Saturday, July 25, 2009

Greetings from Vancouver: Presenting the 2009 Agora Financial Investment Symposium

Here's a line I heard several times at last year's well-named Agora Financial Investment Symposium: "A View From the Peak":

"Any mountaineer will tell you the way down is the most dangerous part of the climb."

This is a bloody truth.  And last year we couldn't have nailed it any better.  In fact, the conference occurred almost at the same time that the market topped and crumbled.

You know the gig: the whorish cardhouse folded.  The credit markets spewed vile sputum. Markets around the world collapsed.

We now live in a new world.

And if you've read your Agora Financial fodder for some time you were hopefully prepared for this inevitably nasty financial crisis.

Because we railed against runaway debt, dumb politics, and the financial fad culture for a decade in our flagship e-mail newsletter Daily Reckoning.

For example, last year the Daily Reckoning's Bill Bonner exposed the World-Wide Crack Up Boom.  His writings and his conference speech referenced Ludwig von Mises' theory of a massive inflationary boom-bust.  And it couldn't have been any more timely.

Armed with that insight, you would've been among the first to go short when the financial firms hit the skids.

But the beautiful part about our annual weeklong jaunt in Vancouver is that the Symposium is bigger than one idea.

Even, better, it could be more powerful (for your future prosperity) than any other week of the year…and don't worry if you couldn't make here in person.  Because you can still take advantage of every speech and stock pick presented…

Your Money's Future in the New Financial World

"Your Money's Future" is an appropriate subtitle for this year's conference.

Because in this new world there are new rules ― new opportunities ― new risks ― new chances for incredible gains.

But that's not all…

This year's AF Investment Symposium also celebrates a "Decade of Reckoning."

On July 23rd 1999, Agoran architect Bill Bonner hit "send" on the first issue of the Daily Reckoning…

Now, the Daily Reckoning reaches nearly a million people world-wide. It's translated into 6 languages every day.

New worlds…timely predictions…ten amazing years of publishing incendiary and profitable ideas…

But let's stop here and start from the start.

Who am I? And where am I? Let me explain…

Vancouver, British Columbia ―
Not Your Average Commodity Wealth Town…

Even though just east and north of here lay resource-rich tracts holding some of the world's great stores of gold, silver, copper and iron ore…

…from my room on the 12th floor of the palatial Fairmont Hotel in the heart of downtown, I see not one belching smokestack. I don't hear a single burp from a rail yard.

What I see: a sleek, modern metrop that still maintains the elegance and polite attitude of your favorite small town.

For example, yesterday I strolled Stanley Park (a walk of just minutes from the Fairmont), where among hundreds of other souls old and young I stalked along the seawall from Second Beach to Prospect Point.

I smoked in the crispy air and beautiful Burrard Inlet views during my ride among the centuries-old cedar trees that scalp the sky…

Later, I ducked into the posh Vancouver Art Gallery (currently displaying select pieces from Vermeer and Rembrandt, on loan from Amsterdam's chic RijksMuseum)…

And finished my day in the packed restaurant row of Japanese, Malaysian, Thai, and Indian hotspots on Denman Street…where I spent hours sampling some of the most decadent foods I've ever tasted.

By sundown ― I wanted to relax. I watched the sunset at English Bay Beach, and sipped a cup of coffee as the sun disappeared behind the lush, green hills across the bay.

The natural resource mecca of Vancouver is holding up quite nicely, thank you. And maintaining its dignity and charms like few other towns could.

Yes, the worst financial face-suck of the last 75 years has chomped lending and squeezed bottom lines from here to Toronto, New York, Europe, Dubai and all points East…

But amid the towering glass and steel architecture and hip, globe-spanning array of restaurants and nightlife the city has to offer, I cannot help but think ― Vancouver will emerge from this protracted financial mess stronger and more beautiful than ever.

And so will you.

Because of the Agora Financial Investment Symposium.

After all, this year we're celebrating a decade of Bill Bonner spackling the truth. Of Bill needling the insipid, impotent jesters who suckle wannabe kings.

And Bill does this for a reason, yeah. He wants Agora's ideas to help you weather the storms - and increase your personal wealth ― no matter the market clime.

So now it's time for me to get to some of those new ideas…and how you can get your hands on them ― from the comfort of your own home. Today, if you choose.

First, I should properly introduce myself…

I'm Greg Grillot, former manual laborer and co-creator of Whiskey & Gunpowder.  Been with Agora Financial since the beginning, and let's hope there ain't gonna be an end.

I'm your "Roving Reporter" for the Vancouver Conference. 

The Roving Reporter job is simple.

I'm just gonna tell you exactly what goes down. In my jade-free view. 

I will report to you, direct to this e-mail address, every day of the conference ― from today until next Monday ― so you don't miss out on one salient syllable or meaty stock pick.

I don't plan to get much sleep. Not with presentations from Outstanding Investments Editor Byron King, Chris Mayer of Capital & Crisis, Patrick Cox from Breakthrough Technology Alert, Resource Trader Alert's Alan Knuckman…

PLUS ― main-session talks from Dr. Marc Faber, Rick Rule, Doug Casey, Juan Enriquez, and Bailout Nation author Barry Ritholtz all lined up!

Does that sound useful to you? 

Do you want the advice and commentary that will inform your life? 

Do you want the 22+ specific stock picks?

I know you do.

And that's why I'm gonna give all of this to you.

Right now.

Look, I need to give you the opportunity to be here even though you ain't here. 

It's **necessary**. 

Maybe you couldn't make it to British Columbia.  For whatever reason.

But ― You can still be here, without BEING here.  I'll explain: 

Here's the next best thing to attendance: I want to personally deliver you the whole conference. 

I want to send you an audio recording of every single main session presentation,

I want to send you every single stock pick.  Every dig at Goldman.  Every nonchalance and BON MOT.

Look, I know you ain't here… I know you ain't here with me wading with perfecto uber-model women…and nearly perfect investment advice.

That don't matter. Here's why:

Because we're recording everything.  And I'd like to send the recordings right to you.  I'd like to send CD's to your front door and your instantly downloadable files to your e-mail inbox (when they're ready), if you'd like.

Easy, right? 

And this way, you can't miss a recommended company. 

You can't miss one idea. 

Now, I just got word that this set is available to all who order while this year's Symposium is in session (July 21st�27th, 2009) for only $99 for the MP3 versions and just $149 for the CDs…

Or BOTH MP3s AND CDs for Just $149

The one catch is this: the price for these recordings will shoot up at least $100 right after the Symposium ends.  So you have a pretty limited time to get your recordings for that big discount.

For now, you can get it all for an extremely low ticket price.

Simply click this link right now and you can get these recordings…

Then, be on the lookout for my next dispatch tomorrow ― when the 2009 Agora Financial Investment Symposium officially kicks off!

Dr. Marc Faber, Juan Enriquez and perennial favorite Rick Rule are all scheduled to speak.

I'll have all the details on the picks ― plus more…


Agora Financial Investment Symposium Day 1: Magic Salamanders,BUY GOLD and the Newest Normal...

ACTG... 010001110001110...

Does that sound like a bunch of gobbledygook?

Or does it sound like the simple codes that let humans dominate the earth...?

It's the latter. Weird, eh?

And what about the fact that your DNA is a mere 1.23% different than a chimpanzee's?

Or that bioengineered goats now produce milk that battles cancer. Or that a woman fully regrew her own trachea after a horrific bout of cancer?

Or that this litte salamander holds the key to allowing American soldiers to regrow lost limbs:


So said Juan Enriquez, the Chairman of Biotechonomy during his speech yesterday at the Agora Financial Investment Symposium. He's an early- stage venture capitalist in these world-changing industries.

He claims that those lines of seemingly random numbers and letters define both the biological and technological power of mankind. Let me explain.

You see, those numbers - zero and one - form the binary language that powers modern computing. And those letters A, C, T and G describe the pieces of your genetic code.

So those 6 letters and numbers gave you life and make your day-to-day existence possible. Amazingly simple, yes?

And even more, Juan claims that these fields - modern computing and emerging genetic biotechnology - will make early investors extremely rich.

Imagine getting in on the ground floor of the medical technology that can help humans regrow their own arms. Or powerful supercomputers that can fit in your coat pocket? Or the most effective cancer treatment yet known...

We're talking historic, life-changing profits from the science that promises to help humanity live better, healthier, more complete lives.

As interesting, helpful and compelling as Juan's emerging technology ideas are, another, more familiar theme popped up in no less than 4 different speeches today: resource investing.

5 Speakers Offered Opportunities in this One Sector,
So You Ought to Listen...

Agora Financial Symposium famed stand-bys Chris Mayer, Eric Fry, Rick Rule, Frank Holmes and Dr. Marc Faber all hit different angles of commodity investing.

Here's where the day took a decidedly macro - um, gloomy bent. But gloom begets opportunity, right?

Let's start with the good Doc Marc Faber, editor of the pleasantly- titled Gloom Boom and Doom Report...who I met last night at the bar and shared in some hilarious, bawdy banter.

First I must laud Marc's light-speed Swiss-accented speech. It slams out the most ideas in the least time. However, he rifled it out so quickly that understanding it all proved a strong test of my attention.

He started with a discussion on the FED and how it discourages you from sound action such as saving money due it's foolhardy interest rate policy. He then went on to state that higher inflation is inevitable. And that the yuan should double versus the U.S. dollar over the next ten years.

"Robert Mugabe is Bernanke's mentor."
- Dr. Marc Faber

Dr. Faber then offered a list of sectors to take advantage of:

He thinks you should short US gov't bonds...
Go long Gold...
Look to go long select Asian equities with beefy 6-7% dividends...
Look for Asian stocks at 20 year lows...
And avoid real estate in financial areas...

Then he gave more general, overarching advice: Grab some actual commodities and hold them someplace other than the U.S. And move your money out of America...

Of course, rather than listen to my summary of his speech, you can grab the full audio recording of Doc Faber's Symposium presentation on your copy of the 2009 audio recordings. More on that in just a second...

After the Dr. presented, Rick Rule, perennial Symposium favorite and Founder of Global Resources Investment, Ltd took the stage...

Now, The Daily Reckoning's Bill Bonner has referred to Rick as "the Best Resource Investor I know." And resource investing's what he spoke about today...

He said that there are only two types of commodity stock investors: contrarians and victims. Obviously, you don't want to be a victim.

Rick said that "the only cure for high prices is high prices. And the only antidote for low prices is low prices." So that means that you must be a contrarian - you must buy when prices blow to rock bottom - you must sell when prices rocket to Mars - to successfully play the resource markets.

Rick had a little formula you can use to find these madly low-priced resource stocks:

1) Find a commodity with steady demand presently priced below how much it costs to dig it up
2) Find a lousy business that produces that commodity and buy it at liquidation prices
"When you get confident you might consider selling. When you feel terrified, you might consider buying."
- Rick Rule

And then Rick insisted that, despite the recent blow back in commodity stock companies, we're still in the first leg of a resource superbull market. He pointed to the inevitable rise of emerging economies like China and India. When those people get wealthier, they buy more and more actual stuff like refridgerators and food. Stuff that relies on raw resources. So he sees a huge rise in demand for these resources.

He then pointed to specific sectors that promise some good runs in the near future.

First, he spoke of Canadian small and microcap oil and gas plays. He called these the "ugly step sister" to alternative energy plays.

Rick sees the alternative energy sphere as the next great bull market. Because, with such fervent gov't support, even the "stupid stuff" like biofuels get your tax money thrown around...You can't stop this huge wave of governmental and social support.

Here are the specific alt. energy sectors he mentioned:

1) geothermal energy
2) small-scale hydro
3) solar
4) wind
5) uranium
Rick then went on to explain his two FAVORITE sectors. Each one is a no brainer way for you to double your money in the coming years. But out of respect for the conference attendees, it wouldn't be fair if I gave you everything for free here. Instead, you'll have to grab your own copy of the audio recordings to find Rick's two favorites.

Next up was Chris Mayer, Agora Financial's Managing Editor and editor of Capital & Crisis and Mayer's Special Situations. He presented a speech called "the Coming Agriculture Breaking Point..."

Chris detailed an impending global resource crisis that Americans tend to ignore: the food crisis. You see, the world's farmland has a nasty double pinch right now: skyrocketing global demand and a topsoil and freshwater shortage.

First, the demand picture. The global population has boomed over the past decade, adding 600 million people to the picture. That's basically 2 Americas in terms of new people on the globe.

And, the massive populations in China, India, and other countries only grow wealthier. And as they grow wealthier, they eat more and better stuff. In China alone, demand for fruits, vegetables, and meats has shot up. Chinese people spend as much as 70-80% of their income on food. Chinese kids have actually started to get taller and fatter. And once these eating habits become the norm, there's no rolling them back.

You add that rampant demand growth with the nasty supply factors of disappearing topsoil and crushing droughts and we have a recipe for a global agriculture boom. Topsoil disappears with each crop. One bushel of wheat uses two bushels of soil. And soil naturally replenishes on a slow scale of decades. Add the desertification of large previously arable landmasses and the late, skimpy monsoons and general drought conditions around the world and you get both a short-term future and long term food crisis.

And Chris mentioned 2 companies uniquely positioned to take advantage of this coming bull market:

1) Potash Corp (POT : NYSE)
2) XXX Irrigation Specialist Company *
[Note: This company is too small to give away here. To learn the name,simply secure your copy of the 2009 Symposium recordings. If not, you can still use Chris' research on Potash Corp. to your advantage if you'd like.]

Then Frank Holmes, CEO and CIO of U.S. Global Investors, Inc took the stage to give a rousing talk about everyone's favorite store of real wealth - GOLD!

Specifically - Frank unpacked the complex matrix of issues that force gold's up, up and up.

First, you have government policy.

Government policy drives, you guessed it - everyone's favorite meaningless concept - "CHANGE".

Sometimes, as you know, that change is good. And sometimes, it's downright rotten.

Rotten for your tax basis. For your personal safety.

But GOOD for the price of gold.

Now, government economic policy comes in two basic forms - monetary, or fiscal.

Are interest rates up or down? Is the overall money supply up or down? That's monetary policy.

Are taxes up or down? Is gov't spending up or down? That's fiscal policy.

Spin them all together (plus other factors too) into a matrix as Frank described, and you get some strong predictive powers for what future gold prices look like...

But thus far, Frank had only included domestic factors in his talk - it was time to step back - and look at the GLOBAL picture.

Like what to make of demand for gold and overall growth in...the E7.

You know - the 7 countries that the "experts" on TV say will one day rule the world...I'm talking about Indonesia, Mexico, Russia, Pakistan, India, China, and Brazil...

In fact, places like India suck up more gold than you might think.

See, it's incredibly fashionable there to "wear your wealth" - more so even here in the U.S....

And as Frank described in brilliant detail, the changing fortunes of the E7 are just one part of the geopolitical gold picture...

So since I'm running out of space, I'll sum up the rest of Frank's comments in shorthand - gold (and silver, actually) run higher when the dollar breaks down...

And the U.S. government is stuck. China's complaining about our long- term credit-worthiness. Eventually, monetary and fiscal policy will converge and begin a great push toward steep inflation.

As these events unfold, folks holding gold will get filthy rich.

Oh - and - Frank also has the key to the universe figured out. Here it is...

The higher the percentage of lawyers who hold office, generally, the more decrepit a financial system you have.

Frank's crunched all the numbers on it.

But you'll have to get the complete audio set to learn the details on this one...

Another reason to think about the audio set - in either MP3 or CD format - is that Frank also covered a shockingly simple but potentially very lucrative "matrix" idea for how to compare gold stocks...and pick the best ones.

You know what that means.

More winners. BIGGER WINNERS.

We're offering a special discount off the price of the set until next it's in your interest to act NOW!

Don't leave me now, though - I still have more to cover!

Rude Awakening Editor Eric Fry then took the stage, wearing a tuxedo - and danced toward the mic to the silky beat of a 1959 crooner's voice...

I couldn't recognize the song...

Because the laughter was so loud.

I even think I missed Eric's first few lines. As soon as that mirth died down - Eric cut to the quick as only he can.

He opened with a quote from his 2008 AF Investment Symposium talk.

The paraphrase is this: "America's overleveraged. We must de-leverage. We gotta rein this puppy in. Banks must sell whatever they can - even parts of themselves. People will sell homes. It'll hurt like hell. And a "new normal" will emerge."

But what's this "new normal" look like?

We're living in it right now. And it basically, well, sucks.

In fact, the economy is still de-leveraging. It's the hurricane wind of all headwinds in today's market.

And the so called policy response has thus far addressing only what Eric called "cosmetic issues."

So Eric offered a solution: his "Permanent Portfolio".

One that provides great returns in headwinds, tailwinds, crosswinds...even in no wind.

The Permanent Portfolio Revealed:

1. Stay long commodities (including, of course, GOLD)
2. Gain exposure to emerging market stocks - specifically, BIC stocks - that's Brazil, India, and China. (Eric's not a Russia fan. Good for him, I say.)
3. Generally, grab value stocks worldwide.

PLUS - Eric also specifically mentioned two funds that deserve a look for anyone looking to set up their own "permanent portfolio".

1. XXX International
2. FPA XXX Fund (XXXXX ) *

[Note: These fund symbols were redacted in this report to reserve them for Audio Set listeners only.]

Finally - Eric suggested to the rapt audience a "volatility dampener" component to a "permanent portfolio" - including a vehicle like CDs - something that allows you to ride along in periods of high volatility without being completely exposed to that terrific headwind.

I'll tell you this much for sure - the pens were flying and the notebooks were humming while Eric disclosed the details of his "permanent portfolio".

He closed with a quote - albeit a famous one - from none other than Warren Buffet.

"Risk comes from not knowing what you're doing."

And if you want to know what you're doing as you set up your own "permanent portfolio" - you need the names of those two funds Eric mentioned in his talk.

If his presentation ends up being anywhere near as prophetic as last year's was, you could certainly be sitting on a pile of profits when Vancouver 2010 rolls around.

So - once again I must say - I think you need the complete audio set.

So you can listen (in your car, at home, at work, at the gym - heck, wherever you like) and learn.

So you can be here - without actually being in Vancouver for the AF Investment Symposium.

That's the best of both worlds, right there.

The picks. The access. The moneymaking power. Right at your fingertips.


And again, this set is available to all who order during this year's coverage of the event (the 2009 Symposium coverage runs through this Monday, 7/27) for only $99 for MP3 files - and just $149 for the CDs...

Or Both CDs AND MP3s for Just $149

Remember, after this year's conference ends, the price will go up to $199 for the MP3 version only - and up to $249 for the CDs (or the dual-media package).

So to learn more about the special offer we've got going for the COMPLETE 2009 AF Investment Symposium audio set - simply visit this link.

I know today's update presented you with a good deal of info. From Juan Enriquez' emerging technology ideas to 6 different and unique commodities speeches. But I simply had to relay it all to you so you don't miss anything.

..And I'll have more tomorrow...I'm stone tired and want to go listen to the Mixed Business Trio rock some tunes for the opening banquet.

Agora Financial Investment Symposium Day 2:A Libertarian, Futurist and "Liberal Republican" Walk into a Bar

A battle of opposing philosophies brewed in the aether surrounding the Symposium.

I knew it would come.

Let me explain: A core disagreement mind-struck me when I saw today's list of speakers for the Agora Financial Investment Symposium.

You can sum up the idea-rift this simply: can government prevent a future financial meltdown or not?

As you'd expect, the conference room forms as much of a free market mecca as you might find in the investment world.

And yet two of today's speakers - Barry Ritholtz and to a lesser extent James Howard Kunstler - embrace different forms of government action to solve the problems that they would detail in their speeches today.

And, to make things even more personally interesting, I perch near the line of absolute anarcho-capitalism.

So these gov't vs. no gov't, regulation against no regulation scuffles would intrigue me. And perhaps fire me up.

But despite my personal opinions, I'll present their cases to you as I heard them, without filter, to leave you free to make up your own mind.

Let me delve into the specifics by reporting on Barry's speech and his position on the bailouts and overall American financial blowup...

By way of introduction, Barry is a very well-known financial blogger, seems omnipresent on money TV, has just written a book entitled Bailout Nation, and acts as CEO and Research Director of Fusion IQ. Busy guy.

He detailed his visions of more ideal role of stauncher regulations in his speech called Capitalism after the Crash.

He presented a slight twist on the regulation argument: rather than focusing on the regulation vs. non-regulation tack, he focussed on creating a climate where Wall Street can't buy politicians, turn them into shill-whores and get laws written or repealed to suit their ravenous greed.

So, put simply, Barry stressed that regulation itself isn't the problem. The problem is how big corporations bought the regulations they wanted. And acted accordingly once the laws they wanted got written.

He likened this tawdry situation to treating a heroin addict by giving them a bunch more heroin. Of course the end is death...

Here are some specific examples he offered:

The repeal of the Glass-Steagall Act. This allowed consumer banks to act as investment banks, so now they could monkey around and put your deposits at risk.
The Commodities Futures Modernization Act was passed, helped along by Enron and AIG. This left over-the-counter derivatives in some shadow "market" without regulation or even knowledge of their price.
The change in the net capitalization rule. Simply put, this change allowed Wall Street firms to more than double the amount of money they could borrow to bet with. The allowed leverage amount went from 5 to 1 to 12 to 1. At some firms it ended up at over 30 to 1...
Changes in how the ratings agencies could receive fees. These agencies used to be paid by bond buyers. Then model changed and the bond sellers paid the ratings agency, so this could lead to favorable ratings so the bonds could sell easier.
So that's how Barry tried to show that the diddling confluence of Wall Street and the government led to the American meltdown. He stresses that the laws need to be changed to prevent the recklessness that whose aftermath we now clean up.

I told you where I lean. But there's my objective synopsis of his speech.

I think you should hear it for yourself to see what you think... which is why we've recorded everything for you. And why - up until Midnight on Monday - we're giving you the chance to get these recording for a significant discount.

Then the sarcastic Jim Kunstler hit the stage with his radically compelling vision of tomorrow's America in his speech called The World Ain't What it Used to Be.

First, he stressed this interesting concept: trash the word "consumer" because it's degrading and implies we have no obligation to anyone other than ourselves.

That idea alerted me to a personal moral underpinning that subtly wove through almost all of Jim's indictments of America and his visions of change. But let's drill into his speech a bit more...

He berated the Swindlers and Frauds. It's nigh time for the prosecutions to begin.

And so we can expect no more "something for nothing wealth" that came out of those frauds and swindles. So we come to the strange situation that we can no longer act as a debt economy.

Then Jim turned to oil's blaring finitude and how it's coming scarcity will forcibly redefine America. Some of his points:

We've passed Hubbert's peak, but the downslope is far steeper than we thought. So we'll have even less oil than anticipated in the nearer term - and that oil will be harder to find and purchase...
There's an oil export crisis - where already depleting exporters use more and more of their own oil. For instance, Mexico, which has been #3 to America will not be able to export any oil at all in a few years.
We'll see more and more "oil nationalism." So oil will go off the free markets and sent to special customers that aggressively lock up supply.
Almost all of the oil infrastructure is sclerotic and old. 50 years or more. We're talking derricks, pipelines, refineries, drills. The human workforce ages rapidly, and soon we won't have enough skilled people to run this industry.
So the supply side of oil looks pretty grim for America.

But what about how we use the stuff?

Petroleum agriculture is sheer folly, using it to make fertilizer and power massive machinery. We waste oil and gas to suck cheese doodles out of the soil. We can't do this forever, but when it must change, there's gonna be a problem because we haven't prepared.
The way we move across America - happy motoring and airlines. Gotta change.
Gotta change the way we inhabit the land. Suburban sprawl forms the greatest misallocation of resources in the history of the world. A total squandering of our post-war wealth.
He then stressed the need to ditch the crumbly, sprawly, wasteful interstate highway system to rebuild the rail system...We need a New Urban Movement composed of walkable cities and towns that with a nearby agricultural landscape consistent with energy realities...

I could go on and on about his urgings. And I stress that you ought to listen to his whole speech for yourself.

He definitely proposes interesting ideas and brave ways to tackle the problems he says we face. But the grand scope of these potential solutions makes me wonder if they'd inevitably bring about a massive growth of the state and its influence on our lives.

This same fear struck me when I listened to Barry's proposed re- invention and re-invigoration of the state's role in corporate and financial governance.

But I'll leave you to form your own take on their speech when you listen to it on your own when you get your audio set of the Symposium...

The next speaker also talked of the future, but in a more positive, heartening way...Breakthrough Technology Alert's Patrick Cox took the stage for his inaugural Symposium presentation.

His topic? The dramatic upslope of human achievement...and how to invest in its inevitability.

And just hours after Patrick's talk concluded - his Breakthrough Technology Alert portfolio booked a dramatic achievement too...

Bristol Myers Squibb announced their intention to buy one of Patrick's recommended companies at $16 a share.

Where and when did Patrick recommend it?

$4.74. In Mid-December 2008.

Great gain for only 7 months of hold time, right?

That's a 238% gain!

If that sounds promising, wait until Patrick's other breakthrough tech companies in these fields start to move:

Quantum computing that can make a supercomputer that'll fit in your coat pocket
RNA interference that can turn on or off any gene
Robots that can soon serve us
Nanotechnology that will revolutionize materials science and medicine, among many other fields...and
Youth and life-extending biotechnologies that are already in development
Far out, futuristic stuff.

Do you want to know exactly which companies in these fields he mentioned in his presentation?

If so, the complete AF Investment Symposium audio set will deliver them to you.

With the audio set you will get a recording of Patrick's main session speech and the exact picks Patrick mentioned in his small-group talk later in the afternoon. The whole thing is available for a limited time at a steep discount. Remember - as soon as the Symposium closes, however, this incredible savings does too.

Do yourself a favor and get the audio set - complete and in crystal clear quality - right here. If I seem insistent - it's with good reason. You see, Patrick's great day was simply a warm up...

Because Ajit Dayal - Founding Director of EquityMaster and Agora Financial's man-on-the-ground in India - also took the main stage today.

In fact, Ajit is currently neck deep in developing a new emerging market research service currently titled BRIC by BRIC.

And, BRIC stands for the same thing it did in yesterday's alert: Brazil, Russia, India and China.

You may recall that Marc Faber, Chris Mayer and Eric Fry all hit on investing in some or all of these countries yesterday. And when I hear so many speakers enthusiastic about those emerging economies, my excitement only deepens.

And what did the Indian native Ajit's have to add?

He reflected back to 1999 tech stocks "forged the future." Not BRIC stocks.

Remember - tech in 1999 was basically Internet stocks. The vast majority of these companies had no products, earnings, or chances in hell of maturing into respectable businesses.

At that time, Ajit always got this question: "Why buy emerging markets?" With all the action in tech - who needed to think about emerging markets?

Well - Ajit answered that question by comparing Indian-firm Infosys to IBM from 1999 to present. And guess what? Infosys slammed IBM over the last 10 years...

Then, Ajit hit the crowd with his investment thesis: BRIC - China and India specifically - will rise, again. But not as fast as you think...

You see, in the year 1500 - China and India created more than half of global GDP.

But in the West, we forget how powerful this region once was - and will be again.

For example, Ford came to India in the 1990s to build cars for the huge and growing Indian middle class. What happened...?

3 years later, Ford India sold fewer cars in an entire year than one noted dealer in suburban Florida sold in a single month!

You see, the American-centric Ford perceived a different notion of "middle class growth" than India delivered...and their huge bet went bust-o.

Ajit then made his big pivot: We can't assume BRIC will emerge and dominate overnight. You can anticipte stumbles. Bumps in the road.

Given this emerging, but not quite as fast as we think case for India and China - Ajit then leveled some sobering advice on Symposium attendees - "Make India and China a part of your portfolio. Just don't go overboard."

Ajit's key sectors to target? Well, I can give you one here.

Infrastructure firms.

Not surprising, I know, considering the growing populations and the amassment of huge wealth...

But some of Ajit's other suggestions were, in fact, quite a surprise.

To get the complete details, access your copy of the complete Symposium audio set right here.

So, I bet you wonder "where was the GOLD talk?"

The case for gold came from the President of EverBank World Markets and Daily Pfenning author Chuck Butler.

Chuck got off to a fast start too...

His first point?

Barack Obama is the new FDR. Which spells big trouble for the dollar...

In the wake of FDR's 1934 Gold Reserve Act - the dollar dropped 41%.

Gold rose from $20.67 to $35 an ounce.

Today, we're running a $1.2 trillion deficit for the year - still with nearly 6 months to go.

And our reckless printing - it strangles the dollar.

Even worse, your "part of the tab" stands at $37,000. That amounts to an unimaginable federal debt of $11 trillion. And growing...

Plus, from 2002 through July of last year, the dollar index shed 40%.

Guess what? It's all great news in the long-term for GOLD!

You're going to need more gold too...

Because as Chuck unpacked the Baby Boomers and their precious Social Security - he pointed out that Social Security ate up 14% of income tax revenue last year. Already a hearty chunk...But it will devour a huge 27% in 2020.

It's only going to get worse...Tax increases, devaluation of dollar, decreased spending. We'll see all three.

This is the heart of the impending catastrophe.

So it boils down to trouble, trouble, and more trouble.

But Chuck was kind enough to offer solutions. Big ones too...

Here's how it breaks down...

His basic "old model" of asset allocation went something like this: Go 10% cash, 20% bonds, 30% stocks, 40% real estate.

But Chuck offered a new plan. A better plan. A plan for the next decade...

Now I can't tell you all about it here - but I can tell you about 40% of it...

Currencies and precious metals EACH make up 20%...

Good diversification, in this new world reality, is an insurance policy.

And as a part of the complete audio set - you can hear about Chuck's insurance policy-and his complete program of new asset allocation recommendations. You can access your limited-time discount on the complete audio set right here.

Again - the audio set gives you all the power of the AF Investment Symposium - from the comfort of your own home.

It's as good as being here...but without the hours and hours of travel time.

PLUS - you get the convenience of listening in to all the ideas, the recommendations, EVERYTHING...whenever you want. Wherever you want. For good.

Because the Symposium is a power-packed but seemingly short 4 days. The audio set will last you forever.

Don't miss this chance to lock in your own complete audio set at a 40% reduced rate. Simply click here now to complete the secure order form.

I'll be back tomorrow with my next dispatch.

Hot-handed Resource Trader Alert Editor Alan Knuckman, Outstanding Investments Editor Byron King and the ever-controversial Doug Casey will speak...and it should be another humdinger of analysis and specific picks!

Agora Financial Investment Symposium Day 3: The Most Offensive Speech That No One Walked Out of…

I look forward to one of the speakers every year: Doug Casey, of Casey Research.

He's a verbally obnoxious, forceful man that you might under-describe as an extreme anarchist.

I've seen him speak about six times.

And, by way of background, the most astounding thing about his speech today is that ALMOST NO ONE WALKED OUT OF IT. Here's why that's surprising:

In the past - and perhaps not coincidentally during maniacal bubble markets - as much as 33% of the Symposium crowd would stand up and retreat from the conference room in a disgusted unison.

Perhaps the fact that only about four people walked out today means that his prescient outrage now broils the hearts of many. So maybe his outspoken warnings about the Greater Depression in the past years were simply too early for good appetites.

Enough warm-up, let's get to his speech...

His presentation today updated his thesis of a coming Greater Depression.

Of course, now it seems we stand in the muck of its first leg. Doug claims that we've barely started, that we've got much much deeper to go, and that today's Depression will last far longer than the one that careened from '29 to '46...

And he pinpointed why: 5 HUGE PROBLEMS that Obama can't do anything about and just might make a damn lot worse:

Huge problem 1: Global warming! Ugh, it's always something! AIDS is the old global warming. Swine flu might be the new one. Although mankind can and should change the earth, we're trivial compared to ocean currents, volcano action and the sun. The climate's changed for 4 billion years, we've been around for about 2 months. So don't worry about it - it's all mass hysteria.

Huge problem 2: Resource Depletion! We're rapidly running out of oil, food, copper, and water. There's not enough of anything except carbon.

Huge problem 3: Demographic Change! Might Europe get taken by Muslims and America grabbed by Mexicans? Why should you give a damn? In the recent past, America and Africa got conquered by whites, Europe by Mongols, etc. These ebbs and flows have went on since civilization it'll be good since it'll establish destruction of the nation state. This will make your countrymen people who you share interests and values with, not those who hold some passports or other gov't bailiwick.

Huge problem 4: The Military Problem. Despite these stupid, counterproductive wars in Afghanistan and Iraq, Obama is likely to start new ones, mayhap in Iran. Military spending grows apace despite the Greater Depression.

Huge problem 5: The Economics and Finance problem. Here's what we SHOULD do: deregulate totally, abolish all agencies like the SEC, FBI, ATF, DOT - eliminate taxes which misallocate capital from the productive to the lazy - abolish the Federal Reserve - allow the collapse of corrupt overstuffed institutions - default on the national debt so we can punish the idiots that lent to us....

Sound extreme?

Well, Doug wouldn't shy from offering you action-solutions...

First: stocks? No's far too soon to get back in. These green shoots are vile weeds. Wait till yields climb back to 10%...

Bonds must eventually collapse. The dollar's dead.

But what does this mean to Doug..?

Buy precious metals and put them aside...
Short interest rates...
Ride the next possible bubble - junior mining stocks - up for mega money...
Buy real estate in a foreign country - preferably in Argentina and Uruguay...
And, lest you think Doug's a big dourpuss, here's his final quote:

"The situation's hopeless, but it's not serious..."

I know that could seem very extreme. But I really didn't cover but one third of what Doug said. And I captured nothing of his sardonically charming hilarity. In my opinion, you should get your hands on the Symposium Audio Set recordings for Doug's speech alone...

And now, the next speaker...

Famed "rock hound" Byron King of Outstanding Investments and Energy and Scarcity Investor took the Main Session stage and asked:

"Is God Brazilian?"

Byron didn't waste a single breath. His enthusiasm for oil befits a studied geologist and old oil patch he jumped right to the action:

The next Saudi Arabia is under the South the coast of Brazil.

He nearly shouted: "And YOU can profit from it! All Hail the Brazilian Oil God!"

So how does this massive oil field stack up compared to other fields?

Well, this Brazilian beast beats total US reserves by over 4 times. She's about the size of Saudi Arabia's famed Ghawar.

Yes, they're making oil history in the South Atlantic. It's all quite easy, really:

First, you start with 200 million years of geologic pressure
Then add the best deepwater oil exploration advances of the past 50 years
And unprecedented capital flows in deepwater drilling investment
And you get what could be the mother of all projects for the next century for Brazil.
The catch? The oil's up to 200 miles offshore. Under 12,000 feet of water. And then you gotta drill through about 25,000 feet of rock and salt.

That's darn deep...

As Byron explained in his brilliant stroll through 200 million years of ocean and continental development - those thousands of feet of salt have kept the decayed organic matter (read: OIL) in place, and until now, impossible to grab. So...

It's big money time for select drilling, rig hardware, and oil services companies that can get down there...

The Chinese have already inked a $10 billion deal to fund much of this offshore development.

Brazil's also going to entertain taking on other partners.

And you could be one of them.

How? By having a stake in the select basket of firms that will be most intimately involved in this massive new project...

Now - I want to disclose just exactly which firms Byron mentioned to the audience on Day 3. And while I can't tell you all the names here - know that you can get every single ticker he discussed by grabbing your complete audio set right here...

Remember though - your exclusive discount to grab the audio set ends soon. Now's the time to lock in your savings before the new prices kick in!

For now, here are tickers Byron presented that I have permission to share...

Petrobras (PBR)
Repsol (REP)
Baker-Hughes (BHI)
So grab those three, and you're ready to get some Brazilian oil gains...

But you're missing FOURTEEN other opportunities.

Because in all - Byron mentioned a whopping 17 companies in his lightning-paced talk.

Get them all on your copy of the complete Audio Set, right here.

Next up, the man with the hot hand in commodity options - Alan Knuckman - took the stage for his AF Symposium debut!

Alan has booked a slew of triple-digit gains for his Resource Trader Alert readers, including a Canadian dollar money doubler just today...

He introduced himself by way of a story. His punchline:


Everything you do. Everywhere you go. Every purchase. Guided directly by commodities...

Alan proved his thesis by sharing the story of how he came to Vancouver this year.

The OJ the morning he was set to depart Chicago...the crude used to craft the plastic cup he received when he bought his coffee on the way to the airport...the corn chips at the airport... Bean oil in the newspaper he bought for the flight...cattle in the hamburger he had for lunch when he landed in Vancouver...soybeans in the tofu burger he refused to look at...the Canadian dollars he changed at the airport...the cotton in the sheets at his hotel...the nat gas he burnt to crank his AC to arctic before dreaming lustily about GOLD...

Corn, cotton, cattle, coffee, the OJ - the oil - the list doesn't end.

Alan walked the crowd through his day. Step-by-step. Transaction by transaction.

Commodity by commodity.

You might not even realize it. You might not actively trade them in your accounts.

But commodities are your life. They make your life pleasant. Possible.

And Alan introduced himself as a master of trading them - time and time again - for maximum possible profits.

Some of the specific trades he mentioned during his talk were in fact worth $40,000, $23,000, $18,000...

Don't let all those dollar signs fool you though. This ain't gambling. It's probability.

Because it's not so important which commodity you invest in at any given moment - Alan admitted he'll trade anything, anytime, anywhere - so long as it fits his strict trading philosophy...

What counts is HOW you invest.

And in his small-group Breakout Session - Alan went through his trading platform piece by piece.

You want those details? Your FREE Breakout Session Special Report tells you all you need to know. Get your report as part of the complete symposium audio set, right here.

Near the end of his talk - as he finished a 64 ounce Diet Coke Big Gulp he brought on stage as a crutch and prop - Alan slashed all the moorings and smashed the crowd with a series of trading insights the average Joe would kill to master...

Commodities options profit from finite resources - stocks can go to zero - but because of unslayable need, oil or cattle will never go to zero
Discipline counts - Be extremely selective. Learn the risk/reward ratio for each trade. Know when to get out
Trading is for tomorrow. Never overexpose yourself today and put tomorrow at risk.
Bottom line? You deserve to give Alan Knuckman a moment of your time. He's averaging 85% gains over the past 4 months. He delivers Big Gulp profits to folks just like you.

You'll get a clear recording of Alan's breakneck presentation, his system explanation and what he sees in the months ahead with your complete audio set right here.

Next, Paul van Eden, President of Cranberry Capital Inc. hit the stage to discuss Gold, Silver, and Commodities...

Using regression analysis, Paul historically tracked silver, copper, lead, zinc, nickel - and of course GOLD...

And made a case for their relative strength (and how accurately they're currently priced) compared to our ever-weakening dollar.

His conclusions?

GOLD should be $815 an ounce.

Why so low? Because the gold market has already priced in the future devaluation of the dollar.

So believe it or not, there's an even better hedge right now against a continually falling dollar. What is it?

Well... forgive me for not disclosing, but I'm forced to reserve the answer for CD buyers only.

Next up, the Sovereign Society's Eric Roseman...

Well, I should just be honest.

Eric covered so much, so fast during his presentation that I needed an oxygen mask just to keep typing along at my computer...

So if I've said it once - I must say it again - get the audio set here: because the bullets I'm about to fly through do his spot-on presentation no justice at all...

Domestic consumption has fallen off a cliff. Folks save more, consuming less.

Eric's advice?

Well, he's a gold bull. And a dollar bear. JOIN THE CLUB, ERIC!

The banks won't lend - despite "TARP" - despite "PPIP" so the morass of "stuck money" gets worse...

We're saddled with massive spending - the gov't can't continue to be consumer of last resort...we're riding the bomb of a soaring deficit...

The "green shoots" in the economy are mostly hollow and filled with poison.

I know - holy hell - what's with all the good news, right?

Thankfully, Eric was also kind enough to rifle through a litany of solutions - real ones too - which had the audience notepads flying full steam...

He named three defensive stocks he likes right now - Nestle, Diageo, and Kraft.

(When all else fails - go with chocolate, booze, and processed cheese.)

He also mentioned XXXX - the "Strategic Growth Fund"** as his favorite fund in the U.S. today...

** Note: this fund symbol has been removed so only Audio Set listeners and Symposium attendees can know it...

There's more. A ton more. But I've run so long today...I must get out of my own way...

Almost as Good as the Real Thing - But for Only $149...

Some people paid as much as $995 for admission to the Symposium. And that doesn't include the cost of getting here and staying in this fine and expensive city. My plane tickets from Baltimore cost well over $1,000. And I fly economy-style.

What's more, my hotel costs over $300 per night. And the exquisite food I can't keep from devouring sure ain't cheap.

All in all, I conservatively estimate that this entire trip, all added up, would cost the average attendee about four or five thousand dollars, depending how far away they travel from.

What's more, the travel itself takes a great deal of time. And I'm sure you're familiar with the iniquity and unnecessary humiliation you encounter at airport security and customs...

Now, to be sure, I ain't complaining. Not the least bit...

I love the Symposium - it's by far my favorite event of the year. Just pointing out that it takes a considerable amount of time and money to get out here.

That's why I'm glad to give you the opportunity to listen to all of the main session speeches and the opportunity to take advantage of all of the specific stock picks presented this year for a tiny sliver of what it would cost you to come to Vancouver.

You'll pay only $149.

I estimate that that's 97% off what it's gonna cost me to be here.

So let me explain exactly what the deal entails...

For the low price of $149, here's what you get:

a slick package of high-audio quality CD's mailed right to your doorstep
a full set of easily downloadable MP3's that you can play on your computer or iPod
an instantly downloadable report (as soon as it's ready) that covers the small-group Breakout Sessions and all of the stock picks presented in them
I constantly listen to past years' recordings. Usually when I'm at home cooking. Or during long enough drives so that I can concentrate well.

(Shoot, we even make the recordings available to new Agora Financial writers and employees so they can easily grasp the investment philosophy and get instant exposure to well-reasoned stock recommendations...)

And, I must humbly admit that, even though I ran around nearly insane taking notes in every main session to supply you with these timely Roving Reporter updates - there's no possible way I could completely capture the essence of such an event in this space.

And that's not even counting the over 70 small-group Breakout Sessions...

At some points we have five Breakout Sessions going on at once! Obviously, I only have so much time to research and write these dispatches. Even more obvious - I can't be in five places at one time...

That's why we painstakingly documented every Breakout Session - where most of the actionable, specific tips and stock picks get presented. There may be hundreds of potential picks for you to look into. We present these Sessions, in vivid detail, in a Special Report that's yours FREE when you purchase the Audio Set.

And remember: right after the final Roving Reporter dispatch hits your e-mail box on next Monday, the price for this Audio Set will immediately jump at least $100.
So click here right away to insure that you get the lowest possible price on this informative Audio Set and FREE Special Report...

That's it for me for today.

I gotta go hit the private Agora Financial Reserve reception that features more cocktails, more British Columbia beef, and an intimate concert with the world famous California Guitar Trio.

I hope you enjoyed this dispatch as much as I enjoyed researching and writing it...

Friday, July 24, 2009

Finding Caterpillar’s Tell Could Lead to Astronomical Profits

The story on Wall Street that's got everyone worked up one way or the other is the recent profits at Goldman Sacs and Bank of America. Some are pleased and view this as a telltale sign of a recovery. They look at these banks profits and argue that TARP is working.

Others view this recent quarter's profits as outrageous. This group sees the greed and misuse of government funds to prop share prices and executive compensation at the banks.

While this debate enters its frenzy stage, another story is developing slightly below the radar. Surprisingly, no one seems to be talking about another earnings announcement at one of the most important companies in the U.S.: Caterpillar.

CAT announced a second-quarter profit of 60 cents per share. Analysts expected just 22 cents per share ― just a third of what the company actually produced. Of course, 60 cents is miniscule compared to just last year. The company's Q2 2008 EPS was $1.74. But you need to look at the wider view…

Caterpillar is the crown jewel of American industry. It represents the engine of the blue-collar world ― at least in the U.S. CAT makes everything from bulldozers ― needed for nearly every road and construction project in the country ― to turbines ― needed to keep the lights on in the U.S.

The company's customer base reaches from Canada to Indonesia…from China to Chile. There's almost no developed or even developing country in the world that doesn't show Caterpillar some business.

So what does this quarter's profits mean for CAT, the U.S., and the rest of the world? It means, that either the stimulus plans worldwide are starting to work or we are turning a corning on this recession…or both.

We're not calling for the recovery to start now, and we certainly aren't calling for the bottom of the market. But we are pointing out the number one indicator. We'll know when the economy is back on track, when Caterpillar starts performing like years past.

For us small-cap investors, profiting from CAT's story is even easier. You see, CAT may be the world's largest industrial machine manufacturer. But it's not the only one. There are plenty of smaller, but just as lucrative, companies that make plenty of money in this field.

The first one that you should keep an eye on is Manitowoc Co. (NYSE: MTW). Until this recession, Manitowoc was on a very impressive pace. The company, which also manufactures machinery like lifts and cranes, brought in nearly $66 million in 2005, $166 million in 2006, and a whopping $337 million in 2007.

Then the economy went sour. Projects were locked up because of funding. Customers quit building ― therefore eliminating the need for Manitowoc's products. Shares fell from almost $50 at the end of 2007 to just $5.60 as we write.

Another one that we've kept an eye on here at Penny Sleuth for quite awhile is Insteel Industries (NASDAQ: IIIN). Insteel makes reinforcement for roads, bridges and water/wastewater systems. Its products represent the new way of building the world's infrastructure.

As opposed to rebar, Insteel's engineered structural mesh, or ESM, holds up longer and is just as inexpensive ― if not cheaper. The best part about Insteel is its customer base. Around 90% of the company's business comes from nonresidential projects, which could be very important if the housing market takes longer to recover than the rest of the economy.

This fact alone hasn't done much to protect Insteel, however. Shares are down almost 50% over the past year.

While companies like these continue to take a bath in the market, smart investors should pay attention. Now is certainly not the time to buy. Remember, CAT is the indicator. Once that company tips its hand, and let's us know when a recovery is truly starting, companies like Manitowoc and Insteel could be the backdoor play for us small cap investors to make big money.

Infrastructure is possibly the most important theme we'll see in the recovery. The world's roads and bridges are collapsing beneath us. Water and wastewater systems are beginning to hurt as many people as they help with all the corrosion and impurities they are creating while they crumble. Even the energy sector ― with its trillions of dollars of backing ― is comprised, in many cases, of decades old turbine technology. Many power plants around the world date back as far as the Second World War. That doesn't even count the failing power grids that are overwhelmed by the massive and still-growing world population. And as more countries enter the rank of "developed," these problems will only get worse.

These are problems that cannot go unsolved…and companies like Manitowoc and Insteel hold the key to profits. Once CAT starts to make its recovery, these smaller two could make a few smart investors extraordinarily rich. The only thing we need to do is wait for CAT's signal.

Thursday, July 23, 2009

Gold Stocks Take a Drubbing

The stock market clearly is not worried about inflation right now. That is the only way to explain recent 10-year Treasury yields of 3.30%. The deflationist view is the one that prevails. This view, which makes some compelling and elegant arguments, maintains that the credit losses far surpass the monetary and fiscal stimulus. All those trillions in destroyed debt, plus the yanking of credit from consumers and businesses, overwhelm new money creation.

So, this reasoning goes, the greater risk is that asset prices continue to fall. This is the classic debt-deflation point of view. The theory seems to fit the facts of what we are seeing in the marketplace right now.

I don't dismiss these arguments easily ― and there is more to it than what I've given you here. I've spent some time going over the arguments of some of deflation's most persuasive and sophisticated advocates: money manager Van Hoisington, economist David Rosenberg and others.

Still, I think the endgame is for inflation ― which is when paper currencies buy less. Given the choice of holding U.S. dollars or real assets (such as gold or iron ore or land), I'll take real assets.

Over the weekend, Thomas Donlan at Barron's had a good analogy for it all. He asked what you would rather own as store of value, bananas or corn? The obvious answer is corn, because you can store it for months. Corn lasts longer than bananas. Fruit rots. You can also use corn for a lot of different things ― corn flour, animal feed, etc. You can also arrange to sell corn into the future, say, by arranging to deliver corn so many days from today.

Corn can lose value, obviously, as can any real asset. But it is a better choice than holding the bananas.

Donlan likens money to bananas and natural resources to corn. "In the modern economy," he writes, "a barrel of oil is much like a bag of corn… Paper money and bank balances are more like the bag of bananas." When currency rots, we call that inflation.

The problem with the deflation arguments long term, it seems to me, is that you are betting against a government's ability to destroy its own currency. Governments are seldom good at anything, but one thing they are undeniably good at is destroying their own currencies. The dollar has lost 95% or so of its value since 1913. That's a pretty darn good job. Other countries have been even more thorough.

So that would be the way to bet. Deflation may prevail today, but the real question is for how long. My own crystal ball is frustratingly cloudy on the issue. But the great rewards in investing are always with the out-of-consensus view.

The upside from holding Treasuries seems hardly worth the risk of being wrong, for instance. On the other hand, if we are right about currency rot, then we'll make multiples of our money on natural resource top stocks.

The downside on many commodities seems low, because the prices have already corrected. In several instances, as with oil and natural gas and iron ore, we are already below the marginal cost of production for much of the industry. So unless we don't need these things at all anymore, the simple economics of the businesses involved help support a certain price structure.

Worse Than Subprime

And anyway, as far as the case for gold is concerned, I've been arguing that it is less about inflation or deflation than it is about creditworthiness in general. I wrote about this in the May issue of Mayer's Special Situations.

Gold does well during times of credit troubles. It did well in the 1930s, for instance, even though that was largely a deflationary era. Banking troubles made investors turn to gold.

On that front, we've got plenty of banking troubles on the way. A recent Wall Street Journal headline, buried in the middle of the paper, hints at what's to come: "Pick-a-Pay Loans: Worse Than Subprime." The piece begins:

"For the third straight month, option adjustable-rate mortgages are generating proportionately more delinquencies and foreclosures than subprime mortgages, the scourge of the U.S."

These loans include only partial-interest payments. So the loan balances on many of these loans have actually gone up while housing prices tumbled. It's a disaster. As of April 36% of these loans were at least 60 days past due.

These pathetic loans will mean more large losses for banks ― in particular Wells Fargo, J.P. Morgan Chase and others who were active in these markets. Wells Fargo, the WSJ points out, has a mountain of this stuff ― $115 billion of crap.

So as long as we have banking troubles, we have the potential for fear to return in a big way. And that is when gold does well.

In other cultures, too, gold is more naturally a part of the wealth-storing equation than it is in most Western countries. In places such as China, India and the Arab world, people see gold more readily as a store of wealth than the typical American or European. These areas of the world are on the rise, and their gold holdings are also rising.

Beyond this, gold stocks are cheap again. Gold also has a seasonal tendency to be weak in the summer months. So against all this, I'd use the market weakness in the gold price and in gold shares to pick up your favorite gold miners.

Have a good week, and I'll write you again soon.

More Upside for this Junior Mining Play

Seven months ago, I was having dinner with a group of Vancouver stock brokers and venture capitalists at a tragically hip club in South Beach.

When the check came... everybody had "penguin arms."  In other words, nobody reached for their wallets to pay for the group's overpriced meal.

A year prior, that probably wouldn't have happened.

The Vancouver Stock Exchange is the birthplace of the junior mining sector. . . and in 2007, it was sitting at record highs.

But in December of 2008. . . with the Vancouver stock market getting killed, promoters and investors, who once were on waiting lists for Porches and Audi R8s, were now getting busted out by bone-crunching margin calls that would literally send them into bankruptcy.

Only one guy in the group was smiling.  He had gone short in September. . . and was now covering.

Champagne for everyone!

jx-i chart

This same guy was also the one who said now is the time to buy junior mining stocks. His favorite was Argentex, trading for just $0.11 at the time.

It still is today. . . now trading for nearly $0.70.

I recommended Argentex in these very pages eight months ago. If you followed my recommendation, you're up big.

agxm chart

But in the update below, I will explain why there's even more upside to this junior mining stock.

Argentex Mining (ATX: TSXV, AGXM: OTCBB) is currently in the dark before the inevitable dawn. Within 12 months, I expect Argentex's valuation to reflect a 100 million ounce silver resource on their Pinguino property in the Santa Cruz Province of Argentina.

My 12-month target valuation for Argentex is $70 mil - $90 mil, or $2.00 - $2.70 per share.

Based on an analysis of 98,000 feet of core from a 45-mile vein system, Argentex's management has commissioned a 43-101 compliant engineering report.

I expect the report to describe a 100,000,000 oz. near surface silver deposit with additional gold and indium credits.

Our 24-month target valuation for Argentex is $135 mil - $155 mil, or $4.00 - $4.50 per share.

Due to the 'shovel ready' nature of Argentex's deposit, I expect cash-strapped Argentex to begin production sooner rather than later by taking advantage of proximity to local producers to extract and refine ore in a joint venture agreement.

AngloGold Ashanti (ASX: NYSE), Coeur d'Alene (CDE: NYSE), Pan American Silver (PAA: TSX), Minera Andes (MAI: TSX), and Hochschild Mining (HOC: LSE) are each active in the region and may provide a local source for Argentex's production and refining and a potential exit for shareholders.

Why Now?

Junior miners have picked up steam since PDAC, and Argentex is very much a hot timing play. By acting now, an investor takes advantage of five years of invested capital and a still depressed market for junior miners.

Argentex's management has already conducted extensive drilling programs and I believe that they have identified a near-surface silver deposit in the magnitude of 100,000,000 ozs.

Canadian investor protection laws require an independent engineering report compliant with National Instrument 43-101 to be filed with regulators, to be disclosed to the public before management can describe any aspect of their resource to the public.

Argentex's management has recently commissioned an independent engineering firm to complete a 43-101 compliant report. Results are expected by the end of summer 2009.

I believe that Argentex will appreciate significantly in value when the report is filed and the results are disclosed to the market.

Following the definition of the resource, it is likely that Argentex will expand the definition of the resource with additional drilling― more drill holes along strike might show a continuation or an expansion of the trend―and that Argentex will move towards surface extraction and refining using local third-parties within 24 months.

If you don't have a position, now is the time to take immediate advantage of weakness in the stock and in the market for juniors to capitalize on anticipated catalysts that may drive Argentex up three to four times its current valuation in 12 months, and to eight times its value in 24 months.

I view the Argentex Opportunity in 3 phases:

1) Management has identified a near-surface silver deposit in the magnitude of 100,000,000 ozs. (approximately $1.2 billion, at current prices)

2) I expect Argentex's valuation to increase 250% - 350% when the engineering report is released, based on a 100-million ounce resource and comparable company valuations.

3) With minimal capital expense and impact, Argentex can move from exploration into production within 24 months by initiating surface extraction and refining in an arrangement with either, or both of, AngloGold's Cerro Vanguardia mine (22 miles away), or Coeur d'Alene's Marta mine (50 miles away).

Wednesday, July 22, 2009

This “Dirty” Industry’s Secret “Green” Penny Play

There are no two ways about it…investing in environmentally friendly companies is a powerful trend that will sustain itself for quite some time.

Green stocks ― like solar panel manufacturers, wind farm builders, and clean fuel developers ― have seen share prices race ahead of the rest of the market in recent months. Since the beginning of the year, the Wilderhill Clean Energy Index has rallied 9.08% versus a 1.68% loss for the market at large.

Individual companies have fared even better. Just look at Suntech Power Holdings (NYSE: STP) and Helix Wind (OTCBB: HLXW), two green companies that have netted investors 32% and 46% respectively since January.

The allure of green companies isn't relegated to Wall Street, however. Main Street is going green, too.

With the demise of our country's traditional manufacturing base, growing numbers of now unemployed Americans are looking for manufacturing jobs at green companies. The growth rate of these green jobs has been quite robust. The Associated Press reports the renewable energy sector has added jobs at more than twice the national rate for nearly a decade. Now, we can look forward to even more money flowing into renewable energy projects, thanks to government interest.

That influx of jobs and money has even made its way to Motor City.

Where line workers in Ford, GM, and Chrysler automotive plants once had few options during past recession-induced layoffs, manufacturing jobs with green companies have become a welcome alternative to the unemployment line. Between 1998 and 2007 Michigan saw a 10.7% increase in clean energy jobs ― a trend that's continued into 2009.

Green companies may be part of the only industry that isn't awash in a sea of red. That's because today green manufacturing has become a $228 billion dollar industry that's even attracting the eye of behemoths like GE and Wal-Mart.

However, while green companies have investors' attention right now, most of them aren't as compelling as they could be...

The best green investment right now isn't in windmills or solar. In fact, it's a business most people wouldn't categorize as green at all. That's because while traditional green technologies have enormous potential, they're untested in the business world and ― for the most part ― currently unprofitable.

That's fine if you're willing to wait years for gains to materialize in your portfolio, but that's not an attractive option for investors who were burned by 2008's tumultuous market.

That's why I'm not looking at some experimental new technology. Actually, the industry that interests me the most right now has been around in some form for more than 2,000 years. It's also extremely profitable…

I'm talking about paper.

And while paper manufacturing may elicit mental images of huge smoke-billowing tractors clear cutting endangered rainforests, that's not necessarily the case. Paper can actually be one of the greener products in your home. In fact, the Sustainable Forestry Initiative calls paper "one of the few truly sustainable products" on the planet.

Surprisingly, manufacturing by-products provide a renewable source for more than 60% of the energy used to make paper. Couple that with the fact that paper is biodegradable, recyclable, and reusable, and that paper makers are responsible for planting 4 million new trees every day, and paper really emerges as one of the most interesting green products out there.

It also emerges as a compelling investment right now…

As a basic material used in practically every household and office in the world, paper is remarkably recession resistant. And that omnipresence also makes for a hugely diversified client base. To be sure, not all paper companies are equally attractive in this economy, but it's essential to remember that paper doesn't just include the white sheets in your printer ― paper companies manufacture products that are used as retail packaging, industrial components, and even building materials. Forget notebooks, these are the paper products you want represented in your investment portfolio right now.

What This Week’s Gains Mean for the Market

The market looks as if it's finally taking a breather today after the S&P 500 rocketed up 6.33% in the last week. But while things have been good for investors this week, that doesn't mean stocks are out of the woods just yet.

Here's a look at what to expect next week…

Coming into this week, investors ― particularly traders ― were watching the market intently as a textbook bearish head-and-shoulders pattern started to form. While the market set itself up for a colossal fall, it stopped short of catastrophe when it ran into the 200-day moving average (the red line that shows the S&P's average price over the trailing 200 days). That changes the game:

The 200-day moving average acted as support (a price level that a stock has trouble falling below) for the S&P 500, causing it to bounce back this week in a big way. The "head-and-shoulders" pattern I mentioned ― and which you can see in the chart above ― is usually a signal that a stock's preparing for a fall. Because it's such a powerful pattern, the fact that the S&P caught itself at its 200-day moving average means that there are still a lot of bullish investors right now.

That support level also gives the market a chance to form a base, and makes the rally after the market bottomed on March 9 look like more than just a "dead cat bounce."

What to Watch for Next Week

Right now market levels are "dangerously" close to resistance at around 947 ― a breakout above that level could be the signal for the second part of the stock market's rally. That said, it'd be foolish to count this week's movement as the start of a second rally before the S&P breaks out above 960. That could be a key number.

There are two bullish signals to read from this chart right now: that bounce off the 200-day moving average I already mentioned, and the MACD line crossover down below the chart.

The MACD (or moving average convergence divergence) is essentially an indicator of where trends are headed. It's calculated using moving averages (like the 200-day moving average that the market bounced off of), but you can get MACD at any big charting website ― now including Google Finance.

When the MACD line crosses above the signal line, as it did above, it's a bullish sign that suggests it could be time to go long on stocks. Additionally, a negative MACD, like we're seeing right now, is often an indicator that the market's oversold and could be overdue for a rally.

Coupled with the price action we're seeing, things could be very good for investors for the next few weeks…

But I'm going to add one caveat to keep an eye on as the market does its thing over the course of the next few trading days: Watch for the S&P 500 to breakout above the 950-960 level before you think about calling this the start to another period of ever-rising stock prices.

We could easily see another downward bounce at 950…

Sunday, July 19, 2009

A Baseless Lawsuit Against Chevron in Ecuador

Can plaintiffs in a lawsuit generate infinite favorable publicity, yet have virtually no substance to back up their claims? The Amazon Defense Coalition (ADC) has found a way to play into many peoples' concerns about oil companies ― but with very little substance behind their accusations. ADC is shaking down Chevron for $27.3 billion, with essentially nothing to back it up.

The ADC uses its position as an Ecuadorian Non-Governmental Organization (NGO) to raise funds as a not-for-profit in the United States. With these funds, it pays for a widespread publicity network (including a Washington, D.C. public relations firm) that would never exist in the absence of well-meaning donors. This network publicizes over and over that Chevron is liable for damages of $27.3 billion. But the claims have no basis in fact.

How could this situation arise?

It seems to me that the Ecuador suit may have begun with good legal intentions, but has gone badly off course. One possible scenario:

Texaco operated in Ecuador until the early 1990s. By 1992, Texaco turned over all its operations to Petroecuador. Then Texaco paid for and oversaw a cleanup of many of the oil pits, pursuant to its agreement with Petroecuador and the national government.

In 1993 Texaco got sued in US court over the Ecuador matter. The ADC was formed at about the same time, probably not by coincidence. To be accurate, in 1993 there were a lot of unremediated pits related to oil production in Ecuador. There were many local concerns about what the long-term health issues would be.

Case Dismissed? Not So Fast…

But in 1995-1998, Texaco cleaned up its share of the pits, pursuant to an agreement with Petroecuador and the Ecuadorean government. The cleanup was good enough that new vegetation started to grow on these sites. Eventually, after a lot of legal haggling, the US court case was dismissed on grounds of forum non conveniens. So what happened? Plaintiffs filed a new case in Ecuador in 2003.

Then with the new case in Ecuador, the plaintiffs started learning some unpleasant truths―Texaco had done a pretty decent job of cleaning up the pits. There wasn't any evidence linking Texaco-remediated sites to higher cancer rates, and tests for soil and water pollution kept coming up negative.

So what were the plaintiffs' lawyers to do? Drop the case? No way. They had the big troop of ADC folks, whom they had convinced of a huge problem. These ADC folks volunteered their time and contributed money to the cause.

Also by that time, the suit was in Ecuador where the court system was much looser (and has become more so over time). Almost any allegation can be made in a lawsuit, no matter how scandalous. 

When current President of Ecuador, Rafael Correa was elected in 2006, he made it clear that he was on the side of ADC. Correa made it even easier for the plaintiffs to paint the story however they wanted, and to get the court to support them so that results came out as they wanted. In his weekly radio program, Correa has talked about his support for the ADC and his solidarity with the Ecuadorian lawyers in this case.

The US trial lawyers in the case, and their Ecuadorean co-counsel, started embroidering on the truth, and found they could get away with it.

Instead of just trying to get back to where they would have been if the pits hadn't been remediated, the lawyers decided to make a huge suit out of it ― $27.3 billion instead of the original $1 billion. To get to such a large suit, a lot of embroidering on the truth was needed ― including accusations that had little to do with the underlying facts.

Complicated Case

The nature of the case was so complicated that only a very few at the top of ADC understood how misstatements were being made. The rank and file of ADC, let alone the local citizens near the Ecuadorean oil operations, never knew the difference.

Most of the well-intentioned people who had volunteered their time and money to the ADC never figured out where the paths diverged. It seemed like such a "good cause," and as the allegations increased, ADC donors became more and more convinced they were doing the right thing.

US Press Takes Sides ― Against the Oil Company (Surprise!)

Almost all of the US press assumed that if an NGO was making the allegations, there must be some substance behind them. Certainly, an oil company can't be believed in this day and age.

Once the story got started ― including the catchy (but totally false) notion that Chevron caused an "Amazon Chernobyl" ― it was easy to propagate. More and more media were unwittingly drawn into what was pretty close to a multi-billion dollar scam.

The fact that the suit was in a foreign country and much of the evidence was in Spanish made it even easier to issue accusations as if there were substance behind them, and to pass off problems caused by the state-run oil company, Petroecuador, as problems caused by Chevron.

Examples of Baseless Allegations and Questionable Claims

1. Pits recently in use by Petroecuador are being passed off as showing damage caused by Texaco Petroleum prior to 1992.

Newspapers and magazines are peppered with photos such as this one from the Economist:

Looks terrible, huh? Except that it's not a Texaco pit. It's a pit from Petroecuador operations. Whoops. Wrong oil company.

When the ADC shows reporters pits at issue in the suit, it shows pits such as the one above with liquid oil in them. Any pit that still has liquid petroleum in it clearly has been in recent use (by Petroecuador), because the more volatile elements quickly evaporate in the heat of the Amazon, leaving a substance similar to asphalt.

Texaco has been completely out of the country since 1992. So that means the pit shown in the photo is one that Petroecuador has been using. Trying to pass it off as Texaco's responsibility is just plain fraudulent.

Texaco remediated 161 pits back in the 1990s. These were Texaco's responsibility under its agreement with Petroecuador and the government of Ecuador. These old, remediated pits are undetectable to someone now looking at the sites, based on the ones I saw during a recent visit.

2. Water pollution that is either non-existent, or that is caused by current Petroecuador operations, is being passed off as the responsibility of Chevron.

The example of Texaco-caused water pollution that is now being offered to the press is that of "Mr. Salinas' well." In the movie Crude and in a recent segment on the CBS News show, 60 Minutes, Mr. Salinas indicates his well is polluted with petrochemicals, and that this has caused health problems.

One problem with this allegation is that if it is true, it could not possibly be the fault of Texaco. Mr. Salinas' well was tested in 2005, as part of the official, court-sanctioned "Judicial Inspection" phase of the Ecuadorian trial. When it was tested in 2005, there was no petrochemical contamination as determined in tests performed by the plaintiffs and the defendants. So if there is petrochemical contamination of the well, it must have occurred after 2005 ― and long after Texaco left Ecuador.

A May 11, 2009 article in Terra Magazine talks about pollution of the well near Mr. Salinas' house caused by a recent Petroecuador accident. If there were a problem with pollution at the time of the filming in early 2009, this recent Petroecuador accident would seem to be the likely cause.

La Nueva Casa de Senor Salinas

One thing that is strange about the whole story is that Mr. Salinas recently received a new house, as part of a program sponsored by ADC and the Ecuadorian government. As a condition of the grant, the house near the polluted well was to be torn down, because of the pollution.

Yet I had a chance to visit Mr. Salinas' old house when I visited Ecuador in early June. Mr. Salinas has moved (presumably to his new house), but his old house has not been torn down. Instead, his daughter and her children were living in the house near the well. We could detect no sign of hydrocarbons in the well. In fact, Mr. Salinas' daughter seemed to be washing clothes with the water, as shown in this photo I took. One wonders whether the extra house was some sort of bribe or payment, in return for testimony.

3. The truth is being stretched when it comes to health issues of people affected by petroleum pollution.

If there were huge numbers of individuals suffering from cancer as the result of petroleum pollution, it's likely we would find them, and they'd be plaintiffs in this or other lawsuits. Yet when attorney Cristóbal Bonifaz (the lawyer who filed the initial suit in 1993) filed a suit in San Francisco in 2006 on behalf of nine Ecuadorian plaintiffs supposedly having cancer, three of the plaintiffs didn't have cancer. A US federal district court dismissed the case and sanctioned and fined Bonifaz.

The suit in Ecuador against Chevron also does not include the names of any individuals with cancer. Since the Ecuador suit doesn't claim the particular individuals named in the suit have cancer, it isn't necessary that any of the 48 named individuals have cancer. But the lack of individuals with cancer is somewhat strange. When one looks at government statistics regarding cancer in Ecuador, cancer rates are lower in the area with oil extraction than they are in the nation's capital of Quito.

A second approach to stretching the truth is a peer-reviewed paper whose data appears to have been doctored. The 2008 paper "Monitoring of DNA Damage in Individuals Exposed to Petroleum Hydrocarbons in Ecuador" by Cesar Paz-y-Mino et al. purports to show injuries from hydrocarbons. Yet, another paper with the same lead author from 2004 called "Chromosome and DNA damage analysis in individuals occupationally exposed to pesticides with relation to genetic polymorphism for CYP 1A1gene in Ecuador" has identical summary exhibits.

The likelihood of identical results in two supposedly "different" cohort studies is virtually nil, especially since there were different numbers of subjects in the two studies. One can only conclude that results of the second study (the one regarding hydrocarbons) are incorrect ― the second study really reflects the results of the earlier study on pesticides, but it was tossed into the pileup onto Chevron.

A third approach to stretching the truth is determining the incidence of illness by asking residents their recollections of illnesses of types that may or may not have anything to hydrocarbon pollution. Sewage water in the area is not treated prior to discharge into rivers, so there are a large number of illnesses related to bacterial contamination. Yet no attempt is made to distinguish between illnesses cause by bacterial contamination and illnesses caused by hydrocarbon exposure.

A fourth approach to overstating health issues is repeated mention of the possibility of benzene contamination. Benzene is known to cause cancer. But in the lawsuit against Chevron, none of the test results submitted to the court show evidence of benzene contamination.

I could go on and on with many other baseless allegations and questionable claims. Some of these are given in a post I wrote earlier for The Oil Drum.

Why Am I Writing This Post?

The primary reason I am writing this post is that I am appalled at the level of journalistic investigation in the US. It is ridiculous that a case such as this one against Chevron can have so many baseless allegations repeated endlessly, without any attempt to discern the truth.

The fact is that I'm an energy-oriented blogger. I work for nothing (or often, less than nothing). Yet I'm the one investigating these issues, involving multi-billion dollar international claims that appear to be riddled with fraud. It's bizarre.

A second reason I am writing this is that I believe that current press treatment is manifestly unfair to Chevron.  There seems to be a belief today that oil companies are somehow "bad," so it's OK to treat them differently.

As far as I am concerned, with world oil shortages ahead, US oil companies will be ever more important to the US mix of energy needs. We are still far from the point where we can expect renewable energy systems suddenly to appear on the horizon and save the day, even if many people would like immediate salvation from them.

I'll come right out and say that Chevron paid most (only most) of the cost of my trip to Ecuador to see the oil extraction sites. But Chevron buying me an airline ticket, hotel lodging and a few meals has not influenced my independence of thinking. I'm just following the facts as I see them.

Actually, I came out financially behind on the trip to Ecuador, and risked physical harm, both from yellow fever (for which no vaccine was available) and from the people of the area ― we were accompanied by armed guards on the trip.

Meanwhile, I do not own any shares of any oil company or any renewable energy company. I have no opinion about the future financial prospects of Chevron, although I happen to believe that a company like Chevron is vital to the world's future energy prospects.

I did not get any answers when I twice attempted to get information from the ADC. I do not see this as a huge disadvantage. The "ADC story" ― supported by a slick, Washington, D.C. public relations firm ― is told endlessly on the Internet and in much of the mainstream media.

But based on what I saw when I visited the site of the so-called "Amazon Chernobyl," the ADC story is baseless. The lawsuit is nothing but a world-class shakedown of Chevron.