The price of oil is at near-record highs. And that’s driving the biggest transfer of wealth in human history, says Profit Watch editor Manraaj Singh. Manraaj says that in the next five years oil exporting countries are going to buy-up foreign assets worth three times as much as the entire British economy.

Today comes a report from the McKinsey Global Institute that shows us just how quickly money is shifting away from Europe and America towards the oil-exporting countries and the Asian manufacturing economies.

The new numbers are staggering.

The oil exporting countries alone owned foreign assets worth $4.6 trillion at the end of last year. That’s more than 1.6 times the size of the whole UK economy.

And remember that that was before we saw oil cross the $100 per barrel threshold this year.

This phenomenon is just getting started… That’s just the beginning of it though. Even if the price of oil falls back to $70 per barrel, the petrodollar economies are going accumulate foreign investments worth $10 trillion by 2013. That’s two and a half times bigger than the UK economy will be at that point. And if the price of oil stays at $100 per barrel, their oil exporters are going to snap-up $12.2 trillion in foreign assets – THREE times the size of the British economy.

Remember that this isn’t something that’s going to happen at some distant point in the future. It’s happening right now. And the figures that we’re talking about are just for the next five years.

When you look at it from that perspective, it doesn’t make much sense as an investor to focus on companies that are trying to tap into UK or European economic growth.

What we’re seeing right now is probably the biggest and fastest transfer of wealth and economic power in history, but our daily media is still focussing on UK retail sales blues and falling property prices. These are obviously serious concerns, but smart investors still have plenty of opportunities beyond these shores…

Just look at the Persian Gulf…

Zoom-in on the six Arab countries of the Gulf Co-operation Council alone and you find that they’re raking-in $1.5 billion dollars from oil exports every single day!

Over the next 14 years, the Gulf Arab countries alone are going to earn up to $6.2 trillion from oil exports, even if the price of oil falls back to $70 per barrel. That’s almost 50% below where the price of oil is today. What are the chances of that happening? Not very high, if you ask me.

But even if oil falls back to $100 per barrel, the Gulf states are going to rake in almost $9 trillion over the next 14 years.

The big question of course, is where all this money is going to end up and how do we get our slice of it?

Where’s the money going?

Traditionally, the oil exporters re-invested the bulk of their petrodollars in Western securities and assets. That’s changing fast though. A lot more of that money is now being invested at home and in the fast-growing Asian economies.

In 2002, nearly 85% of the Gulf’s wealth was invested abroad in financial instruments mostly linked to the U.S. Dollar. By 2007, though, that was down to 75% as they increasingly focussed on the Gulf itself, Asia and Africa. You can bet that that is only going to keep on rising because growth in those regions far outstrips what we’re seeing in the US and Europe.

So that’s where you’ve got to position your investments if you want to take advantage of this petrodollar bonanza. And that’s precisely what we’ve been doing on the Profit Hunter service.

You’ve only got to look at our play on the Gulf’s petrodollar boom to see that happening. This company is the Gulf’s premier alternative asset manager and made its name with take-overs of some of the best-known Western companies in the 1980’s. It still has a big Western focus. But it recently launched a $1 billion Gulf investment fund to take advantage of local opportunities.

Given the kind of returns that it’s given investors – an average 20% per annum for the last 25 years – this is about as sure-fire a long-term investment as I can think of. Just remember that that 20% figure was what it produced when oil prices were a lot cheaper than what they are now.

Africa is going to be the big winner

The most exciting thing about the report was its finding that African oil exporters will be the biggest winners from this process. With oil at just $100 per barrel, the value of their foreign investments will increase by 30% each year and hit 1.6 trillion in the next five years.

That’s 1.6 thousand, thousand million dollars! Not bad for a continent that had been written-off as a basket case until just a couple of years ago. The latest forecast by McKinsey simply backs-up what I’ve been saying here at PH – Africa is set for a massive economic boom and all serious investors ought to be in there.

Profit Hunter readers are already invested in two fantastic companies that operate in Africa. One of them controls vital infrastructure on the continent and the other one looks set to become one of Africa’s biggest mining companies. You can read more about that here.

We’re now looking at several other opportunities in the region as well.

Asia’s powerhouse economies are raking it in as well…

The McKinsey report shows that the Asian manufacturing powerhouses have accumulated $4.6 trillion in sovereign foreign investments as well. That figure could rise to as high as 12.2 trillion over the next five years. That puts them on a par with the oil exporters. But these reserves are held by central banks and sovereign wealth funds. That doesn’t really give us a chance to get a slice of this bonanza. What it does show us though, is how quickly Asia’s economic machine is ramping-up.

We’ve stayed out of Asian markets recently – with the exception of Vietnam. But, as I have emphasised repeatedly in this service, Asia’s long-term growth story remains on track despite the recent share market turmoil. We’re now looking at a number of investment opportunities across the region. Expect to hear more on that from us shortly.

Here’s how you can profit from it…

In the meantime, follow this link and let me tell you exactly why we chose to stay in Vietnam despite all the recent turbulence in the Asian markets – because this is quite simply one of the biggest profit opportunities that we have come across.

Source: Buy This One Share and Tap into the Biggest Transfer of Wealth in History