Nick Hodge - Angel Publishing

Who Is Henry Hub?

We don't all immerse ourselves in energy.

If I told you XOM beat analysts' Q4 EPS estimates this week at $1.97 on revs of $121.6 billion, you might look at me cross-eyed.

You might understand a bit better if I said Exxon (NYSE: XOM) posted fourth quarter earnings this week and earned $1.97 per share on revenue of $121.6 billion, beating Wall Street expectations.

Sometimes things are unnecessarily complex. Industry jargon, false assumptions about what people already know, and a deliberate effort not to 'give too much away' often make even the simplest energy-related topics difficult for retail investors to understand.

It shouldn't be that way. And we do our best here to offer insights to the market in a way everyone can understand.

With that in mind, I've been receiving more inquiries about 'Henry Hub' than I can ignore. In fact, my Web team tells me tens of thousands of people search for information about the topic every month.

Search no more, fellow readers...

Who is Henry Hub?

Henry Hub isn't a person, but rather a thing. Specifically, it's the central location (hub) for the pricing of natural gas futures contracts in use since 1990.

A BTU is the amount of heat required to increase the temperature of a pint of water (which weighs exactly 16 ounces) by one degree Fahrenheit.

Since BTUs are measurements of energy consumption, they can be converted directly to kilowatt-hours (3412 BTUs = 1 kWh) or joules (1 BTU = 1,055.06 joules).

MBTU stands for one million BTUs, which can also be expressed as one decatherm (10 therms). MBTU is occasionally used as a standard unit of measurement for natural gas, and provides a convenient basis for comparing the energy content of various grades of natural gas and other fuels.

One cubic foot of natural gas produces approximately 1,000 BTUs, so 1,000 cu.ft. of gas are comparable to 1 MBTU.

MBTU is occasionally expressed as MMBTU, which is intended to represent a thousand thousand BTUs.

It's owned by Sabine Pipe Line LLC, a subsidiary of Chevron (NYSE: CVX).

Located near Louisiana's Gulf Coast, the hub connects to four intrastate and nine interstate pipelines owned by various public and private pipeline operators like The Williams Companies (NYSE: WMB), Enterprise Products Partners (NYSE: EPD), and others.

It has two compressor stations that can compress 520,000 decatherms per day (one therm equals 100,000 British therm units).

The entire hub can transport 1.8 billion cubic feet per day (Bcf/d).

Natural Gas Prices

In late 1989, Sabine was selected by the New York Mercantile Exchange (NYMEX) as the official delivery mechanism for the world's first natural gas futures contract.

Natural gas is priced in units of one million British thermal units (MMBtu).

A standard NYMEX natural gas contract is for 10,000 million British thermal units and uses the average of the natural gas prices from Henry Hub's 13 interconnected pipelines.

Contracts expire 3-5 days in advance of the first day of the delivery month, and can be traded up to 72 months in the future.

When you hear someone say, “Natural gas is trading for $XX,” they're referring to the Henry Hub price for the current month's contract.

Right now, natural gas is trading for $2.35 per million British thermal units. That's the Henry Hub price for March 2012 contracts.

If you hear someone talking about "spot price," that's the Henry Hub price at that moment in time — not associated with a future contract.

~~eac_nat_gas~~

Record Lows

I have an ulterior motive for this educational session...

Natural gas prices are now the lowest they've been in a decade, and it's all because of increased supply.

Newfound shale gas supplies have led a bevy of drillers large and small to push U.S. natural gas production to the highest levels ever.

The Associated Press reports: “Supplies in storage are well above average, and some experts estimate the nation has enough natural gas to meet its needs for a century.”

That's probably good news for you, because more than 50% of U.S. homes use natural gas for heat.

With the price so low, some “experts” have floated the idea that large drillers like Exxon should curb production to allow prices to rise. But its fourth quarter report, released this week, showed the company hasn't slowed down at all.

When asked why, Exxon investor relations chief David Rosenthal said, “We remain bullish on the future of natural gas as an energy source.”

So do we.

And it's why, as low natural gas prices help save money on your heating bill, we've been showing you how to add money to your bottom line by investing in the most valuable drillers and service companies bringing all this gas to market.

~~nat_gas2~~

~~nicks_signoff~~

The Keystone XL and the Northern Gateway

We're all aware of the Keystone Pipeline.

It's the $7 billion project that would send a much-needed 1.1 million barrels of crude oil per day from Canada's oil sands to the American Heartland.

But you're probably a bit fuzzy on what its status is.

Because of fiery political rhetoric and backroom maneuvers, it can be tough to figure out where the project stands.

I offered my no-spin take a few weeks ago, when the headline was that Obama “killed” the Pipeline, concluding:

This man has an election to win over the next ten months.

He can't kill a pipeline that would create thousands of jobs, break a supply logjam in Oklahoma, and carry between 500,000 and 1 million barrels of secure Canadian oil to the States every single day.

It will happen... eventually.

A Tale of Two Pipelines

In addition to the Keystone XL, Canada also has plans to build the $5.5 billion Northern Gateway Pipeline, which would send oil to a British Columbia port for export to Asia (China).

That pipeline has a capacity of 525,000 barrels per day.

Combined with the Keystone, the two pipelines would send 1.625 million barrels per day out of Canada.

To be clear, the Canadian government wants to build both pipelines. With reserves second only to Saudi Arabia and Venezuela, it would be an economic boon to the Great White North. And Prime Minister Stephen Harper has shown he's willing to play politics to make it happen.

After Obama's decision two weeks ago to postpone the Keystone, Harper publicly said he was “profoundly disappointed,” and spoke of the need to “diversify” Canada's oil industry.

That's code for “sell it to China.”

The thing is, Enbridge's (NYSE: ENB) Northern Gateway is facing the same environmental pressures as TransCanada's (NYSE: TRP) Keystone.

Currently, the former project's Joint Review Panel is canvassing public sentiment along the pipeline's 731-mile proposed route. Already, more than 4,000 people have signed up to testify, and I'm assuming not about how much they want a pipeline in their backyard.

What's more, together the pipelines could move 1.625 million barrels per day.

For the most recent month that data is available — October 2011 — Canada exported 47.03 million barrels, or 1.52 million barrels per day. And data from the Canadian Association of Petroleum Producers shows total production will hit 3.5 million barrels per day in 2015, 4.2 million in 2020, and 4.7 million in 2025.

So throw the politics out the window. Canada has enough to fill both pipelines.

Harper just wants to have his cake and eat it, too. And I don't blame him.

~~eac_nat_gas~~

A North American Comeback

The real story here is being buried by political spin...

It isn't about whether the United States or China gets Canadian oil. It isn't about environmentalism. It isn't about Obama.

The real story here is a veritable North American oil rush.

We're just fighting over where it will go and who will make the most money.

As I told you in my last update on this pipeline situation, oil is a global market. A fight over where a pipeline should reside doesn't change the amount of the stuff in the ground.

Sure, the political angle will play a supporting role in this year's U.S. election. And yes, the environmental crowd may get a “victory” by tying both pipelines up in court for a few years.

But at the end of the day, I believe both pipelines will be built.

The oil sands in Canada and the shale in the U.S. will both be fully developed.

To think otherwise is naïve.

And to get caught up in the trivialities of politics and environmentalism surrounding this development is to seriously take your eye off the ball.

There's a reason China invested $16 billion in Canadian energy in the past two years and $6 billion in the U.S. in just the past few weeks...

A major oil production boom is underway.

~~nat_gas2~~

~~nicks_signoff~~

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~~

U.S. to Be Natural Gas Exporter

We've been meandering down a path of energy insecurity ever since the Carter-era gas lines.

As a nation, we use 19.14 million barrels of oil every day. We produce just 7.51 million barrels per day (mbd).

We are 61% energy dependent. This isn't opinion; this is a fact taken from the most recent data right on the U.S. Energy Information Administration website.

The rest comes mainly from three countries:

Canada, 2.53 million barrels per day
Mexico, 1.15 million barrels per day
Saudi Arabia, 1.08 million barrels per day

No other country gives us more than a million barrels per day.

Nigeria and Venezuela used to, but we now get 983 mbd and 912 mbd from them, respectively, as Peak Oil's grip takes hold.

The question has always been: How do we cut our 61% (11.63 million barrels per day!) dependence on foreign oil when we've never produced more than the 9.63 million barrels per day we generated at our peak in 1970?

Gas Time

That same EIA has forecast a boom in shale production will lead to a 20% increase in oil production and a 29% increase in natural gas production.

Concerning natural gas specifically, we produced 21.65 trillion cubic feet (tcf) in 2010. We're expected to produce 27.9 trillion cubic feet in 2035.

But here's the thing...

The United States only used 24.64 trillion cubic feet in 2010, which means we're about to go from a natural gas importer to a natural gas exporter.

Much of it will be natural gas liquids, or LNG.

The switch is expected to happen in 2016 with an export capacity of 1.1 billion cubic feet per day, rising to 2.2 billion cubic feet per day by 2019.

And that has a lot of companies and investors very excited right now.

As Reuters recently noted:

The search for higher-value energy resources has prompted companies such as Chesapeake and Halliburton to shift drilling from "dry gas" fields to those that are "liquids-rich," meaning they contain oil or natural gas liquids such as propane, butane or ethane, whose prices are based on those of crude oil.

Even foreign companies are rushing in...

China Petroleum & Chemical (NYSE: SNP), otherwise known as Sinopec, has paid $2.2 billion to access Devon Energy's (NYSE: DVN) fields in the Utica, Tuscaloosa, and Niobrara Shales.

France's Total (NYSE: TOT) has paid $2.3 billion to Chesapeake (NYSE: CHK) to access 25% of its 619,000 acres of Ohio's Utica shale.

~~eac_nat_gas~~

Political Support

Shale gas actually has support from both sides of the aisle.

We know where the Drill, Baby, Drill crowd stands.

But look what the Democratic White House had to say at the beginning of 2012, as part of a report called, Investing in America: Building and Economy that Lasts:

Only a few years ago, fears of a looming natural gas shortage led to significant investments in the rapid construction of liquefied natural gas (LNG) port facilities that could enable the United States to import vast quantities of natural gas. Projections from the Energy Information Administration (EIA) as recently as 2005 suggested expanding natural gas imports for decades. Without the prospect for adequate domestic supplies of natural gas at reasonable prices, companies increasingly pointed to overseas operations where they could access large quantities of low-cost natural gas.

Since the mid-2000s, however, the discovery of new natural gas reserves, such as the Marcellus Shale, and the development of hydraulic fracturing techniques to extract natural gas from these reserves has led to rapidly growing domestic production and relatively low domestic prices for households and downstream industrial users. The potential benefits to the U.S. economy are substantial.

An abundant local supply will translate into relatively low costs for the industries that use natural gas as an input. Expansion in these industries, including industrial chemicals and fertilizers, will boost investment and exports in the coming years, generating new jobs. In the longer run, the scale of America’s natural gas endowment appears to be sufficiently large that exports of natural gas to other major markets could be economically viable.

Twenty Years of Uses

The above snippet mentions a few of the potential uses for our newfound gas wealth, namely lower costs for industries like industrial chemicals and fertilizers.

But there's much more than that...

You'll also enjoy lower home energy costs.

Already this year, the price of natural gas has fallen below $2.50 per million British Thermal Units (MMBtu), a price we haven't see in more than a decade.

That will translate to your bottom line — and the bottom lines of companies that use large amounts of it.

Dow Chemical (NYSE: DOW) and Westlake Chemical (NYSE: WLK) have both announced they'll make major investments in new facilities because of low natural gas prices.

Vallourec (PK: VLOWY), a French maker of oil and gas drilling supplies, is investing $650 million in an Ohio steel mill that will produce pipes for fracturing... and create 350 jobs.

Companies like Westport (NASDAQ: WPRT) are hard at work making car engines that run on natural gas. Cummins is working with them on natural gas-powered big rigs.

Clean Energy Fuels (NASDAQ: CLNE) is building the network of fueling stations that would keep those cars and trucks topped off.

Cheniere (NYSE: LNG) has signed three 20-year contracts worth $28 billion to ship LNG to Britain, Spain, and India.

Shell (NYSE: RDS-A) has said it will build a “world-scale” natural gas processing plant in Ohio, Pennsylvania, or West Virginia.

It's all part of revived natural gas market that grew by 63% in 2011 to $31 billion — and that will grow another 19% this year to $37 billion.

Over $30 billion of that will be in the United States, where 19,000 new wells will be fracked this year, up from 16,000 last year — creating tens of thousands of jobs along the way.

~~nat_gas2~~

~~nicks_signoff~~

Pipeline Straight Talk

Here's some rare straight talk about the Keystone XL pipeline, which would carry oil from Alberta's tar sands to refineries and distribution hubs in Illinois, Oklahoma, and the Gulf Coast.

There's been a ton of spin, so I'd like to give you the facts and the best investments for the eventual outcome.

Pipeline Nuts and Bolts

In 2011, after vicious opposition from environmental journalist Bill McKibben, the Natural Resources Defense Council, and the World Wildlife Fund, a decision on the pipeline was delayed until 2013.

At issue were the emissions associated with tar sands and the route of the pipeline, which crosses ecoregions and the all-important Ogallala Aquifer.

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Waiting until 2013 was too long for pipeline proponents in Congress.

So when they passed the temporary tax cut bill in December, they added a provision giving Obama until February 21st to make a decision on the pipeline.

The president, siding with a State Department announcement made last month, said this week that:

The rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.

And Obama made clear this wasn't a permanent killing of the project, adding: "This announcement is not a prejudgment of the merits of the pipeline," and further that this decision "does not change my Administration's commitment to American-made energy that creates jobs and reduces our dependence on oil."

What he's saying is that this is a temporary denial, pending submission of an alternate route by TransCanada (NYSE: TRP), which it says it will submit.

This man has an election to win over the next ten months. He can't kill a pipeline that would create thousands of jobs, break a supply logjam in Oklahoma, and carry between 500,000 and 1 million barrels of secure Canadian oil to the States every single day.

It will happen... eventually.

This CEO Accidentally Reveals a Big Secret

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

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

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

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

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

Global Market

Right now, 99% of Canada's crude exports come to the United States.

It has 90% of all proven reserves outside of OPEC.

And as Canada made clear this week, there are plenty of places to sell that oil.

In addition to the Keystone XL, Canada wants to build the Northern Gateway Pipeline, which would take Alberta oil to ports in British Columbia.

Canadian Natural Resource Minister Joe Oliver affirmed this fact when he said the “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market.”

Billions of barrels of shale oil are going to be sold to someone.

Whether on Main Street, America or the streets of Shanghai, the companies selling it will be equally profitable.

~~nicks_signoff~~

The Secret to Gold Prices: Real Interest Rates: TIPS Sellout at Negative Yield
Why would a record number of investors pay to lose money? Could it be they think inflation is coming?

Politics Killed the Pipeline, Not the Profits: When Elections Outweigh Energy Security
Why Obama's rejection of the Keystone XL pipeline will have bigger consequences for us in the future...

Oil and Gas Service Stocks: A Different Way to Profit During this Shale Boom
Energy and Capital's Keith Kohl offers investors a new way to find profits during North America's shale boom.

Gold Buffalo Tribute Proof is a SCAM: Beware of This Gold Coin Scam
Editor Nick Hodge sheds some light on a gold coin scam that's been going around, and shows readers how to educate themselves about buying precious metal coins.

Obama's Hydraulic Fracturing Pledge: The Biggest Promise Obama Didn't Break
For all of Obama's flipping and flopping, it looks like he got one right...

Energy, Agriculture, Metals All Drifting Higher: The Commodity Supercycle
We've all seen what the commodity supercycle has done to copper, gold, and many other resources. Copper, nickel, gold, wheat, corn and, of course, oil will never again see the prices of the nineties and early oughts.

Yap Has No Gold: Limestone Blocks, the Ultimate Storehouse of Wealth
Yap, as you well know, is a coral island in Micronesia. According to the their Tourist Bureau: "Yap is so remote it takes a two day journey by plane, but the moment you step off the airplane, a topless woman will great (sic) you with a fresh flower lei."

Natural Gas Export Stocks: Will This EIA Report Push Natural Gas Stocks Higher?
Editor Jeff Siegel discusses what the coming EIA report means for natural gas stocks.

The Shale Boom is Giving Birth to Other Bull Markets: Bigger than OPEC
Those of you who remember the introduction of the drug Viagra to the in 1998 will agree it was a game-changer for the pharmaceutical markets. The same thing is happening in the American oil and gas shale boom.

Gold Coins and Freedom: 32 Miles from Purgatory
If you don't own physical gold, you should get some.

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~~

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~~

North American Oil Production On the Rise

We've been talking a lot recently about North American oil...

About new fracking technologies. About new formations. About the rush of foreign countries — namely European powers and China — rushing in to secure a piece of this newfound wealth.

Today, I want to make an important distinction.

Because with all the recent landgrabs and bullish sentiment and headlines about oil boomtowns, I want to make sure you see the forest for the trees.

Supply Still a Problem

The forest is still Peak Oil.

We're simply staring at a few trees of increased production in one area.

The rest of the world isn't as lucky. Here's what I mean...

OPEC member Nigeria is producing the same amount of oil today as it was a decade ago:

Venezuela is actually producing less than it was ten years ago:

Libya is way down:

Iran has been sliding for six years:

And Angola started to slide four years ago:

That's five OPEC nations with supply heading down, down, down, down, down.

~~oil-sign-up~~

And it doesn't get any better in non-OPEC countries that were once major producers...

Mexico has fallen off a cliff:

And so has Norway:

Consumption Also a Problem

In countries whose supply isn't shrinking, there's another problem: growing economies.

The New York Times reports:

The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.

Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.

Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter.

It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years.

To recap, many countries — both inside and outside OPEC — are undergoing supply contraction. Those that aren't are exporting less because they're using more internally.

Are you starting to see the forest?

World oil demand is marching up and to the right, expected to surpass 115 million barrels per day in 2025 from only 91 million barrels per day today:

Yet production in many countries is either waning or being consumed by the producing country.

It's the perfect recipe for higher oil prices, which, by the way, Goldman, Barclays, and Deutsche are all forecasting for this year.

But Wait — There's More

I just showed you notorious oil-producing countries whose production is on the skid.

Now take a look at production in Canada and the United States:

See the difference?

Canadian oil production has been surging for years.

American production is undergoing a renaissance.

As prices rise due to falling production elsewhere in the world, rising demand, and any consequences of the Iran situation...

Companies operating in the United States and Canada — especially in rich new shale finds — will be the main beneficiaries.

Companies like Northern Oil and Gas (NYSE: NOG), Oasis Petroleum (NYSE: OAS), Continental Resources (NYSE: CLL), Whiting Petroleum (NYSE: WLL), Petrobakken (TSX: PBN), and more are already showing how the strength of new North American oil production is translating into financial wealth.

Even as the Dow has tacked on 2,000 points since October, it can't keep pace with shale oil stocks.

Oil prices aren't getting any lower and shale production isn't slowing down anytime soon, so you need to be putting yourself in a position to profit now.

~~eac_shale_gas2~~

~~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.

The Most Disruptive Energy Technology Ever Invented Is

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

The mainstream media doesn't have a clue!

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

electric utility company out of business for good!

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

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.

U.S. New Top Natural Gas Destination

I recently went to tour a graphite mine about 150 miles northwest of Ottawa.

From the highway, it was another several miles down a snow-covered forestry road to get to the mine, which is in the middle of thousands of acres of Crown land.

Two moose tried to block our passage on the way in.

Massive fallen pine trees need to be cleared from the road every single day.

You'll be hearing plenty more about that mine — and about graphite — in the coming weeks and months...

But it's something else I learned on that trip that piqued my interest. And I think you'll want to know about it, too.

Remote Power

Ever wonder how you get electrical power to a graphite mine in the middle of the Ontario wilderness, miles from any power line?

I hadn't either, but it was a prime concern for this young mining company.

Every cent of cost is one less cent profit.

So all the options were weighed in thorough feasibility studies: build a substation from the highway and run a line; build diesel generators; tap into a nearby Enbridge gas pump house and build gas turbines on-site.

The winner?

Natural gas won by a wide margin.

Even with the up-front costs of tapping into the Enbridge facility, laying a new pipe, and building turbines, the current low price of natural gas — and the forecast for it to remain low — means it's a cheaper option than buying electricity or diesel to run generators.

That's incredible.

Swimming In It

New techniques and formation information have led to a global reassessment of natural gas reserves.

The advent of fracking and the discovery of shale formations mean proven reserves of natural gas could be several times more than once thought. And that's keeping prices at two-year lows — below $3.00 per BTU.

Even better, these formations are, for the most part, in countries previously considered “energy poor,” namely the United States, China, and Argentina.

This means countries once dependent on energy imports could soon become energy exporters... and this has the “energy rich” incumbents starting to worry.

The sentiment is clear in this recent quote from the head of the Venezuelan Gas Processors Association:

The global energy chessboard is changing, and markets will be realigned. Countries that have never had so much available energy will become self-sufficient, and perhaps even exporters. Fossil fuels may become cheaper, the growth of alternative energies will slow down, and new alliances, investments and trade networks will be established.

Indeed, those alliances, investments, and trade networks are being established right now.

~~oil-sign-up~~

One Day: $4.5 Billion

You may have still been hungover from New Years, but two very indicative events occurred on Tuesday:

1. For the first time ever, China's Sinopec (NYSE: SHI) bought into a U.S. shale play. It paid $2.2 billion for a 33% interest in five of Devon Energy's (NYSE: DVN) fields. Devon had been shopping the package, which includes 1.2 million acres in the Utica, Tuscaloosa, and Niobrara Shales since November.

2. France's Total (NYSE: TOT) paid $2.3 billion to Chesapeake (NYSE: CHK) and a smaller partner for a 25% stake in 619,000 acres of Ohio's Utica shale.

If you're starting to think this is part of larger, much more valuable trend, you're right.

Keith and I told you several times last year about the heavy merger and acquisition activity caused by new shale finds.

Here we see China and France chomping at the bit to the tune of $4.5 billion.

In total, 2011 saw $473 billion in energy asset transactions.

This year could be even bigger.

To that end, we've identified three stocks operating in U.S. shale formations that are most likely to be a part of this year's boom.

As the global energy chessboard changes, the world is starting to hail the new shale king.

~~eac_shale_gas2~~

~~nicks_signoff~~

International Oil Investments

Over this New Year's weekend, I mused about India and China increasing their national petroleum reserves and about Israel, Iran, and $150 oil...

Here's a Reuters headline and first sentence from this morning:

Oil above $110 on Iran, China Data

Crude oil rose above $110 a barrel on Tuesday as tension between Iran and the United States stirred fear of a possible disruption to oil supplies from the Middle East and as Chinese data showed economic activity increasing.

That price was for Brent, U.S. crude was up over $102.

And the news is only getting more interesting, with the rhetoric — both governmental and media — only getting stronger.

We're starting to see phrases like “cut off oil exports from the region” and “shut the Strait.”

The Ayatollah's have warned they'll “take action” if U.S. aircraft carriers return to the Gulf.

Iranian Army Chief Maj. Gen. Ataollah Salehi told the world:

The Islamic Republic of Iran will not repeat its warning... the enemy's carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf. I advise, recommend and warn them over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once.

In the past week, Iran has produced its first nuclear fuel rod and test-fired two long-range missiles.

France is urging the rest of Europe to join the United States in imposing sanctions such as an embargo on Iranian oil exports and a freeze on its central bank assets.

Dog and Pony

On the financial side, at least, no one's buying it.

I saw a representative from an international Swiss consultancy call it “a public relations show.” The term “saber-rattling” has become hackneyed in three days' time.

But Strait blockage or not... Nuclear tit-for-tat with Israel or not... Embargo or not..

Only one thing is certain and real:

As the same Swiss consultant said, whether they have teeth or not: “In this environment of increasing tensions and rhetoric, global asset managers are unlikely to give up their long exposure to oil.”

~~oil-sign-up~~

Easy Money

It isn't like we haven't seen this show over and over for the past three decades.

The first thing I did this morning after seeing the Iran news was click over to my brokerage account. My investment in Transocean (NYSE: RIG) was up nearly 4% in premarket — almost as high as the Dow went up all of last year.

And Transcocean wasn't alone...

Major oil companies with market caps half a billion or higher were making similar or bigger moves.

By lunchtime, TransAtlantic (AMEX: TAT), Tesco (NASDAQ: TESO), Suncor (NYSE: SU), and plenty of others were marching even higher.

Owning a simple oil ETF like the ProShares Ultra DJ-AIG (NYSE: UCO) would've made you more than 7% richer already this year.

This isn't brain-racking, intensely-researched, needle-in-a-haystack stuff; this is political unrest in oil's most fertile region driving up the commodity's price — and therefore, the value of companies that operate in that sector.

And you should be putting it to use for your bottom line.

Think about your goals...

Are you running for office? Are you the head of an NGO? Are you the chairman of an international non-profit with billion-dollar resources?

If you responded "no" to all those questions (I certainly did), then you needn't take an ideological stand on the issue.

Forget the water cooler chat about how crazy Ahmadinejad is.

Quell that inner monologue debating U.S. policy on Israel.

Unless that stuff has a direct bearing on your day-to-day life and finances, it's a mere distraction.

Always wear your investor's hat.

And always be thinking not of the outcomes and intricacies of international and domestic events, but of how you can put them to financial use for you. And then act on them.

Spending a few minutes buying Exxon (NYSE: XOM), Chevron (NYSE: CVX), or any of the other big names in your IRA this morning would've already been worth the effort.

You would've enrolled in a 2%-3% dividend program that far beats the return on many other “safe” investments out there.

No one is going to capitalize on the opportunities for you...

You have to do it yourself.

~~nicks_signoff~~

Of Israel, Iran, and $150 Oil

Next year is going to be very interesting.

The presidential primaries and general election will be more melodramatic than an episode of Jersey Shore.

MTV producers in their wildest dreams couldn't come up with some of the stuff we've seen already: Ni*gerhead, vaccine-induced retardation, Herman Cain.

Wait 'til it's down to just two.

But 2012 will be interesting for more than the free entertainment of the election...

After all, either winner will be controlled by special interests, as has been the tradition for decades.

It'll be fascinating because oil's already at $100. Brent is at $108.

The Ultimate Safe Haven

Gold has become the world's go-to investment.

But it's often misunderstood...

That's why we partnered with one of the world's foremost gold experts to answer all your questions.

To participate, sign up for the free seminar here.

The Wall Street Journal reported last week that both India and China are increasing their reserves, and that will put upward pressure on prices.

India said it's more than tripling the size of its reserve from 39 million to 132 million barrels.

China's going to 500 million barrels from 103 million.

That'll add a nice 490 million barrels of global demand over the next few years...

Oh, and Iran's threatening to block the daily flow of 15 million barrels through the Strait of Hormuz. The Telegraph notes the implications:

If the ayatollahs' carried out their threat, Iran could, at a stroke, choke the main artery for the West's energy supplies.

The Iranians have been planning for such an eventuality for the past twenty years. Unlike the late 1980s, the last time Iran seriously disrupted shipping passing through the Gulf, Iran now has the equipment, in terms of anti-ship missiles, to enforce the threat.

The U.S. Navy, which has two aircraft carrier groups permanently stationed in the area, would, of course, be forced to intervene, thereby leading to open hostilities between Washington and Tehran.

But if you think that is an alarming prospect, just imagine the mayhem that would erupt if Israel decided that it had had enough of Iran's prevarication over its nuclear program and decided to launch unilateral air strikes to knock out Iran's nuclear facilities.

Happy New Year!

Hello $150

High oil isn't the enemy. It's a profit catalyst.

When geopolitics send the price soaring, production costs stay the same for those with access to oil.

And of course, the Bakken comes to mind...

It's awash in oil at a time when global supplies are in question.

It won't be a global panacea, but it will be a hell of an investment as oil ticks higher.

~~nicks_signoff~~

Recession-Proof Secret: Why There'll Be No Unemployment in the New Year in North Dakota
There's a small town in the heart of the United States where there are more jobs than people. And what's driving this boom is bigger than just a small town, a zip code, or a single state... It's an industrial expansion the likes of which we haven't seen since the early 20th century.

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.

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

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

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

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

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

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

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

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

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

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

Personal Responsibility

I get 12.8 miles per gallon and I love it.

There, I said it.

Why don't I care?

Because I drove all year for just over $3,000. I four-wheeled through snow and mud and corn and soy and wheat fields.

I towed my girlfriend's car. I hauled loads of stone and dirt and mulch.

I helped friends move. I avoided the delivery fee for new appliances.

I took deer to the butcher. I took bulk trash to the dump for free. I took coolers and rods to the beach and the lake and the river, sometimes with a boat in-tow.

Even though it's cost me more than it ever has — $3,087.26 for 886.1 gallons at an average price of $3.47 to drive 11,346 miles — I'd do it all over again...

And I will next year.

By 2015 there will be more than 1.3 million electric cars on the road...

And nearly every one of them will require lithium.

Most of it is expected to come from here:

And there's enough at this one spot to boost the value of this company's stock by 3,000%.

But don't take my word for it...

Click here and see the numbers for yourself!

Hoggin' and Loving It

Yep, I'm still a data hog, tracking every gallon, mile, kilowatt-hour and therm.

You can find my 2009 and 2010 gas use here and here, and the past four years' gas use below:

Year	Total Spent	Average Price per Gallon	Total Gallons Used	Total Miles Driven	MPG
2008	$2,185.47	$3.09	715.71	10,611.3	14.83
2009	$1,947.18	$2.23	871.69	12,707.5	14.58
2010*	$2,364.52	$2.76	856.65	12,305	14.36
2011	$3,087.26	$3.47	886.1	11,346.1	12.8

*Switched from Chevy Silverado 2WD to Ford F-150 4WD in October.

I'm in touch with my energy use, and I know that even if I had a 51 MPG Prius, my annual gas use would cost me $772. ((11,346 miles / 51) x $3.47).

I'd save $2,315.26.

But I couldn't go four-wheeling. And I couldn't tow cars or haul dirt and mulch. I couldn't tow a boat. And, perhaps most important of all, I couldn't help friends move.

All that stuff has a price, whether tangible or not. Towing cars costs money. So does having landscape products and appliances delivered to your house.

For me, it's worth more than $2,315.26 a year. For others, it's not.

I get it.

What I don't get are the stupid articles that try to hammer home pedantic points, like one I came across from MSNBC that described consumer reaction to this year's high gas prices thusly:

When the gifts from Grandma are unloaded and holiday travel is over, the typical American household will have spent $4,155 filling up this year, a record. That is 8.4 percent of what the median family takes in, the highest share since 1981.

The trap has caught Michael Reed of Charlotte, N.C. He hasn't been able to find work since he lost his computer-support job in 2009. Now high gas prices are claiming more of what he has left. He and his wife won't exchange gifts this Christmas.

"I try to drive as little as possible so it doesn't take such a chunk out of my wallet," he says.

In 1981, when the economy was sliding into recession and oil prices were high because of Middle East turmoil, gas ate up 8.8 percent of the typical family budget, says Fred Rozell of the Oil Price Information Service.

Over the past decade, gas has taken up 5.7 percent of the family budget. If families had spent only 5.7 percent this year, they would have saved $1,300.

Excuse me while I get out my violin...

Wrong Focus

You know, I was just telling a colleague the other day about the first week I started as an associate editor here at Angel for a whopping $27,000 a year.

Something happened with my first paycheck, and it didn't arrive as expected. I literally had to call my parents for cash to get me through until it came. I was 23 years old.

A $3,087 gas bill that year would've been 11% of my salary.

The point MSNBC makes — and it's one I hear echoed by Americans across the country — is that high gas prices mean you have to skimp on Christmas or drive less. That high gas prices are the enemy.

This is sophomoric.

The idea that high gas prices are to blame is partly what's wrong with this country.

Those prices are only an honest reflection of commodity supply and demand in the market-based system we all live in. It's an external, individually uncontrollable factor.

If those prices are eating too much of your budget, change the thing you have control over...

Increase your budget.

I Just Witnessed the Impossible

Not far from the U.S. Capitol, a tiny $1.50 tech firm unlocked the secret to harnessing solar energy — at ANY time, from ANY window!

It's so efficient and affordable that CNBC is calling it energy's "silver bullet."

Before the first big ticket contract comes through — doubling the share price — click here for exclusive video footage to learn more about this company that will forever change the energy landscape as we know it.

Today, that $3,087 gas bill is about 2% of my budget.

I've put myself in a position not to complain, but to choose.

I can choose to continue driving my truck or I can choose to pay a premium for a hybrid or electric and reduce my gas bill. But the choice is mine.

You think Michael Reed of Charlotte, N.C., can choose?

He's not even buying Christmas gifts, let alone a new hybrid vehicle.

He needs to fix himself first. All the human interest editorial condemning high gas prices in the world can't do that for him, or for anyone else.

Here's an Idea

Instead of remaining oblivious to global markets and continuing to wallow in a sea of self-loathing while continuing to blame everyone and everything but yourself...

Why don't you read up, get invested, exploit tax loopholes, pay down debt, save, and take control of your financial destiny?

That's what I did. And it's now what thousands of people pay me to tell them how to do.

So oil prices are back near $100 per barrel.

Why didn't you buy an oil ETF and turn the high prices into personal profits? You can do it. You may just need someone to show you how.

That's what I and my fellow editors are here for — not to tell you what to choose, but to put you in a position to be able to.

Expect more broad-themed and hard-hitting editorial to that end in the New Year.

~~nicks_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~~

Bullets for Christmas

Not those kind of bullets... bits of information.

To keep it light for the holiday, I'm going to give you three news headlines from the past three days with bullets from each.

If you're not convinced of the Bakken's success and potential by the end, you never will be...

1. The Vancouver Sun: Enbridge's Bakken pipeline approved

The $180-million pipeline will move crude from the Bakken and Three Forks formations in Montana and North Dakota to Cromer, Man., via a new pump station at Steelman, Sask.
Pipeline companies have not been able to keep up with the flood of production, which averaged approximately 400,000 barrels per day on the U.S. side from 2,000 bpd a decade ago.
Enbridge VP: “The growth potential in the region is tremendous — with our existing infrastructure, and the proximity of our main line system, Enbridge is well positioned to capture opportunities created by increasing production.”
Earlier this month Enbridge said it would be investing $145 million to ship up to 70,000 bpd Bakken crude by rail between 2012 and 2013 to U.S. Midwest markets as an interim measure while it completes its Bakken expansion.

2. CBS News: N. Dakota leads 3-state region in oil, gas leases

Federal oil and gas lease sales in the Dakotas and Montana set a record in fiscal 2011, with parcels in Western North Dakota's booming oil patch fetching the most revenue.
Oil and gas lease sales in the three states during fiscal 2011, which ended in September, totaled $109.9 million, with North Dakota accounting for $104.2 million. Montana tallied $5.2 million in lease sales, followed by South Dakota with $364,146.
Leasing revenue in the three-state region shows no sign of letting up.
In North Dakota, "every little nook and cranny" of available federal land is being leased.

3. Reuters: Bakken by the numbers

The magnitude of North Dakota's oil revolution is hard for outsiders to grasp. Superlatives fail to convey the speed and scale of the transformation and its impact on the economy of the state.
On current trends, North Dakota will overtake California as the third-largest oil producer in the United States by the end of Q1 2012. Output is likely to exceed production from Alaska by the end of 2012 or early 2013.
In October, the state's oil output rose to 488,000 barrels per day, up by a stunning 9 percent compared with the previous month (464,000 b/d) and an extraordinary 42 percent compared with October 2010 (344,000 b/d).
The state unemployment rate is just 2.9 percent, compared with 8.6 percent nationwide, which effectively means that there is more than full employment (assuming some level of frictional unemployment due to turnover). In the counties on the western side of the state overlying the Bakken formation, unemployment rates are less than 2 percent and labor shortages are acute.

The New Saudi Arabia

A natural event took place that moved apart two major landmasses...

As a result, over 70 billion barrels of King Saud's oil were lost.

Today, this untouched resource is finally being recovered — and you'll never believe who just bought up the single biggest share.

Click here for the details.

Merry Christmas!

This year, the Bakken is certainly spreading more cheer than Santa...

The North Dakota state employment service reports there were 18,500 job vacancies open in October — and only half that many people looking for work.

The number of new housing permits in the United States has been cut in half since 2007. Permits in North Dakota are up 50%.

The U.S. national debt is over $15 trillion. The North Dakota state budget is expected to have a $300 million surplus at the end of its two-year cycle in June 2013.

North Dakota is now the fastest-growing state in the Union. Its median income is above the national average for the first time in decades. Its GDP is growing three times faster than the rest of the country.

You know any other place enjoying this kind of economic prosperity right now?

It's clearly translating to stocks as well...

Here's Enbridge (NYSE: ENB) — the company that just got Bakken pipeline approval — compared to the Dow Jones for the entire year:

This is going to continue for years. Revenues are exploding.

And there are three drillers in particular you should be aware of as this happens. They'll be the gift that keeps on giving.

~~nicks_signoff~~

Next-Generation Electricity: Solar Technology from DC Company to Shine Bright
The latest technology from a little-known D.C.-based outfit is about to become a household name. It’s over 300% more efficient than rooftop solar panels and can generate electricity even from artificial light sources. Get your shares of this company while they're still under the radar.

American Oil Renaissance: Why the Next 5 Years are Gonna be BIG
The CEO of an American oil corporation says he's found 24 billion barrels right here on U.S. soil. This will make us a bigger producer than Saudi Arabia in the next five years.

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

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

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

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

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

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

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

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

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

Canadian Zinc Permit Looming

On October 21st, I told readers of my Alternative Energy Speculator to buy shares of a company called Canadian Zinc (TSX: CZN)(OTC: CZICF).

On December 9th, we sold it for a 31% gain.

Zinc is a critical metal used for galvanizing iron and steel.

It's used as an anode material for batteries. It's used in alloys to make bronze, machine bearings, and nearly 14 billion pennies to date.

It's part of photocopying products, fire retardants, luminescent pigments, and dietary supplements.

But none of that is why we so easily profited...

And as I'm about to show, you have the chance to make that same kind of gain in the next few days.

Timing

I have an advantage.

I sit in front of two computer screens and read all day. I get to follow multiple markets, stocks, trends, and patterns very closely. And because I'm tuned in, I pick up on a lot of things earlier than most.

A couple months ago, I came across some articles on Canadian Zinc. The story was interesting and promising, so I dug a little deeper...

It didn't take long to learn the company had been pursuing permitting for its Prairie Creek mine since 2009. Delays and bureaucracy ensued, and by August 2010 the latest news was that an environmental permit decision would be issued by March 2011.

I came across the story in October, and still no decision had been issued.

So I dug deeper still.

The First Nations seemed to support the project, which is critical in Canada. The company had done community outreach, and had been developing the project for years. A working mine had existed on the site before.

In other words, I deduced there was no way a negative decision would be issued. Canadian Zinc was going to get that permit.

Since a decision was supposed to be issued in March, I figured it had to be fairly soon. So I alerted my readers:

We've also been talking more about zinc. Specifically, the qualities that make it a good option for grid and electric vehicle batteries and some of the other metals that can be produced alongside it.

As promised, I have a zinc play to release to you today.

The company is Canadian Zinc (TSX: CZN)(OTCBB: CZICF). It has a large zinc mine ready to go in the Northwest Territories.

The final permitting process has been ongoing for years. A decision was supposed to be issued in March of this year. It hasn't happened yet, but it's getting closer. And all signs point to a positive outcome, including starting to incorporate First Nations into the plan.

We're buying Canadian Zinc (TSX: CZN) (OTCBB: CZICF).

We bought in at $0.61.

What happened?

From Reuters on December 9th:

Up to $0.83 from $0.61!

We took the money and ran.

~~eac_rare_earth2~~

It Ain't Luck

You see what happened there?

No mention of Europe, the stalling economy, unemployment, or housing woes. None of that stuff mattered in this case. The bullish scenario was irrefutable.

I have a habit of finding situations like that — and it goes back to when I first got started nearly five years ago.

My readers were in Xantrex (a electric inverter company you've never heard of) before it was bought by Schneider Electric in 2007; Solarfun as it ran from $9 to $19 in five months of that same year (it's not even called that anymore and it trades for $1.00 — but that doesn't take our double away!); BYD Company (PK: BYDDF) as it went from $11 to $55, thanks to Warren Buffett's buying 10% of the company for $230 million...

And on and on.

I clocked 16.4% in 2007 as the Dow only rose 5%.

I reported 46.01% in 2008 — not closing a single loser — as the entire market tanked 31%.

I put up 15.87% in 2009 by closing over 80 winning positions.

My total 2010 portfolio was up 19.01% while the Dow only went from 10,000 to 11,500.

And I've done it by spending eight hours a day in front of two screens — as well as countless trips abroad for further investigation — finding gems like Canadian Zinc.

Your Turn

I know something else about Canadian Zinc...

Environmental approval wasn't the only permit needed, though it was enough to send the stock higher.

Next, the decision goes to the Federal Minister of Aboriginal Affairs and Northern Development, who either accepts or rejects the environmental approval. He has ten business days to do so.

Today is day nine.

If approved (and I think it will be), the project then moves to the regulatory phase managed by the Mackenzie Valley Land and Water Board, with input from territorial and federal agencies for final permitting and licensing (I mentioned the bureaucracy.)

Because this was already an existing mine, the company could be a major producer of silver and zinc very quickly.

Internationally recognized metal analyst Greg McCoach has written that once the permit is received:

[...] this stock could be $10 to $20 very quickly. Remember, this is not an exploration play; this is a story that could be a major producer of silver and zinc within six months of receiving the final permitting.

You don't see too many situations like this; it is very unique.

The measured and indicated resource is capable of supporting a mine life in excess of 10 years at the planned 1,000-tonne-per-day mining rate. With the inferred numbers, you easily have a mine life of over 20 years and still have plenty of extra exploration upside potential.

I like the odds and the potential payoff.

And I'd be buying shares of Canadian Zinc (TSX: CZN)(OTC: CZICF) ahead of that looming decision — just like I did back in October.

~~nicks_signoff~~

Generational Investment Opportunity

Here's the problem with America as I see it: We try to project ourselves as one thing, while internally we're something completely different.

I caught a glimpse of a comedy special this past weekend where the comedian said:

"We all feel divided — conservative or liberal. I want everyone to know I’m both, conservative and liberal. When it comes to my daughter I am a staunch conservative who believes in hard-core conservative values. When it comes to your daughter, I’m liberal. She can be as promiscuous as she wants to be."

Or how about Bill Johnson, the Alabama conservative who ran on a platform against gay marriage only to be found donating sperm to lesbian couples.

Or Nancy Pelosi saying we need to reign in the banks and Wall Street while continually profiting from information only privy to Congress.

And on a more personal level, the friends on Facebook who portray themselves as happy and financially secure when you know they're anything but.

Or the money manager who recommends you buy certain funds because he's incentivized, but wouldn't buy them for himself or family.

Whether for political, financial, or Machiavellian reasons, many of us pretend to be something we're not.

Instead of doing things because we think it will get us ahead or impress our peers or get people to vote for us, I think the world would be much better off if we didn't factor others' perceptions of us into our decision-making process.

Walk Small

Growing up, my grandfather (the American, not the Italian immigrant) always told me to walk small and carry a big stick.

But he wasn't referring to Roosevelt's riff on international diplomacy (I know the original says "speak softly")...

As he taught me to drive a manual-shift 1940s Ford tractor, erect livestock and poultry fences, cut banks with a sickle bar, till land, cut trees, split wood and more, he was trying to teach me how to be the strong, silent type.

Basically, that you don't have to show off and gloat about the things and skills you have. Enjoy them and keep them to yourself (walk small) and use them precisely when needed (carry a big stick).

This went for boyhood and pubescent scraps as well. Don't try to fight, don't start a fight — but certainly be able to finish one.

It's advice that's served me well and that I still employ to this day.

~~eac_nuclear1~~

Big Stick

Thankfully, I haven't had to use my “big stick” too much. Put a few wannabe tough guys in their place in high school and college...

But mostly, the thing I carry is put to use to maximize life's enjoyment in an economic fashion.

I've rescued a few stranded drivers, finished my own basement, added a full bathroom, built my own driveway, tend my own garden, dress my own game, and plenty more.

Those mostly derive from learned skills and are physically applied.

But the best part of a well-rounded big stick is something psychologist Robert Sternberg calls “practical intelligence.”

In his book Outliers: The Story of Success, Malcolm Gladwell describes it like this:

It is procedural: it is about knowing how to do something without necessarily knowing why you know it or being able to explain it. It's practical in nature: that is, it's not knowledge for its own sake. It's knowledge that helps you read situations correctly and get what you want. And, critically, it is a kind of intelligence separate from the sort of analytical ability measured by IQ.

To use the technical term, general intelligence and practical intelligence are “orthogonal”: the presence of one doesn't imply the presence of the other. You can have lots of analytical intelligence and very little practical intelligence, or lots of practical intelligence and not much analytical intelligence, or — as in the lucky case of someone like Robert Oppenheimer [head of the Manhattan Project] — you can have lots of both.

I credit most of my success to “practical intelligence.”

Where does it come from?

It's a set of skills that have to be learned. It has to come from somewhere, and the place where we seem to get these kinds of attitudes and skills is from our families.

I use it in everyday life but, fortunately, I also use it to read macro trends and profit from them in the stock market.

It's the same acumen that allowed me to not get caught or punished in my adolescent years while I was doing things as devious, or more so, than the other kids my age.

It's what allows me to read situations and people in an instant, and decide what to say and how to say it for maximum effect. It's how to get into a store two minutes after they've locked the door and how to get an upgraded hotel room for free just because I feel like it.

When applied to every aspect of life, success is imminent.

Your 1830s Moment

Success isn't all individual. Much of it comes from external circumstances: war, periods of rapid industrial and technological improvement, etc.

Outliers also ranked the 75 richest people in human history, from pharaohs and monarchs to landowners and barons...

The most interesting part? Nearly 20% of them were born within nine years of each other in the mid-1800s — between 1832 and 1840.

They amassed wealth in the trillions of dollars.

Sure, they were bright and ambitious; but they were also born at precisely the right time to profit from the emerging dominance of railroads and Wall Street in the 1860s and 1870s.

Why am I telling you all this?

Because we have a shot at an 1830s moment, maybe not to become billionaires — but definitely to attain safe and secure wealth.

As Forbes noted last week: “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.”

I've mentioned several times recently that the Dow is trading at the same level it was in 1999.

Forget all the bullshit — politics, the election, "Toddlers & Tiaras," Facebook (unless you jump in and out of the IPO). If you want to be truly financially free, you have to leave the herd behind.

As the bile that's accumulated in the system over the past decade is purged, you will have the opportunity to do just this.

Next year won't be the end of the world, but it will be a major turning point.

The bad assets, loans, and debt are going to come due. The guise of fiat money and printing money will be shed...

And when that happens, we'll be in a prime position to buy stocks at decade lows with high dividends.

Coil your springs now. When the time comes, you'll want to buy some of the strongest names in all the sectors — especially energy.

Until then and while it happens, precious metals will be your friends. Gold's back at $1,600 today.

I'll keep you updated every step of the way as to how to play this shift with stocks.

But I'm not a gold guy. Greg McCoach is, and he's actually offering a free seminar on how to invest in gold in the coming years.

In the meantime, continue to hone your practical knowledge and put your success before the opinions of others.

~~eac_rare_earth~~

~~nicks_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

"Emergency": A Book Review

I have a confession to make...

I sometimes look at the world through what Neil Strauss calls “apocalypse eyes.”

It's not something I want to happen. I view it as a hope-for-the-best-prepare-for-the-worst kind of thing.

As Strauss puts it in the best-selling book Emergency:

... all it would take is one war, one riot, one dirty bomb, one natural disaster, one marauding army, one economic catastrophe, one vial containing one virus to bring it all smashing down. We've seen it happen in Hiroshima. In Baghdad. In Halabja. In New Orleans.

Our society, which seems so sturdily built out of concrete and custom, is just a temporary resting place, a hotel our civilization checked into a couple hundred years ago and must one day check out of. It's an inevitability tourists can't help but realize when visiting Mayan ruins, Egyptian ruins, Roman ruins. How long with it be before someone is visiting American ruins?

The author didn't always think like this, and neither did I.

He goes on to say people his generation (born 1973 or later) did not have anything serious enough happen to them to consider their country at risk.

The first twenty years of this century saw World War I. Then the Depression. Then World War II. The 50s saw Korea and the 60s, Vietnam.

“And then, from 1980 to the close of the century — nothing. Or at least no war, no national catastrophe, no defining event powerful enough to pull us outside our self-centered, solipsistic world, outside of our preoccupation with ourselves and our financial and emotional well-being, outside of our comfort zone.”

You know what happened at and after the turn of the century...

As Strauss says, “History happened to us. Terrorist attacks. Domestic crackdowns, flooded cities. Bank failures. Economic collapse.”

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The point of the book is to be prepared for every eventuality. Because everyone thinks it can't happen to them.

Strauss cites Hitler, whose goal wasn't to subjugate other countries; but rather “to cleanse them, to wipe out the so-called weak races and speed the evolutions of the human species through the propagation of the Aryan race.”

Doesn't sound like something that could happen in the civilized Western World, but Hitler got away with it for seven years.

“Few of the most brutal periods in medieval history — from the sack of Rome to the early Inquisition — were as coldly barbaric as what happened in our supposedly enlightened modern Western civilization.”

After we fought a global war to end it, the world vowed to never let it happen again.

“In the USSR, Stalin continued to deport, starve, and send to work camps millions of minorities. As the bloody years rolled on, genocides occurred in Bangladesh in 1971, Cambodia in 1975, Rwanda in 1994, and in Bosnia in the mid-1990s.”

All the people affected thought it would never happen to them, either. And as the author keenly notes, it isn't the event that we fear; it's the breakdown of the social contract that would follow if the system broke down, "the snap."

As Philip Gourevitch wrote in his book on the Rwanda massacre, “Neighbors hacked neighbors to death in their homes, and colleagues hacked colleagues to death in their workplaces. Doctors killed their patients, and schoolteachers killed their pupils.”

Just in Case

We've seen the snap happen on our own soil.

Rapes and murders skyrocketed in the lawlessness following Katrina. Police were recently convicted of shooting for sport an unarmed mentally challenged man. Thousands looted the city, many others were starving. It was every man for himself.

It can happen quicker than you want to think.

And it's not just natural disasters and terrorist attacks you need to be prepared for...

Your rights and liberties are quickly being confiscated by your own government.

Consider this erosion of freedom cataloged in Emergency:

2001: 9/11 terrorist attacks; 1,200 people arrested and held indefinitely without charge; Bush signs USA PATRIOT Act, allowing the government to secretly wiretap and search the personal records of citizens without a warrant; war in Afghanistan begins; no-fly list created, eventually growing to over a million names.

2002: Male immigrants and visitors from over 25 countries required to register with the U.S. government; more than 13,000 registrants face deportation; Department of Justice allows FBI to spy on religious and political groups without probable cause; Bush doctrine of preemptive war announced; Homeland Security Act passed; Department of Justice memo authorizes torture up to “serious physical injury” in overseas interrogations.

2003: Iraq War begins; Department of Homeland Security established; Operation Liberty Shield detains visitors seeking asylum from 34 Muslim countries; Bush continues to centralize and expand power through the unprecedented use of executive privilege and signing statements, which enable him to ignore or reinterpret bills that have passed Congress.

2004: Department of Homeland Security begins affixing electronic monitoring ankle bracelets to thousands of illegal immigrants; government outsources domestic intelligence collection to private companies to circumvent laws restricting spying on citizens; US-VISIT system requires all foreign visitors to be digitally photographed, fingerprinted, and checked against a computer database on entry; photos of prisoners tortured in Abu Ghraib prison surface; subsequent Red Cross investigations find evidence of prisoners being sexually abused, set on fire, and forced to eat a baseball at Guantanamo Bay.

There's an undeniable correlation between these actions and the Nuremberg Laws.

It's not paranoia or conspiracy. As you'll learn in the book, plenty of billionaires see the same correlation and are preparing themselves and their families to live without “the system.”

One of the billionaires is Spencer Booth, who refers to himself as a 'B Person.' He and several other billionaires chronicled are already seeking second and third passports from other countries and making ten-year plans for escape and survival.

You should read the book for yourself, but I want to pass along a couple convincing quotes from Spencer before I wrap this up..

“A bunch of other B people are doing similar things right now. Do you know the Walton family? They own Wal-Mart. They just built an underground bunker near their home in Arkansas. They even have a helipad in case they need to evacuate. If something does happen in America, it may be difficult to get out. So we're taking flying lessons in a few months. I'm not taking any chances with my family. I just bought them guns, in case we have to shoot our way to the airport. I'm executing a ten-year plan to make sure everything that could go wrong is protected against. It's about creating revenue sources and residences in multiple locations, so that if you have to flee one country, your daily existence won't change.”

The book ticks up over 400 easily-digestible pages. I read the whole thing during a roundtrip flight to San Francisco and back.

In addition to convincing you (I don't need convincing; I read for support) why such skills and plans are necessary, Emergency provides a good launchpad to learn and enact them.

From acquiring dual citizenship to surviving in the woods for a week with only a knife, Neil Strauss did it — and begins teaching you how to do it as well. He pursues offshore bank accounts and hard metal assets, as well as shooting skills and EMT training.

As Strauss tells readers in the prologue:

Today I can draw a holstered pistol in 1.5 seconds, aim at a target seven yards away, and shoot it twice in the heart. I can start a fire by rubbing two pieces of wood together. I can identify seven hundred types of footprints when tracking animals and humans. I can survive in the wild with nothing but a knife and the clothes on my back. I can find water in the desert, extract drinkable fluids from the ocean, deliver a baby, fly a plane, pick locks, hot-wire cars, build homes, set traps, evade bounty hunters, suture a bullet wound, kill a man with my bare hands, and escape across the border with documents identifying me as the citizen of a small island republic. When the shit hits the fan, you're going to want to find me.

I'll be available, too.

I already have many of those things covered.

And before you write this off as loony, take one last look at a passage toward the end of the tome:

I used to wonder if Kurt Saxon, Tom Brown, Bruce Clayton, and all the other survivalists I met ever regretted dedicating their lives to a skill set they never had to use. But now I know the answer. They use those skills every day. Because after three years of searching and learning and accumulating, I've learned that it isn't actually survival these skills bring. It's peace of mind. I now know that I can take care of myself and my loved ones. But until the day comes when I have to do that, I'm going to be taking care of everybody else.

Being the man — a real man — is a great feeling.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital

P.S. I can't do the entire book justice in this small space, so please read it for yourself.
P.P.S. If want you get a look at some of the products Neil Strauss used — or get them for yourself — click here.

Bigger than Brigham: Don't Miss My Next Round of Bakken Picks
I have three unknown Bakken plays that are set to explode with the drilling frenzy going on right now in North Dakota. One stock trades for just $7.60 a share... The second trades for less than $2.50 a share... My third Bakken stock might be the biggest blockbuster yet — trading for just $6 a share, it has a total of 74,000 acres in the Bakken... and the company’s insiders have been buying its stock like crazy in the open market. Don't miss your chance to pick these up while they still trade for less than $10!

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.

Jim Rogers Vaporizes Fed: He is Waiting — and Hoping — for the Worst
Jim Rogers warns that the Fed has vaporized an entire generation.

When the Shale Revolution Spreads: The Whole World is Watching this Gas Boom
Editor Keith Kohl tells reads why the whole world is closely watching the shale revolution taking place in the United States.

How Investor's Are Crushing Big Oil: It's Not Too Late to Enter This Energy Bull
Energy and Capital editor Keith Kohl shows you how investors are consistently outperforming some of the largest oil companies in the world.

Bond Investing: Beat the Stock Market with Bonds
Volatile stocks, low interest rates, and drive investors into bonds. Here's the best bonds to buy now.

U.S. to Steal Oil Crown from Saudis: Thanks to Shale, U.S. on Top by 2017
Goldman Sachs said in November — though it wasn't carried by any major U.S. economic or energy media outlets — that the United States would pass Saudi Arabia in oil production by 2017.

Greenland Oil Bonanza: The Arctic Oil That Never Was
Editor Jeff Siegel discusses how to profit from the rise of U.S. oil production.

2012 Natural Gas Outlook: The Best Energy Trades for 2012 - Part I
Analyst Ian Cooper takes a look at why natural gas prices will continue to drop, and offers a few ways to cash in.

The Most Powerful Investing Strategy of All Time: The Rule of 72
Editor Steve Christ take a look at the most powerful force on earth and explains why time is every investors best friend.

African Oil Boom Town: Fastest Growing Region on Earth
Why be in the market at all?

Get Long on Bakken Oil Stocks: Same Day, Different Year... Same Fight
Following WWII, thousands of returned soldiers packed up their families and headed to cities where there was work. Today we are seeing the same phenomenon: Old industrial and agricultural states like Pennsylvania, Ohio, and North Dakota are seeing their populations swell because of oil and natural gas drilling.