposing warheads...

Ways to Play

As is the case with oil, uranium majors are keen on buying up easy access to supply.

Just a few weeks ago, Rio Tinto (NYSE: RIO) successfully bid $654 million to take over Hathor Exploration (TSX: HAT) and its 57.94 million pounds of uranium oxide reserves in the Athabasca region. Cameco unsuccessfully bid for the same acquisition.

Here's how Hathor's stock responded to the buyout:

But there are plenty more acquisition targets and producing projects available.

When it comes to uranium miners, companies are typically categorized one of five ways:

Exploration
Pre-feasibility
Feasibility
Development
Production

As you might guess, there are many more explorers than producers.

I list for you here those in the production and development stages, as well as their resources and reserves:

Company	Ticker	Stage	Resources & Reserves
Cameco	NYSE: CCJ	Production	1.05 billion pounds
Denison Mines	AMEX: DNN	Production	335.3 million pounds
Energy Resources of Australia	ASX: ERA	Production	663.6 million pounds
Paladin Energy	TSX: PDN	Production	522.7 million pounds
Uranium Energy	AMEX: UEC	Production	42.27 million pounds
Uranium One	TSX: UUU	Production	328.4 million pounds
Alliance Resources	ASX: AGS	Development	17.5 million pounds
Energy Fuels	TSX: EFR	Development	17.78 million pounds
Uranerz Energy	AMEX: URZ	Development	19.06 million pounds
UR-Energy	TSX: URE	Development	27.43 million pounds

It's worth noting that Paladin has already been a target of interest for Cameco.

It's also worth noting that there are dozens of companies in more nascent stages of the uranium mine life cycle and, depending on where they are and the political and regulatory regime in place, these could be buyout targets as well.

Talvivaara Mining (LSE: TALV), for example, is a major nickel producer in Finland. But they also produce uranium in good amounts simply as a byproduct of their day-to-day operations.

So Cameco decided to invest $60 million to add a uranium extraction facility to Talvivaara's mine. Talvivaara will repay the $60 million with uranium, and then Cameco will buy any remaining uranium at market prices. The project is expected to yield 770,000 pounds of uranium annually.

I seriously believe uranium is in for staunch appreciation over the next few years. And I'm getting my ducks in a row.

~~eac_rare_earth~~

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

Wanted: Vanadium Supply

A little-known metal used in steelmaking could emerge as a game-changer for battery technology, raising the prospect of an investment boom like the one that lifted rare earths out of obscurity last year.

Those aren't my words. They're Reuters'.

The opportunity the straitlaced news organization is describing is so exciting, its description almost sounds sensationalized.

It's not.

Another Metal to Learn

The metal in question is vanadium.

And according to Chris Berry, founder of New York-based research firm House Mountain Partners, the potential exists “to make vanadium into a multi-billion dollar metal.”

Its strengthening capabilities have been known for years...

Henry Ford added it to steel to build the Model T. It's also used to create specialty alloys for the aerospace industry.

But those uses aren't what's going to turn vanadium into a multi-billion-dollar metal...

Energy is.

Wanted: Vanadium Supply

Vanadium flow batteries charge in a flash, their capacity actually expands, and they last for decades.

But until recently, vanadium's volatile price has kept most manufacturers from working with it.

Reuters reports: “At present, vanadium prices tend to surge when steel demand is high and plummet during economic downturns. The volatility is a major deterrent for battery producers.”

A new willingness to invest in vanadium battery technology could mean a new use for the metal — and something to help stabilize prices.

China-based Prudent Energy recently raised $30 million in an effort to reduce the costs of its vanadium batteries.

It's rumored that China Strategic Holding is spending $300 million to build the world's largest vanadium battery.

German start-up DBM Energy has made a lithium-vanadium car battery it says can travel 375 miles on a six-minute charge. For comparison, the Chevy Volt can only go 50 miles on a four-hour charge.

Two major international automakers already have plans to adopt the technology.

According to Byron Capital Markets analyst Jonathan Lee, “You're seeing dollars flow into this technology, so there is some good promise in it going forward. "In the long term, the demand will rise.”

The Next Rare Earth Scenario?

Economics tells us vanadium prices will level off if the early scramble to secure a stable supply gains traction, much like the recent rush to find rare earths.

You should know by now the companies that found rare earths surged by tens of thousands of percent.

American Vanadium (TSX-V: AVC) CEO Bill Radvak is certainly excited: "Vanadium has all that rare earth-type opportunity, yet it has a very stable base on the steel-strengthening side, It's just about to take off in the next year or two."

His company owns a deposit in Nevada, and is looking to partner with battery makers to sell them vanadium at a lower price while sharing profits from the value-added battery.

Largo Resources (TSX-V: LGO), Apella Resources (TSX-V: APA), and Energizer Resources (OTC: ENZR) are some other names to watch.

For my money, I like the company I just visited in Canada...

It has a proven reserve of 257 million pounds of recoverable vanadium oxide. At current prices, that's worth over $2.1 billion dollars.

That's impressive — because the metal in the ground is worth several hundred times the company's current market cap.

And it isn't just vanadium this company controls...

~~eac_rare_earth~~

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

Why Should I Invest?

A lot of people have been asking What's it all for?

I had the chance to talk to a wide variety of people over the Thanksgiving holiday: friends, family, hunting buddies, old high school acquaintances.

And though they said it differently, many of them had the same general questions and problems.

My 20-year-old cousin is a cashier at SuperFresh. She's attending community college and was able to afford her own apartment for awhile. Now she's living back at home.

Friends my age (25-30) are combating debt — student loans, credit cards, cars, prematurely bought houses — while still trying to keep up the American consumerist lifestyle as The Dream slowly slips away.

Their parents haven't seen their retirement accounts rise since the late 1990s. The Dow is trading at the same level it was in 1999.

“We've done everything we were supposed to,” was a common sentiment. “And we still can't get ahead.”

From homeownership and a four-year college education to a nine-to-five job and an individual retirement account, in many cases what they were “supposed” to do turned out to be the wrong thing to do.

They weren't happy. They felt like they were trapped in the rat race for nothing. And more than a few of them were starting to notice a couple of other things I'd like to pass on to you today, before I get to my take on the situation...

For Whom Do You Work?

A couple anecdotes...

My mom is a social worker in a small Maryland town. She creates and administers programs for at-risk youth and young offenders. She knows many of the young criminals in town.

Last weekend, she ran into town to fill a prescription and get some bread. At the pharmacy, she noticed one of the town's known drug dealers in front of her in line. He was having a prescription filled, presumably so he could sell it.

My mom was shocked when she heard the dealer tell the pharmacist he had two types of insurances — and if one didn't work, the other would. They were both forms of public assistance.

She then went across the parking lot to a deli where she saw a woman paying for cat food and soda with food stamps.

Needless to say, it rubbed her the wrong way. Her taxes — and yours, to be sure — just went to pay for those drugs and cat food while she has continual financial worries.

My best childhood friend manages his family's liquor store in the same town. A Section 8 housing complex is adjacent to the store. To live there, you have to make “50% or less of the area median income.”

Yet my friend says the inhabitants of that complex visit his store in droves on a daily basis to purchase cigarettes and alcohol. Meanwhile, increased liquor taxes and other pressures on small business owners are wreaking havoc with his livelihood.

Are we subsidizing low-income housing so they can free up cash to buy booze?

According to TaxFoundation.org: “Americans will work well over three months of the year, from January 1 to April 12, before they have earned enough money to pay this year's tax obligations at the federal, state and local levels” — the so-called Tax Freedom Day.

That means you're working almost a third of the year so low-income (potentially criminal) individuals and families can get cheap or free drugs, cat food, and malt liquor... while you're struggling to get ahead.

From that angle, it's easy to see why so many people are wondering What's it all for?

I'll take a few stabs at answering that question in a moment. First, the parable of the Mexican fisherman, which everyone seems to enjoy when I share it.

~~solar_2~~

What's the Goal?

While on vacation in Mexico, an American businessman came across a local fisherman with a small boat full of fish. The businessman asked how long it took him to catch all those fish, to which the fisherman replied only a short time.

“Why not stay out and catch more?” the American asked.

“Because this is all my family needs,” said the fisherman.

“Then what do you do with the rest of your time?” questioned the American.

“I sleep late, fish a little, play with my kids, take a siesta, stroll into the village, play guitar and sip wine with my friends. I have a full and happy life.”

“I have an MBA,” said the American. “You should spend more time fishing and buy a bigger boat. With the proceeds from the bigger boat, you could buy a fleet of boats. Instead of selling to a middleman, you could sell right to the processor and eventually open your own cannery. Then you could move to Mexico City and then New York, where you'd run your expanding enterprise.”

“How long will all this take?” the fisherman wondered.

“Ten to twenty years of hard work.” was the reply. “But then comes the best part! You announce an IPO and sell your company stock to the public and become rich. You'd make millions.”

“And then what?” asked the simpleminded fisherman.

“Then you would retire to a small fishing village in Mexico, sleep late, play with your kids, and play guitar and sip wine with your friends,” said the businessman.

The fisherman, a bit confused, asked, “Isn't that what I'm doing right now?”

Be a Mexican Fisherman

My grandfather didn't do anything he was “supposed” to do. I'm a lot like him.

Dirt poor and barely able to feed his young family, he left Italy in the early 1960s. He left his bride and young daughter (my mother) there to be sent for later.

With hardly a formal education, no money, and no firm plan, he got on a ship, leaving his parents and siblings in the Old Country in search of a new life.

He moved in with an already-immigrated aunt, took a job sewing suits at a factory to hone his trade, and started saving.

Banks? He didn't trust them.

Managed retirement account? Forgetaboutit. He operated in cash.

Again, against everything Americans were “supposed” to do. He saved enough to bring over my grandmother and mother, and eventually enough to open his own small business, Italo's Tailor Shop of Newark, Delaware.

He went from unable to afford milk for his child in Naples to being Joe Biden's tailor while he was still practicing law in the 1970s.

My grandfather still doesn't know what credit is. He only took cash or check at his shop.

He bought and paid for four houses and two beach houses. He also had one in Italy he recently sold. I'd say he only mortgaged the first one in the 1970s.

Every new car he buys (only when needed, of course) is paid for on day one.

Same with my best friend's grandfather, who came here even earlier from Greece and bought a farm and opened that liquor store.

They don't teach hoarding cash, being frugal, and owning hard assets in high school — it's mostly a staging area for the rat race.

And who ended up best in the long run?

A recently-released Wells Fargo survey found that:

25% of middle class Americans say they will “need to work until at least age 80” to live comfortably in retirement
74% of middle class Americans expect to work in their retirement years, including 39% of all respondents who will need to work to make ends meet or maintain their lifestyles
Among middle class Americans age 40 to 59, 54% say they will “need to work,” compared to 34% of those age 25 to 39

While those people are greeting at Wal-Mart, my grandfather is probably tending his fig tree or doing some woodworking or watching Juventus play soccer or going on his annual cruise or digging his toes into the sand in front of his oceanfront condo.

Point is, doing what you're told is best or what everyone else is doing may feel right, but it's often wrong.

I'll be 28 next week. My truck and student loans will be completely paid off in the next three months, several years ahead of schedule on both counts.

My first house is locked in a 3.2% mortgage that I expect to pay off in the next five years.

I didn't get my first credit card until this year, and that was only to improve my credit score. I have an IRA and a personal trading account each with tens of thousands of dollars and growing.

I don't enjoy saying it, but I'm in a better financial position than most 30-, 40-, and 50-somethings I know.

I avoid consumerism. I still wear jeans and sweatshirts I wore in high school. I used my last two cell phones until they died of natural causes. I bought my truck one-year used to avoid instant depreciation.

I spend a lot of time hunting and fishing, probably 50 days a year if I had to guess. My freezer's filled with meat I brought to the butcher myself and vegetables I watched grow from seed.

I don't try to keep up with the Joneses or outwardly impress others.

I don't have a solution for the 50 million Americans on Medicaid, the 46 million on food stamps, or the millions more on housing assistance or other forms of welfare. That's not my job. I never want it to be.

The way I see it, my only job is to live life the way I want to live it and not worry about the rest. I just happen to make money by telling people just that.

Wise investments are a big part of it. And I tell you about plenty of those. I even shared my unedited Scottrade sell history a few weeks ago.

But they aren't everything...

And I don't use their proceeds to buy things or stuff.

I use them to live the kind of life I like to lead, just like the Mexican fisherman. Just like the Greek and Italian immigrants above.

Like I said, 74% of Americans expect to work in their retirement years.

My grandfather did what he wanted and ended up fully retiring in his 60s when he sold his tailor shop... to a Vietnamese immigrant.

Stop running in circles chasing the busted American dream. Create your own dream and follow your own path to get there.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

P.S. Sorry if this became a diatribe or sermon, I intended neither. Instead, I usually find it helpful this time of year to take a step back and ask the tough questions. It always helps me to refocus on important goals. I hope it helped you as well.

I'm off tomorrow to San Francisco, where I'm taking a few days to catch up with a college buddy who now sits at the derivatives desk at Goldman Sachs. I should have some interesting things to share upon my return, when we'll get fully back into investment mode.

These Oil Stocks are Going Higher

You’ve heard the complaints a hundred times from oil and gas drilling advocates...

“The United States hasn’t built a refinery since 1976.”

But it really is true.

Thanks to government red tape and environmentalist pressure, a new oil refinery hasn’t been built in the United States in over 25 years.

Even though we’re still in the grips of a nasty national recession — with spiking oil prices exacerbating the problem — the government continues to stand in the way of domestic development of energy resources such as oil and natural gas.

However, Reuters reported yesterday the first refinery in over three decades may be built in, ahem, North Dakota.

You see, the oil drilling boom in the Bakken is so big, production has tripled in just three years — to more than 464,000 barrels per day.

And that figure is set to go a lot higher in the years to come.

As a result, demand for diesel in the Bakken region has gone off the charts...

Hundreds of diesel-fueled trucks are needed to accommodate the growth in the largely remote state of North Dakota to haul crude to the nearest pipeline or rail head, to haul refined products to the drilling site, or to truck in sand and water, key ingredients to hydraulic fracturing.

As a result of its remote location, North Dakota has experienced periods of severe diesel shortages.

According to the Reuters report:

Local diesel terminals were sucked dry this month — some for hours, others for days — as a major Indiana refinery underwent planned maintenance while fuel demand rose due to seasonal demand from farmers and shippers at the tail end of the autumn harvest and the Bakken shale oil plays. Some truckers had to drive hundreds of miles to fill up.

"Trucks arrive at the loading station and some wait three to four hours and others in excess of eight hours," said Bud Kerr, operations manager at J5, a hauling company in North Dakota. "The problem appears to be worse than what it was last year."

What’s the solution?

Simple: Build a diesel refinery in the Bakken itself.

I love it. I love North Dakota.

The refinery received county zoning approval last week and now awaits final state approval.

Knowing North Dakota’s views and the history of its booming oil market, I’m inclined to believe this refinery will receive overwhelming support. They know it means more jobs and more tax revenue to the state’s coffers.

If only the White House was following this positive story...

~~oil-sign-up~~

Follow the North Dakota Model or Lose Reelection

I watched a video over the weekend of liberal lapdog Chris Matthews talking about Obama’s reelection chances.

Appearing frustrated and confused by the limpness of the Obama administration, Matthews says: “What are we trying to do in this administration? Why does he want a second term? Would he tell us? What’s he going to do in the second term? More of this? Is this it? Is this as good as it gets?”

Remember, this is the same man who said not long ago that Obama gave him a tingle up his leg. Now it’s a headache.

It might be too late for Obama. A couple of weeks ago, Obama punted on the Keystone Pipeline project, delaying the decision to build (or not) until after the 2012 election.

In a perverse outcome, two of Obama’s core constituencies — unions and environmentalists — were engaged in a battle royal with each other over the project.

Labor unions supported the idea, knowing the construction of the Keystone XL Pipeline would bring tens of thousands of good-paying union jobs (they are in the 99%, by the way) to America.

Terry O’Sullivan, President of the Laborers’ International Union of North America, said this in response to the U.S. State Department delay of the Keystone XL:

Environmentalists formed a circle around the White House and within days the Obama Administration chose to inflict a potentially fatal delay to a project that is not just a pipeline, but is a lifeline for thousands of desperate working men and women. The Administration chose to support environmentalists over jobs — job-killers win, American workers lose.

Environmental groups from the Natural Resources Defense Council to the Sierra Club may be dancing in the streets, having delayed and possibly stopped yet another project that would put men and women back to work. While they celebrate, pipeline workers will continue to lose their homes and livelihoods.

To make it worse, last week the Obama administration angered workers again in Ohio by delaying for six months a mineral lease auction in Ohio’s shale-rich region, which is estimated to create 200,000 jobs.

Parts of Ohio’s rust belt have some of the highest unemployment in the nation. But it sits on the nation’s largest shale gas formations, the Marcellus and Utica.

My father was a union carpenter for over 30 years. Though I don’t always agree with what unions stand for, I do know this: They want to work.

Obama would jump 20 approval-rating points if the unemployment rate dropped. All he has to do is look at North Dakota and Western Pennsylvania for a clue.

Luckily for us, we don’t have to wait on the government...

We can participate in the Bakken boom right now.

~~oil_signup~~

Profitably yours,

Brian Hicks
President, Angel Publishing

The Energy Bull Is On

Some headlines from this week:

"Invest in Production Or See Oil Hit Record $150 a Barrel" — The Telegraph
"Iran Worries Spark Fears of $200-a-Barrel Oil" — Financial Times
"Analysis: Struggle for Energy Supply Pushes SE Asia to Nuclear" — Reuters
"Energy Costs to Rise 'Viciously' Without Nuclear, IEA Says" — Bloomberg
"U.S. Rare Earths Miners Would Benefit from Proposed Stockpile" — Financial Times

I started rattling my saber for this move two months ago, when everyone was gasping over Europe, worrying about the next crash, and the market was moving 200 points in opposite directions every other day...

Ever Wanted Endless Income?

We all have.

And a new system is proving to deliver.

Every time it's "tripped," investors walk away with secure gains.

See it in action right now.

You really must ignore all the negativity about debt and politics and PIIGS nations.

If you really want to make money, that stuff is only distracting.

These words should be etched in your mind:

As we approach the peak (we're approaching it, folks, let's move past that nonsensical debate; the CEO of Total (NYSE: TOT), the sixth-largest oil company in the world, said this year we'll reach the peak of oil production in five years), you'll want to own the companies that stand to profit by recovering oil that will then be worth well over $150 per barrel.

That would be any company that accesses or helps access deepwater oil, arctic oil, shale and sands, and any remaining conventional deposits.

It's why Bakken stocks were and are so hot. It's why fracturing stocks are so hot. It's why tiny companies with access to the last big African fields are so hot.

And as energy prices continue to increase as we move further into the peak, alternatives will start to become more and more competitive.

It's not an either/or; it's an and/when.

I couldn't have been more right.

Today, oil is trading at a three-month high. It's about to breach $100.

In the past 60 days, I've personally profited from Veolia (NYSE: VE), ProShares Crude Oil ETF (NYSE: UCO), Yingli Green Energy (NYSE: YGE), First Solar (NASDAQ: FSLR), SatCon (NASDAQ: SATC), and BP (NYSE: BP).

I've been putting my money where my mouth is and winning... because I'm right.

Want proof? Here's my Scottrade sell history:

Members of my advisory, Alternative Energy Speculator, are doing the same.

The time to buy energy-related stocks is now.

I told you in my last "Weekend Edition":

I have a single thesis and continually update you on it: I'm bullish on energy. I think the entire sector (oil, gas, nuclear, renewable, efficiency) is in for immense appreciation as population explodes and resources remain constricted. I don't waiver from that.

And what did we learn from this week's World Economic Outlook from the International Energy Agency?

That “oil prices by 2015 may go to $176 in nominal terms.”

That “global demand for energy is set to increase 40% by 2035.”

That “investment in energy infrastructure of $1.5 trillion a year is needed to meet projected demand through 2035, and even then, the cost of energy will increase.”

That “oil demand will rise to 99 million barrels a day in 2035 from 87 million last year.”

That “global coal demand will advance to 4.1 billion tons of oil equivalent from 3.29 billion tons in 2009.”

That natural gas demand will rise to “5.1 trillion cubic meters a year by 2035 from about 3.1 trillion in 2009.”

That “the use of nuclear energy will increase to 1.2 billion tons of oil equivalent by 2035, or 72 percent, from 703 million tons in 2009.”

In short, that the energy bull is on.

My bottom line knows it. Yours should, too.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

More Precious than Gold: Revolutionary Profits Ahead
Locked away since the Manhattan Project, one of the earth's most powerful materials is going to revolutionize everything from energy to circuit boards.

Your Endless Source of Profit: The Birth of Sunless Solar
Years ago, we would've been laughed out of the room for even suggesting it... but his tiny company's revolutionary technology has finally broken through solar power's biggest obstacle. This report provides the details you need to know.

Cuban Real Estate Opportunities: How to Profit from the End of Communism
Big changes are underway in Cuba, starting with the free trade of property.

North Dakota Drilling Rush: Eyewitness to an Oil Boom
Energy and Capital editor Keith Kohl takes to the road to witness the oil boom happening in North Dakota.

Hot Stocks for 2012: Defending America from the Code Wars
Editor Steve Christ explains how the "code wars" have just begun, and why cyber security investments are going to be hot stocks in 2012.

Investing Successfully in an Era of Crisis: Forget China's Collapse, Europe's Implosion, and U.S. Debt
Investors will find bigger, faster profits in an era where everything feels far worse than it is.

2012 Oil Price Forecast: Why Prices Will Creep Higher in 2012
Energy and Capital editor Keith Kohl explains to readers why oil prices are heading back into triple-digit territory.

Investors, Quit Screwing Around and Buy Something: You Can't Build a Bull Market When the Herd Keeps Running for Cover!
The real reason why the insiders have no faith is hidden in an empty shipping container.

More Important Than Europe: China and Rare Earths
So the moral of the story is this: Whatever China is talking about doing five years from now is 20% to 40% more valuable than what's actually happening in the rest of the world today. Keep your eye on the ball.

America's Oil Boomtown: Buy Into the 20-Year Boom
Why more investors are paying attention to America's Boomtown.

Oil to $120: Raising Employment, Iranian Threats, and Rig Rates
One good number will launch the price of oil overnight.

Brian's Roadmap to Prosperity: Bakken or Bust
Back on October 25, I laid out my plan to get millions of unemployed Americans back to work. It's very simple: Open up our resource-rich oil and gas shale regions to exploration and production.

More Important Than Europe: China and Rare Earths

In terms of dollars, China is set to overtake the United States as the world's largest economy next year.

They've "taken" our jobs. They hold $2 trillion of our debt. And they're being looked to to bailout Europe.

Say what you want about China's brand of Communism, the scoreboard clearly shows who's winning the capitalistic game.

The amazing thing is we're able to witness this metamorphosis in real time.

China's evolution from Third World to economic king isn't happening in geologic time, but in front of our very eyes.

In 2000, we used 25% of the world's energy and China used less than 10%. By 2007, we used 22% and China used 16%. In 2015, we'll be tied at about 18%...

By 2020, we'll have fallen to 17% — and they'll be up over 20%.

The force of their ascendancy is mathematically undeniable, and it's permeated every crevice of the global economy.

The Flip of a Switch

George W. Bush signed a bill into law in December 2007 that banned the future sale of the incandescent light bulb.

Australia signed a similar bill the same year.

The sale of traditional light bulbs in Europe has been restricted since 2009.

Surely the market knew how that would affect the lighting industry. It would be a boon to makers of more efficient light bulbs like light emitting diodes (LEDs).

And a boon it was...

~~eac_rare_earth2~~

Companies in the space took off like rockets, shooting upwards of 1,000% in the two years after the civilized world started talking about banning old light bulbs, even in the face of a global financial meltdown.

But then, something happened.

As with solar, the creation of a brand-new, high-demand market led to stiff competition. A market once dominated by GE (NYSE: GE), Siemens (NYSE: SI), and Philips (NYSE: PHG) was seeing entrants like Aixtron (NASDAQ: AIXG), Cree (NASDAQ: CREE), and Veeco (NASDAQ: VECO) suddenly steal market share.

And as with solar, LEDs became a commodity. Prices plummeted. So did the stocks.

Compared to their 1,000% days in 2009 and 2010, a chart of the same companies over the last six months is cringe-worthy.

We saw headlines like:

LED Lighting Prices May Drop 90% As Competition Grows to Meet Demand
Cree Added To UBS List of 'Least Preferred' Technology Stocks
Siemens Plans for Osram IPO Tested by Weakening Growth Outlook

It seemed like the LED sector was doomed.

The entire developed world switching lighting technology wasn't enough to save it. Too many entrants meant economies of scale being reached, falling selling prices, and — gasp! — falling margins.

LED stocks had fallen between 40% and 60% in six months.

If only there was some way to get them back on track? Some country with a billion inhabitants to which the market always responds? A country whose economy and energy consumption was about to displace America as top dog?

Then out of nowhere, like an oasis in the desert, China announced this week it will begin banning the sale of incandescents in five years.

Not right now, like the rest of the world is doing. Five years from now.

And look what that same group of stocks does:

LED stocks were up 20% to 40% on the news.

So the moral of the story is this: Whatever China is talking about doing five years from now is 20% to 40% more valuable than what's actually happening in the rest of the world today.

Papadapawho?

Allow me to set the record straight. The debt crises that have dominated headlines all week are inconsequential.

How can you expect me to believe Greek or Italian insolvency is going to drag down the entire market? It's nothing more than the latest hyperbolic fodder for an insatiable 24-hour news cycle.

If Mediterranean nations teetering on the brink are going to take down the entire economy, how can a light bulb announcement in China send an entire sector up 20% to 40%?

On Monday, Greek Prime Minister George Papandreou was the most important man in the world. By Wednesday, he was out — and Berlusconi was the new “it” man.

All the while, the most important investment story of the week has been completely buried: China is once again manipulating the rare earth market.

With a 95% stranglehold on the market for metals that are crucial for making everything from LEDs to UAVs, China has been making waves for over a year now by toying with supply.

Last year, it sent rare earth prices soaring when it cut export quotas by more than 37%. That was enough to send rare earth miners outside of China up thousands of percent.

This time, China's largest rare earth producer, Mongolia Baotou Steel Rare Earth, has decided to halt production for an entire month in an attempt to drive up prices once again.

Because these metals are critical for defense applications, Congress is mulling the creation of a type of rare earth strategic reserve, similar to what we have with oil.

A report is currently being prepared by the Defense Logistics Agency and will be delivered to Congress by the end of the year.

If China can alter the movement of global markets in turmoil with a lighting announcement, wait until you see what continued rare earth price manipulation and the creation of a stockpile will do.

As Rare Element Resources (AMEX: REE) noted in the Financial Times last Friday:

... the creation of a stockpile could exacerbate the shortage of rare earths outside of China. It may therefore be prudent for the US government to delay its implementation until three or four years after the ramp up of production from the main non-Chinese pure-play rare earths miners, Colorado-based Molycorp (NYSE: MCP) and Australia’s Lynas (ASX:LYC).

No matter when we start our stockpile, one thing is clear: A rare earth supply crunch is on.

Any company with access to them outside of China (and its investors) is about to be rewarded handsomely — no matter what's going on in Greece or Italy.

I have a few plays in mind, particularly one I recently flew to Alberta to check out personally.

You'll be hearing more about them in the coming weeks.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

Cyber Terrorism and Grid Security

Remember when identity theft was all the rage?

You don't hear the term as much anymore, but our plugged-in nature has us more vulnerable than ever.

Identity theft — mainly, fraudulent spending — has affected hundreds of millions of people, causing hundreds of billions in losses worldwide in the past decade.

Today, though, your credit card number isn't the only target of hackers' keystrokes...

What Do You Do Online?

I bank with an online interest-bearing checking account. I use it to make utility, car, cable, and phone payments. It also contains my entire banking and ATM transaction history.

I pay my mortgage through a separate online account.

I have a brokerage account.

I manage my insurance and health savings account (HSA).

I have an individual retirement account (IRA).

I have a credit card account.

And of course, I have an email account, which doesn't forget anything and is a catch-all for correspondence from any person or business I interact with: orders, confirmation numbers, pictures, usernames, etc.

The very fabric of my life — and yours, I'm sure — is sewn together with digital thread.

It's not just our financial data that's at risk; it's our personal information, our likes and dislikes, our habits, and even our geographic location.

Google knows what you need and how you're getting it. It knows where you're going and how you're getting there. It knows what you're cooking. It knows when you're sick.

Social media, apps, and smartphones have added a whole new layer to this.

People chronicle their lives on Facebook, telling the world what movies and books they like, what they're doing over the weekend, even which coworker annoys them. Some even sync their phones' GPS with these accounts to broadcast their location as they go.

It's all out there in the ether, strings of ones and zeros floating on a server in some cloud.

Individually, you may not think much of it. But when combined, you have a dossier on a nation — a psychological profile, a financial profile, a spending profile, a medical history, a travel log, a family tree, a social interaction chart.

We're way past identity theft...

These mountains of data are our new Twin Towers.

~~solar_2~~

The Real Threat of Cyber Terrorism

We've all seen how penetrable supposed "secure systems" can be.

Hacking has come to be the new tool of both criminals and law enforcement. It's at the core of today's activism, now known as hacktivism.

And more and more each day, it's terrorists' new weapon of choice.

Since launching denial-of-service attacks against Scientology websites in 2008, the hacker group Anonymous has since infiltrated the websites of the Australian Prime Minister and Parliament, Sony (NYSE: SNE) (taking down the PlayStation Network), MasterCard (NYSE: MA), Visa (NYSE: V), and the Swedish Prosecutor's office (after Julian Assange was arrested).

It's been involved in the Arab Spring, hacked Spanish police, and released documents from Bank of America.

It's claimed it will bring down Facebook on November 5th. (To Americans these days, that's surely an act of war.)

And it isn't just the Guy Fawkes' stuff...

The Pentagon announced computer sabotage can be an act of war earlier this year. It also unveiled its first-ever Cyber Strategy, which the Wall Street Journal described as “an early attempt to grapple with a changing world in which a hacker could pose as significant a threat to U.S. nuclear reactors, subways or pipelines as a hostile country's military.”

60 Minutes reported last year that hackers have already disabled critical infrastructure in major cities, disrupted essential services, stolen millions of dollars from banks all over the world, infiltrated defense systems, extorted millions from public companies, and even sabotaged our weapons systems...

The segment continued:

"Can you imagine your life without electric power?" Retired Admiral Mike McConnell asked correspondent Steve Kroft.

Until February 2009, McConnell was the nation's top spy. As chief of national intelligence, he oversaw the Central Intelligence Agency, the Defense Intelligence Agency and the National Security Agency. Few people know as much about cyber warfare, and our dependency on the power grid, and the computer networks that deliver our oil and gas, pump and purify our water, keep track of our money, and operate our transportation systems.

"If I were an attacker and I wanted to do strategic damage to the United States, I would either take the cold of winter or the heat of summer, I probably would sack electric power on the U.S. East Cost, maybe the West Coast, and attempt to cause a cascading effect. All of those things are in the art of the possible from a sophisticated attacker," McConnell explained.

"Do you believe our adversaries have the capability of bringing down a power grid?" Kroft asked.

"I do," McConnell replied.

Asked if the U.S. is prepared for such an attack, McConnell told Kroft, "No. The United States is not prepared for such an attack."

"It is now clear this cyber threat is one [of] the most serious economic and national security challenges we face as a nation," President Obama said during a speech.

"We know that cyber intruders have probed our electrical grid, and that in other countries cyber attacks have plunged entire cities into darkness," the president said.

Brazil was the nation that had been plunged into darkness.

The most important thing to know is that this stuff is already happening.

I have an uncle who's worked on it for decades as an analyst for the Navy before moving on to the National Security Administration (NSA), and eventually defense contracting firm Booz Allen Hamilton.

He's moving this week to Florida where he's taken a new job: cyber security for the grid with NextEra Energy (NYSE: NEE). Not a bad stock, by the way, if you like the utility space. It's paying a 4% dividend.

I know there are more pressing issues affecting the global investment community right now, so I just want you to keep this issue in mind...

When the market comes back, this will be one of the prime places to be.

Steve Christ over at Wealth Daily is already starting to give it broader coverage.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

Energy Stocks at a Discount

At first glance, the energy market of late can look like a danger zone.

Both the NYSE Energy Sector Index (^NYE) and the WilderHill New Energy Global Innovation Index (^NEX) have fallen further than the Dow over the last six months.

The Dow has shed about 6% in that time as volatility has reigned.

The Energy Sector Index fell about 15% while the New Energy Index fell more than 35%.

That doesn't really foster confidence.

But the truth is energy shares — almost across the board — are currently trading at a discount.

And if you're in the mood for some easy longer-term gains (and even dividends), you'd be well advised to go bargain hunting over the next few weeks.

Good for the Goose

If you've seen some of these recent headlines, you know the energy sector hasn't been all ho-hum:

Sinopec (NYSE: SHI) Acquires Daylight (TSE: DAY) for $2.2B in Cash
Superior Energy (NYSE: SPN) Merges with Complete (NYSE: CPX) in $6.2B Deal
Statoil (NYSE: STO) Pays $4.4B for Brigham Exploration (NASDAQ: BEXP)
BHP Billiton (NYSE: BHP) Buys Petrohawk for $12.1B
Kinder Morgan (NYSE: KMP) Pays $21.1B for El Paso (NYSE: EP)

That last one is one of the biggest energy deals in history. And it happened this week.

It seems like someone thinks oil companies are on sale at these levels.

If cheap oil companies with access to North America's fossil fuel rebirth are a good buy for Sinopec and Superior and Statoil and BHP and Kinder Morgan... it stands to reason they're a good buy for you, too.

We're all trying to do the same thing here: Buy cheap assets and make money from them.

What's more, all those acquired companies were bought at premiums to their current share prices.

The logic here couldn't be any simpler or more straightforward. Many oil stocks are undervalued.

~~solar_2~~

A Contrarian Gander

A similar thing is happening on the cleaner side of the energy space.

Stock performance in the sector, as I told you above, has been abysmal.

But all the other data is pointing in a different direction...

For starters, the third quarter of 2011 (July – September) saw more money invested in utility-scale clean energy projects than any other quarter in history.

Over $41 billion was invested in that time — 9% higher than the previous quarter and 16% higher than the same quarter in 2010.

Another surprise is that the bulk of that money was NOT invested in Europe, which has led for a decade. It wasn't invested in China either, which has been grabbing most cleantech headlines lately.

Instead, 40% of that $41 billion (or $16.9 billion) was invested in the United States — a 156% increase over the third quarter in 2010...

All while cleantech stocks had one of their worst quarterly performances ever.

The front page story — Solyndra, Evergreen Solar, etc. — is a stark contrast to the bullish data being buried on the back page.

Overall, more money might be invested in cleantech this year than the $243 billion invested globally in 2010. Bloomberg says “Given that the fourth quarter of each year tends to be a strong one, there is a chance that 2011 will run 2010 close, or even beat it.”

Like with oil, companies in this sector are cheap as well.

JA Solar (NASDAQ: JASO), for example, has lost 73% of its share value this year. Yet it's trading at only 30% of its book value and less than four times forward earnings guidance.

Yingli Green Energy's (NYSE: YGE) CEO flat out said, "We believe our ADSs (American Depositary Shares) are currently undervalued." The company is repurchasing up to $100 million worth of those undervalued shares.

I'm bullish on JA Solar and personally own Yingli.

But there are tons of good energy buys out there...

Transocean (NYSE: RIG) is trading at $53.00 with a 6.2% dividend. I'll probably buy that one, too.

There are plenty of problems out there. But you don't invest in problems...

You invest in stocks.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital