Profiting from the Global Resource Grab

By Dr. Russell McDougal

We are living in unique and historical times. One in which the entire globe is being scoured for the natural resources essential to the continued development and progress of mankind. You will want to be fully informed of these macro events and align your portfolio accordingly for maximum profits.

What’s so unusual about this first decade of the 21st Century?

We are seeing a synchronized global economic expansion that is bringing billions of people into the fold of the modern world. China, Russia, India, Brazil and a host of other developing countries are now queuing up to secure a continued supply of minerals, fuels, food and water for their growing populations.

At the same time, we have just come out of an historic bear market for exploration and mining, after years of low commodity prices. After this protracted period of underinvestment, the global resource infrastructure is totally inadequate for the growing task.

There is now unprecedented global competition for diminishing commodities. The signs are everywhere. “Peak Oil”, for example, isn’t a mountain in Colorado.

History is replete with examples of power struggles -- even outright wars – fought over oil, water, gold, gems and minerals. Times are no different today, as resource scarcities put enormous pressures upon governments. Need a few examples?

Putin, the Russian Czar, has been playing hardball with Europe over supplies of natural gas. In 2003 he also dismantled the Yukos oil group and their intended dealings with the West. Canada has nixed Chinese attempts to purchase high-level mining conglomerates. Venezuela has threatened the U.S. with oil disruptions. South Africa has changed its mining laws to see that those favored by the state get a bigger piece of the pie. Bolivia has nationalized their petroleum industry. Not to mention the “Petro-Wars” in the Middle East and Central Asia.

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The Dusty Pile of Maps that Hides a $14.6 Billion Treasure

30 years ago, the biggest energy giants walked away from millions of acres of land with proven energy reserves. One savvy little company went around picking up that land for as little as a dollar an acre. With the price of those reserves skyrocketing more than 1,300%, this company is now sitting on BILLIONS. As an early-in investor you stand to make four times your money when the company soon begins full scale production.

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Two credible sources recently projected a scenario under which China will utilize its TRILLION dollar holdings of U.S. dollar denominated instruments garnered via trade surpluses to secure natural resources. Talk about a macro event!

The Chinese are already involved throughout Africa, South America and other locales assisting these lesser developed countries in building modern infrastructures of highways, power plants, bridges, water treatment facilities and airports. What’s the quid pro quo?

The Chinese subsequently sign contracts with these countries for future commodity supplies or simply achieve a ‘first in line’ status. This direct beneficial assistance to these resource rich countries is pretty shrewd. You can be well assured that $1,000,000,000,000 can buy some goodwill.

 “Last in line” status will prove to be a major problem as this plays out.

Quite obviously, the global supply of resources is under pressure or we wouldn’t see this myriad of events on such a grand scale. So, how should you invest to take advantage of these ingrained trends?

There is still plenty of money to be made in most of the commodities… oil, gas, gold, silver, copper, lead zinc and so on. All remain under current supply constraints.

On the other hand, you may be more interested in some special situation resources that really seem to have the deck stacked in their favor. Let’s look at some of them and exactly what it is that makes them so unique.

Uranium last saw a bull market in the 1970’s. There has been a dearth of Uranium production since then, as exploring, developing and mining came to a near standstill and the infrastructure dismantled. We have long depended upon existing stocks of uranium – even to the point of pulling it from decommissioned Russian nuclear weapons - for continued supply. The stockpiles are nearly depleted and Russia is balking.

Nuclear power is now back in vogue as it is now seen to be safer, cleaner and more efficient than more traditional sources of power. Hundreds of nuclear power plants are set to come on board in the coming years and this will only intensify the ongoing supply deficits.

The prices of almost every Uranium stock rose considerably in the last few weeks when Cameco, the world’s largest uranium producer, announced flooding at their large Cigar Lake project. The market was depending on future production from this mine, and it is still questionable whether it can be salvaged.

Supplies of resources are stretched thin across the globe and susceptible to these all but predictable disruptions. It is shocking how many key global commodities are located in hostile or unstable countries and therefore vulnerable to disruption.  

Both molybdenum and tungsten are under supply pressures as they are used to manufacture harder forms of steel (in addition to a multitude of other uses) used extensively in building projects worldwide.

Both moly and tungsten are predominately found in China and China is exporting less and less of these products as they need them internally. Global supply breakdowns are virtually inevitable with most commodities, and therein lies the opportunity.

Other minerals with positive supply/demand fundamentals are indium, vanadium and what are known as the rare earth elements. These are all relatively unknown metals, but they are strategic and quite necessary for modern technology.

A worthwhile goal is to find a company with a significant and economic supply of a scarce metal in a secure country.

Are there such exploration and mining stocks for uncommon elements such as tungsten, indium, molybdenum and others? Yes, absolutely. But there are not many of them. Can they be found in ‘secure’ countries? Surprisingly, yes.

This is a global phenomenon and you will want to think and act accordingly with your investment dollars.

Resources... get you some! Everybody else is.

Invest Resourcefully,

Rusty

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Market Watch

Profiting From a Double Bottom

By Charles Delvalle

Some of the best investments you can make are in stocks that have been hammered. The trick is to buy the stock after it has bottomed out and begins a long ascent to higher prices.

But how do you know when the stock has hit THE bottom? A double bottom chart pattern will often show you the way.

A double bottom chart pattern consists of four primary characteristics:

1. A bottom which forms a support line.
2. A rise which peters out, forming a resistance line.
3. A second bottom which finds support at the same place the first bottom did.
4. A rise which breaks previous resistance and confirms the double bottom pattern.

What this pattern usually tells you is that the lowest price for the stock has been reached. Once that happens, buyers flood the market and take the stock above its previous high.

When you see the stock break the former resistance, it is usually a great entry point before the stock continues higher.

If you bought Intel near the confirmation point in the chart above, your total investment would be up over 17%.