That means Africa gets its proper gigantic sizing. It is truly a massive landmass.

It’s also fitting that it sits close to the center, because Africa is a big part of the future of natural resource exploration and production. In some sense, it’s retaking its historical preeminence. For instance, consider the former rich trading cities in the East.

Zanzibar, Dar es Salaam, Mombasa, Mogadishu, Mumbai, Mangalore… all trading cities along the fabled rim of the Indian Ocean. These east African trading cities thrived between the 12th and 18th centuries, with ships sailing in and out on monsoon winds.

Africa had good harbors and plentiful fish and lots to trade with India and Arabia. Ties between India and Africa, especially, strengthened under the common influence of Islam and the Portuguese. (Portugal colonized both Goa and Africa’s coast.) Africa is also home to a large population of ethnic Indians, which helps bridge trade further. One of Africa’s better known industrialists – Manu Chandaria – was born in Kenya, but his parents are from the Indian state of Gujarat.

These historical ties and those old trade routes are reviving once again. In the spring, Delhi hosted the first Indian-African summit. Trade between India and Africa tops $25 billion per year. Nigeria, for example, accounts for 10% of India’s crude oil imports. But China’s trade with Africa is a lot more – $55 billion annually. The reason for this boom in trade? A hunger for the natural resources of Africa.

Africa increasingly is right in the middle of the global quest for natural resources. It has the highest ratio of light and sweet crude in the world – the best-quality stuff you can find. And most of its oil – some 83% – comes from large fields that produce at least 100 million barrels per day. Meaningful amounts of premium oil in large fields explains why Africa attracts so much investment. Between 2002-2006, the big oil companies tripled their spending in Africa.

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The recent discovery of oil sands in the Congo by Eni, a big Italian oil group, lends more credence to the idea of Africa as the future of global oil supply. Eni hasn’t said how much resource its vast acreage might hold. But the Financial Times reports early samples suggest, “The area as a whole could hold more oil than Eni’s entire reserves of 7 billion barrels of oil equivalent.” That would put Eni’s resource on par with the huge Kashagan field in Kazakhstan. Eni potentially doubled its oil reserves with this one African find.

Right now, Africa produces only about 12% of the world’s oil output. By 2012, that could be 30%. No wonder, then, it has become such a competitive battleground for the oil companies. In a recent auction, India’s state oil company bid $321 million for an Angolan oil block. A Chinese oil giant bid $725 million. Guess who won?

It’s not just about oil, either. Africa holds tremendous amounts of natural gas, minerals, and natural resources of all kinds. Much of it is in places where it’s easy to do business. But there is often a fragile social fabric, which seems ever on the brink of a civil war or a coup or worse.

In Niger, for example, you will find some of the world’s largest deposits of uranium. Niger plans to double its output over the next several years.

Companies from all over the world – Australia, Canada, China, India, and France – scramble to lock down claims. But the uranium deposits lie in the ancestral home of the nomadic Tuareg. The Blue Men of the Desert (so-called due to the color of their favored indigo dyes) return to old ceremonial grounds to find red flags marking uranium deposits. The result is predictable – battles between the Niger army and Tuareg fighters, and bloodshed.

Yet the rewards dangling before the world’s eyes are so great. Many companies will walk the edge of that precipice for a shot at glory. A longtime holding in my Capital & Crisis advisory, Canadian Natural Resources has a mix of West African oil properties that could be significant. Another longtime holding, electrical infrastructure specialist ABB Ltd, has a big power project in Namibia and a growing presence in Africa.

Betting on Western companies that have this sort of backdoor exposure to Africa is my preferred modus operandi.

It’s far safer, for one thing. But I wouldn’t mind investing in more of a pure play if I could find a company that offers enough safety and enough upside. In my Mayer’s Special Situations letter, we recently doubled our money in Vaalco Energy, a small West African oil explorer and producer, in about eight months. So there are success stories here.

Ryszard Kapuscinski, the late journalist, once wrote that Africa was too large to describe. Africa was “a veritable ocean, a separate planet, a varied, immensely rich cosmos.” (The Heat of the Serengeti Plain, 1962) “Only with the greatest simplification,” he wrote, “can we say ‘Africa.’ In reality, except as a geographic appellation, Africa does not exist.”

I think the same holds true today. But one generalization is safe to make: Africa is in the thick of the race for more natural resources.

Good investing,

Chris Mayer Editor’s note: Chris Mayer is the editor of Capital & Crisis, an investment advisory we read religiously at DailyWealth. If you’re an investor in agriculture, mining, energy, and infrastructure, Capital & Crisis will become some of your favorite monthly reading. Click here to learn about one of Chris’ top ideas right now.

Source: A Potential Oil Sands Boom You’ve Never Heard Of

Frontier Life

When the stock market turns ugly, the quest for “non-correlated assets” intensifies. A non-correlated asset is fancy Wall Street talk for something that doesn’t move lock-step with the overall market. When the market falls, a non-correlated asset might actually rise, or at least hold its own better than the market.

Gold is a classic example. Its price tends to rise during times of stock market distress. But very few investments can rival gold’s long history of non-correlation. Imposters abound. The imposters might move independently of the overall market for months or years at a time, thereby creating the impression that they are non-correlated. But when the markets really turn nasty, investors often learn that their “non-correlated” asset tumbles just as sharply as an S&P 500 Index fund.

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However, some investors think they’ve found a reliable new non-correlated asset: “frontier markets.” Merrill Lynch recently created an index not only to track them, but for investors to buy and sell them.

Frontier markets include Pakistan, Kuwait, the United Arab Emirates (UAE) and other markets throughout Africa and the Middle East. They also include Vietnam, Kazakhstan, Cyprus and others. They are individually too small for institutions to invest in, but cobble them together in a new index that allows you to buy and sell the basket and… well, then you have something.

Merrill Lynch’s new Frontier Index tracks the 50 largest companies in 17 frontier markets. Even so, the market value of all these companies combined is only about $330 billion – or about that of General Electric. Right now, the index heavily tilts toward the Middle East, with 50% of the index in the region. Asia is the second largest component, with 23%, followed by Europe at 14% and Africa at 13%.

As for industry groups, banks usually are among the biggest companies in any emerging market. So banks and financial service companies represent about 65% of the index. Oil and gas is the next largest sector, weighing in at 13%. As far as countries go, the top three are the UAE (23%), Kuwait (18%) and Pakistan (14%).

So far, these frontier markets have lived up to their advance billing of not following the broader markets. Since Sept. 30, for example, the frontier markets actually gained 31% while the broader market lost ground. Merrill Lynch backtested the index several years and found that between February 2000-December 2007, the index return’s correlation with the S&P 500 was only 32%. Basically, that means that about two-thirds of the time, the frontier markets zigged while the S&P 500 zagged.

I love the idea of frontier investing, because I’m an optimist when it comes to global trade and booming overseas markets. Maybe it’s my globe-trotting that’s skewed my view. But when I travel overseas, I see great opportunity. I see people building businesses. I see the impact of global market forces on local energy, food and resource markets. I see the world getting smaller.

I’m long-term bullish on markets such as the UAE, Kuwait, Vietnam and others. But I also realize that the ride in some of these markets will be absolutely gut-wrenching. Just look at Vietnam.

The Vietnamese economy is growing somewhere between 7-9% per year. It is a cheaper place to do business than many other parts of Asia. Hence, Vietnam continues to attract a strong flow of investment.

While I liked what I saw going on there, I found no direct investment ideas for us. The market is just too small and illiquid. Heck, before March 2002, the market traded only on alternate days. Moreover, as with most of these frontier markets, Vietnam suffers from poor disclosures and low transparency. When you invest here, you’re really not sure what you’re getting.

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I remember listening to Carlo Cannell, a very good investor at Cannell Capital, talk about his trip to Vietnam and his investments there. This was back in May 2007. The theme was investing in the dark. In Vietnam, he basically made many blind bets on lots of companies, figuring enough of them would work out.

But the market has tanked since then.

Perspective, though, is everything in markets. That chart looks nasty, with a near 50% drop from the high in less than a year. But as recently as July 2005, the index was only 250. You’d still have more than doubled your money in less than three years. In 2000, it was only 100. Investors are still up sixfold from 2000, which is a lot better than an investment in the S&P 500 Index. And that’s really the key to the whole frontier market idea. As an investor, what’s most important is what happens over the years.

I’m skeptical of the idea of frontier markets as an “non-correlated asset” for all seasons. Links between these small markets and their bigger brothers are probably stronger now than in the past. Vietnam, for example, depends heavily on foreign investment. Vietnam’s currency, the dong, is still linked with the dollar. So we have to be careful in taking the past and saying the future will work the same way.

As the impact of the global credit crunch rumbles on, we’re seeing a very interesting divergence in the performance of the Asian economies. The countries that are still bound to the American eagle are heading for the doldrums. But the ones that have chained themselves to the Chinese dragon are roaring ahead.

You see, despite all the babble about a global economic slowdown, China is still booming. Its economy grew by a white-hot 10.6% in the first quarter of this year. And that’s despite all the efforts of the Beijing government to slow things down…

So, the commodity-rich Asian countries that supply China’s industrial machine, like Malaysia, Indonesia and Thailand, are surviving the global economic downturn well enough. In fact, they’re seeing exports boom…

But not every Asian country is benefiting. The Asian countries that rely on electronics shipments for the bulk of their exports, like Singapore and the Philippines, are being hit by the US slowdown.
The numbers say it all

Just look at the figures. This week, Malaysia announced a 21% jump in exports in April from a year earlier. What are they selling to the rest of the world? Let’s see…palm oil exports are up by 71%, crude oil exports by 53% and exports of natural gas by 26%. Electronic-component exports were up by just 12.5%. The electronics industry used to be the crown jewel of Malaysia’s export industry. And most of those components used to go to the U.S. We’re seeing a massive shift in the centre of economic gravity here.

Same thing in Thailand. The country’s exports jumped 28% from a year earlier. And a good part of that comes down to the soaring prices of rice and other agricultural products.

Indonesia’s monthly exports have just hit a new record of $11.9 billion in March, as well. No prizes for guessing what they’ve been selling…crude palm oil (Indonesia is the world’s biggest producer), natural gas, timber, coal…

Indonesia’s coal story is something that I’ve written about recently. Coal is the new gold. And Indonesia has some of the most exciting coal companies on the planet. We’re watching that situation very carefully…looking for a chance to get in…

And then India has reported a 32% rise in exports… The gist of this story is that if you’ve got what China needs right now, you’re in the money.

And The Dragon isn’t just dragging along a bunch of small Third World economies either. Even developed economies like Japan are getting a boost from China’s rise. The Japanese have sold so much industrial machinery and parts to China that their economy grew by 3.3% in the first three months of this year from the year before.

But here is the bit that really excites me: what China is doing for Asia, it’s now doing for Africa as well. It’s locking the Dark Continent into its economic orbit. And Profit Hunter readers have bought into this boom right on the ground floor.

From basket-case to oil exporter…

It has already invested $30 billion in Africa’s oil and gas industry. And most of that has gone to places that most Western investors would never have touched: Sudan, Chad, Equatorial Guinea, Angola, Nigeria….

Now it plans on investing $5 billion in the West African country of Niger. This is one of the poorest countries on earth. It ranks in the bottom five on the United Nations’ human development index. And the country is battling an insurgency by the magnificently blue-cloaked, be-turbaned, camel-riding Tuareg nomads in the north of the country. But the Chinese don’t seem remotely concerned. They plan to pump the country’s first barrel of oil next year. And to get it out of the country, they are going build a 2000-kilometre oil pipeline and a refinery with a capacity of 20,000 barrels a day.

Here’s another country about to become an economic annexe of the Middle Kingdom…

The new king of the African oil patch

While we’re on the African oil industry, here’s a bit of very interesting news. Angola has now dethroned Nigeria as Africa’s biggest oil producer. Nigeria has held the top spot for decades. But militant attacks in the oil rich Niger Delta and worker strikes have undermined the country’s oil industry. In April, Angola produced 1.87 million barrels of oil per day. Nigeria produced 1.81 million barrels.

We aren’t in Nigeria. But our brilliant African play puts us in the thick of Angola’s booming economy. It owns airlines in the region and is setting-up a massive logistics centre in the country’s capital, Luanda.

Source: China Invests Billions In Africa And We’re Set To Book a Massive Profit

Recently I’ve been telling my readers about an incredible deal that had just been signed between China and the Democratic Republic of the Congo. For those of you who are new… I’ll give you a quick reminder…

Congo is one of the most mineral-rich places on earth. Africa’s biggest country is said to hold just about every mineral know to man – gold, copper, diamonds, uranium…

In April this year the Chinese sealed an agreement with the Congo government that is going to see China invest $9 billion dollars in reviving Congo’s war-ravaged infrastructure and mines.

In return they will get access to the African giant’s vast mineral wealth. About $3 billion of that is going to be invested in reviving the mines. But a massive $6 billion is going to be spent on building desperately needed infrastructure. China is going to build about 2,400 miles of new roads, 2,000 miles of railway, 32 hospitals, 145 health centres and two universities.

There are only about 3000 miles of roads in the whole Congo at the moment. So the impact on the country is going to be huge…

In return, China is going to get access to some 10.62 million tonnes of copper and 620,000 tonnes of cobalt. That could add-up to more than $42 billion in profit for the Chinese in the coming years.

The sheer size of the deal has completely blown away China’s rivals. Western mining companies and governments have been left reeling as China appears to have locked-up some of the most valuable mineral deposits in the world. And they aren’t very happy…

What are the Chinese up to?

Last week, Hong Kong’s respected South China Morning Post newspaper, carried an article on the deal. I’m going to quote it at length here, because I think it’s an excellent window into how the Chinese actually view their move into Africa:

“Poor Congo! It can never get a break from meddling westerners. But what can it expect, since it is doing a multibillion-dollar deal with China.”

“Worse, this deal, estimated to be worth US$9.25 billion, involves valuable natural resources and will entrench China, for years, in the affairs of a key African country as big as Western Europe. And, as with many similar massive investment schemes across the continent, it is pitting China investors against western institutional lending and aid bureaucrats and mining companies.”

True enough. And the simple fact is that most western companies just aren’t going to have the resources to go head-to-head with the Chinese government in the scramble for Africa. One of our current plays has done just the opposite. It’s providing the infrastructure and support-services that are going to be necessary for the multinationals and Chinese state-owned giants to get their loot out of Africa… find out more about this play here…

The article goes on…
“Sure, there is no guarantee China will deliver. But even if they deliver just half of what they promise, it will benefit the country enormously, which hitherto has been more newsworthy in the west for civil wars and exotic diseases like Ebola.”

“China is taking on enormous risks with the deal. The tonnes of resources sound good on paper, but some of Congo’s mines and concessions are underdeveloped and dangerous to operate; others remain to be explored and developed. The technical and operational challenges are great.

“No western government or corporation would commit so much capital resources in a single enterprise because, as one analyst said of western investments in the continent in general, they mistake their own ignorance and prejudice for risk assessment.

“So, here is a potentially good deal for Congo, and the International Monetary Fund is unhappy. Likewise some western mining companies, which signed dozens of contracts with the country during the last civil war. The chickens are coming home to roost for the companies in the latest sorry attempt at exploitation by the west.”

What he means by that is that many of the small mining exploration companies that entered the country during the Civil War in late 1990’s are now seeing their contracts being cancelled. A lot of these contracts were one-sided deals which left the Congo government holding the short end of the stick. With the support of their powerful new Asian friend, these small American and European companies are now being forced out. And here’s the Post’s rhetorical flourish at the end:

“China is offering real economic growth and opportunity to sub-Saharan Africa, something the west has never done. Poor countries need all the help they can get, from whatever sources they choose.”

The ONE company that can beat the Chinese at their own game…

Why am I revisiting the Congo today? Because when I first wrote about China’s investment deal with the country early last month, I mentioned that we were looking at several investment opportunities in that country…

And we have found one. In fact, if I’m right about it, it’s going to offer the sort of profits that make China’s deal with the Congo look small…

You see, earlier this year, a group of shadowy tycoons who operate in Africa struck a deal that gives them access to the Congo’s richest mines…the sort of thing that the Chinese can only dream about. They’ve got all the right connections and they’ve got the cash to pull it off. And our latest recommendation is going to put you right in the thick of it.

Source: Secret Deals, Africa’s Richest Mines

Just when I thought I had completely lost my sense of humor, I ran across a MoneyNews.com article titled “Lehman Bros. Report: Oil Bust in the Cards”. Hahahaha! Thanks, Lehman!! Hahaha! I needed the laugh!

Perhaps part of the humor is that this comes at the same time as the price of gasoline went up 3 cents to another record high of an average of $3.70 a gallon. This is up 22% from this time last year! 22 percent! 22! Hahahaha!

It gets even funnier when Lehman is not just predicting lower prices, but “Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010.” At this point I am laughing so hard that my stomach hurts, and since I am on the verge of pooping in my pants, I am desperately trying to stop laughing by sticking my own thumb in my eye, but it does no good! I just keep going, “Hahahaha! Oww! Hahahaha! Oww!”

But $70 a barrel of oil? Hahahaha! Oww! Hell, the cost of production is higher than that! So does Lehman think that production costs are going to go down? Hahahaha! Oww!

Bill Bonner here at The Daily Reckoning, taking no notice of my anguish or my thumb, says, “Ten years ago, China imported 165 million barrels of oil per year. Today, the total is more than 1 billion. Wonder why the price of oil hit a new high last week – above $126 a barrel? Well, China is a big part of the answer.” A whopping 600% increase in ten years, and yet Lehman thinks that oil will go down in price? Hahahaha! Oww!

Kevin Kerr at Whiskey and Gunpowder says, “According to the most recent data from the U.S. Energy Information Administration, oil demand for countries in the Organization for Economic Cooperation and Development – which includes developed nations like Japan, Germany and the United States – has gone up 14% since 1980. Oil demand for the rest of the world, however, has skyrocketed 43%. That’s more than three times as fast!”

And yet Lehman thinks that the price of oil will go down? Hahahaha! Owww!

So, handily summing up, you can take it from me, the Loudmouth Mogambo Prognosticator (LMP), the guy with the ready laugh and the sore eye where somebody keeps sticking his thumb in it, when I tell you that there is no way, absolutely no way, absolutely no freaking way in hell that oil will be that low next week, next month, next year or ever! Hahahaha! Oww!

I was going to go to the medicine cabinet to find something that would stop my eye from mysteriously hurting, when it fell on Sean Brodrick at MoneyandMarkets.com writing, “According to the International Energy Agency, China’s overall oil demand rose by 7.8% in February from a year earlier, much higher than earlier estimates of a 5.3% gain. And gasoline demand rose by 22.8%!”

Careful Mogambo Scholars will take particular note of the use of Mr. Brodrick’s use of exclamation points in highlighting the rise in gasoline demand, as this means to me a rise in the use of internal combustion engines, meaning that a lot of work is being done, which means that a lot of raw materials are being consumed.

In fact, he reports, “As a result of that surge in demand, China’s crude oil imports rose 15% in the first quarter and 25% in March. Its imports are rapidly accelerating!” Again one notes the use of the exclamation point!

And in another very populous country, India, he says that “oil product sales – a proxy of demand – surged by 10.9% in February compared to a year earlier.” Yow! Eleven percent in one year!

The interesting part, which is a euphemism for, “the price of oil is going to go through the freaking roof one of these days real soon, and for a long time after that, too, and if you want to make a lot of money, then get your worthless butt in gear and go out and buy things connected with oil” because all of this gigantic surge in demand is coming at a time when supply is shrinking.

This is made manifest when Mr. Brodrick reports that “oil production is already shrinking in 60 of the world’s 98 oil producing countries. So it’s no surprise that in March, global oil supply fell by 100,000 barrels per day, led by lower supplies last month from OPEC, the North Sea and non-OPEC Africa.”

And Kevin Kerr agrees, too. “Unfortunately” he writes, “there’s no way for supply to keep up.” As in “no way, absolutely no way, absolutely no freaking way in hell, just as The Mogambo put it in a previous paragraph”, which he could have said but didn’t.

This is important stuff, so I call up the local paper and tell them that I want one of their stupid little reporters to come over for my news conference so that I can tell the world what is happening. The little receptionist asks, “Is this The Mogambo?” and I proudly say, “Yes, it is!” Then, suddenly, the line goes dead! So I call back, and the same little receptionist asks, “Is this The Mogambo?” and I proudly say “no!”

Then she says, “Is this about inflation?”, and I say, yes, it will impact inflation, and before I can say another word, she says, “It’s you, you Stinking Mogambo Idiot (SMI)!”, and hangs up again!

So, if you never read in your newspaper how inflation is going to kill all of us, especially inflation in the price of energy, then blame the stupid little receptionist.

The inflation you can blame on the corrupt Federal Reserve, and the corrupt Congress (except Ron Paul), which encouraged them, and the corrupt Supreme Court, which let them continually ignore the part of the Constitution that requires that money be only of silver and gold.

Until next time,

The Mogambo Guru
for The Daily Reckoning

The Mogambo Sez: Being as sweet and brief as I can manage, under the circumstances, if you aren’t buying gold and silver, you are a moron.

Source:  ‘Oil Bust’ Headline Makes a Good Punch Line

Although gold made a new intra-day high for this move, the price was capped the moment London closed. Only about $3 of gold’s excellent move on Friday was in New York trading. However, it’s nice to see a $900 handle on the gold price once again. Let’s see how long it lasts.

Silver appeared to show little enthusiasm, but it continued to work its way slowly higher from the moment that Globex trading began in the Far East on Friday morning. The three small rallies that occurred in New York trading were all sold down by some not-for-profit seller. According to Kitco, silver made an intra-day high of $17.08…but it got sold hard at the London close, and actually finished lower in price than when it opened on the Comex. The silver price really wanted to break out strongly, but someone (or more than one someone) was there to make sure that that didn’t happen. Can’t have silver strongly confirming the gold price break-out, now can we?

Open interest for Thursday was interesting. In gold, o.i. rose 4,412 contracts, so Thursday’s price run-up was not due to much short covering. It now appears that it was mostly new buyers. Were they the tech funds? Don’t know…but maybe…probably. The price action next week should tell us a lot, as we broke above the 20-day m.a. by a substantial $19 yesterday.

In silver, the o.i. increased a minuscule 8 contracts. Friday’s price close was less than a dime above its 20-day m.a. If the tech funds were responsible for the 3 short rallies in silver on Friday, they got stuffed right away. Heaven only knows how high the silver price would have gone if those previously mentioned non-for-profit sellers hadn’t been lurking about.

The Commitment of Traders report for positions held as of 13 May 2008, didn’t show much of anything in silver. The ‘technically inclined’ in the Non-Commercial category went net short another 1,100 contracts or so…and the Commercials added 191 long positions and covered 688 short positions. Almost a big zero all around. In gold, there was a little more action. The players in the Non-Commercial category added 5,090 contracts to their long position and went short a further 8,119 contracts. The bullion banks (Commercials) added 7,051 longs and 1,920 shorts during this reporting period. It will, of course, be of great interest to see who went long (and short!) in the $35 price increase we’ve had in the last two trading days of this week. Concentrations? Currently, the bullion banks (’8 or less’ traders in the Commercial category) are short 78% (silver) and 76.5% (gold) respectively, of the entire Comex silver and gold short position. The CFTC sees nothing wrong with this at all.

One thing of note in the gold world yesterday…Dennis Gartman has gone long gold once again. He hasn’t always been right about picking tops, but he’s had an uncanny knack for picking bottoms. It will be interesting to see how this turns out. Needless to say, we will all be delighted if he’s right…yours truly, included!

Since today is Friday…as I write this…I’m cleaning out my in-box, and couldn’t resist passing along the following set of pictures. I remember the eruption of Mount St. Helens back in 1980 very well. We even got a little ash as far north as Edmonton, where I live. Another volcano, this one in the Andes Mountains in Chile, decided to erupt two weeks ago…and a dozen excellent photographs are linked here.

As usual, I’ve got two stories today. The first one is from mineweb.net and is a report on first quarter de-hedging by the gold miners. It’s entitled “Global gold hedging declines by 4.8 Moz in Q1/08 to 22.0 Moz”. The link is here.

The second story is somewhat off the beaten track. Actually I was surprised that an article like this would show up at all…especially on Bloomberg. It’s an exposé on Jacob Zuma, who is poised to become South Africa’s next president. Having been in Africa and seen some of the tribal politics of that continent first hand, you’ll excuse me if I have some deep reservations about how his tenure may unfold…think Robert Mugabe in Rhodesia…now Zimbabwe. I have no investments in South Africa…and don’t plan on any…ever. The link is here.

Political language is designed to make lies sound truthful and murder respectable…and to give the appearance of solidity to pure wind. – George Orwell

Today’s fun youtube.com video idea came from another reader of my daily rant. But I found a version that I liked a little better…and that’s the one that’s posted here…but a big thank you to Karen for coming up with the piece in the first place. The link is here. Enjoy!

With consumer confidence reported to be at a 28-year low, the Dow only managed to lose six whole points. If it had been a 35-year low…or greater…without a doubt, the Dow would have been up triple digits. Maybe something like that will happen next week.

Enjoy what’s left of your weekend, and all of us at CDR+ will see you here on Tuesday morning.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And then there’s this…Saturday, May 17th, 2008

To save you trawling back through your inbox looking for that, let me just give you the link through to the nitty-gritty. This leads you through to the name of a London AIM-listed share that could be a real legacy-making investment:

http://click.fspeletters.com/t/18665/1632470/157214/0/

I can tell from the number of inquiries that came in on Saturday that Profit Watch readers were very receptive to Manraaj’s investment idea. That’s great to see – because I think those people who are following him into this share will see great returns.

But I also had a number of emails from readers who thought that the idea of investing in “the Dark continent”, as someone put it, was utter madness. Why invest in a continent riddled with corruption, poverty and violence, was the gist of the objections.

Fair enough. It’s a natural reaction. But the truth is that those stereotypes aren’t true of most of Africa.

Go where the “smart money” is going…

The smart money is finally catching on that there are really amazing growth prospects in Africa, as The Independent notes:

“As investment banks continue to feel the effects of the credit crunch in the West, some are looking to Africa as the latest emerging market opportunity to boost flagging profits.

“Banking powerhouses Citigroup and JP Morgan operate in sub-Saharan Africa. But last week Russian investment bank Renaissance Capital (RenCap) showed signs of things to come as it bought stakes in New World Investments in Ghana and Pangaea/EMI Securities in Zambia.”

Take a look at this opportunity and see whether you like the sound of it. You can review Manraaj’s in-depth report on one company he believes could help British investors cash in on this great long-term story:

http://click.fspeletters.com/t/18665/1632470/157214/0/

And if your interests lean more towards going for quick in and out profit-grabs, then look out for details from me tomorrow about the latest Forex strategy we’re endorsing. You should see what people using this system are saying.

More on that tomorrow.

Until then…

Best regards,

Frank Hemsley
Profit Watch

Did you know there are 1.1 billion barrels of oil waiting to be shipped out of a small corner of Africa? And all of it has to go through one port – that is owned by a hugely undervalued company.

This company knew exactly what it was doing… it got in years ago… way before the Americans and the Chinese had a clue this was going to happen…

Well guess what…

The Americans and the Chinese want this oil – they want it bad. There is just one thing standing in their way… the small company that has the power to release it…

Amazingly… this company is trading for pennies…

How?

Well they’ve been working behind the scenes for years securing many deals such as this one – and now the big boys have come calling for oil…

Well… of course they can have it… but they’re going to have to pay. And this is going to send this company’s share price through the roof.

And what’s more… this is what’s set to be the first of many pay-offs from their long-term strategy in this region. Profit Hunter is predicting you could double your money before the end of 2008 on this deal alone… and that’s just the beginning.

At present we are witnessing a massive transfer of wealth and influence away from the west and into the emerging markets. Profit Hunter… I am happy to say… is ahead of this curve…

But this curve is catching up fast…

We are already deep into subprime problems of our own in the UK… just as Profit Hunter predicted over a year ago.

In fact Profit Hunter’s chief investment strategist Manraaj Singh is getting increasingly alarmed by how heavily this crisis has affected British investors… and you should be too.

The world has changed… the west is in steady decline… and could be for decades… capital is heading to where new growth is emerging.

And the long term re-positioning away from western markets is the only way to avoid the worst of the sub- prime misery that is just around the corner…

The emerging markets are the only feasible way to make life changing profits over the coming years.

In fact – in the last five years – this ethos has made Profit Hunter readers an average 12 month gain of 33.48% on all closed positions.

This is why you should take a look at their latest opportunity. Over $135 billion dollars of oil revenues are waiting to be generated and this one company is the lynchpin to the whole process…

This company’s shares are trading for pennies… something… I still can’t believe – setting you well on course to double your money within 2008.

What have you got to lose by reading more about it?

Click through to find out more:

http://click.fspeletters.com/t/18465/1632470/157161/0/

Regards,

Frank Hemsley
Profit Watch

In fact, Kuwait is prepared to spend tens of millions of dollars updating its refining industry. At last total, upgrades were going to cost $18.75 million. And that’s the low end of the scale for what’s happening in the Fertile Crescent. Some estimates put the number of construction projects at nearly 3,000, worth approximately $1.3 trillion… and that’s just the ones currently in the works!

The thing is, cement demand will rise by 40% over the next three years, and the top cement maker in the area, Orascom, won’t be able to handle it all. (Orascom was acquired by French cement maker Lafarge [LG: Paris] late last year.)

So the Gulf Cooperation Council is pooling $2 billion to build 75 new cement plants and create a brand-new company: Cemena.

The new company’s plants will begin its operations sometime in 2010, and Cemena will account for about 10% of the region’s demand.

Know what that means? Lafarge’s Orascom will still have to work overtime to help meet that 40% rise in demand. And that translates to profits. Lafarge just released its earnings report. Net income rose 49%, and earnings per share jumped 36%.

That’s good news for my buddy, Christian DeHaemer, editor of Material Profits. It’s also good news for Adam and me over here at Taipan Trader. The Middle East is one area we’re trying to break into for some juicy international companies.

With this type of growth in the face of all the unrest, it might be worth a risk or two.

Sara Nunnally

Editor, Taipan Trader

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The case for the target-price increase of 20% was very clear.

“The math is really simple here,” Fitz-Gerald said in an e-mail interview from China, where he was heading an investment-research tour. “We are burning through supplies at a rate that’s four times to five times faster than we’re discovering new reserves. Throw in a few [surprises] … perhaps a terrorist event …and add in the accelerating use of oil and gasoline in Third World countries, and we have the recipe for far higher prices. That’s already in the oven.”

Crude-oil futures jumped up over the $123 a barrel level yesterday (Wednesday) – closing at an all time record – as worries about worldwide oil supplies continued to sweep away any good news in the energy sector. In fact, prices have soared more than $11 a barrel – or 9.8 % – over the past four days alone, reaching back to last Thursday, MarketWatch.com reported.

But it wasn’t the price increases that prompted Fitz-Gerald to boost his oil-price target. In fact, he did that last week. In addition to the proprietary strategy he uses to project market prices, Fitz-Gerald said he relied on some of the observations he’s been making as part of the investor trip he’s leading through China.

In that country, all it takes is a stroll down the street to see that the demand for oil and gasoline is going to increase far faster than most analysts would ever believe.

“Nowhere is that more evident than China where I’m traveling now,” Fitz-Gerald said last week in an e-mail from Mainland China’s capital. “Beijing alone is adding 14,000 cars a day. Across China, the number is obviously higher. [The] same [is true] in India, but I don’t have the figures at my fingertips. Then there’s the other side … evidence suggests that OPEC reserve figures may be artificially high. Imagine what’s going to happen when people figure out that there really isn’t as much oil as everybody thinks. $225.21 is not out of the question … after we get to $187.”

Alternative energy is the only answer, Fitz-Gerald says. But some of that is years from being commercially viable – cheap and reliable enough to be affordable to, and used by, mainstream consumers.

“Barring the introduction of a truly [alternative] and inexpensive technology, this is going to get ugly … and very pricy before it gets better,” Fitz-Gerald wrote. Investors need to be “long energy, long commodities” for right now, and for the foreseeable future.

China is doing all it can to overcome the massive energy deficits that it faces. One such project is the massive Three Gorges Dam, which Fitz-Gerald had visited the day of his interview with Money Morning.

“It’s surreal how big this project really is,” he noted.

Fitz-Gerald sees oil-and-gasoline prices going higher – much higher. And four factors will be the key catalysts. They are:

• Obfuscation by OPEC: Members of the Organization of the Petroleum Exporting Countries have been misrepresenting their reserve capabilities for years. The key players have reported no new discoveries for decades.

• Terrorism Threats: The odds that a terrorist act will interrupt oil supplies – in the near term or the long term – are higher than most security experts would ever publicly confirm, Fitz-Gerald says. And this is especially problematic because of the double-whammy effect: Damage to a major pipeline or a strategic refinery could crimp supplies just as demand is continuing to escalate.

• The Dollar Doldrums: Oil is priced in dollars. And the dollar is in the dumper. Indeed, rising inflation and falling interest rates have put the greenback into a steep downward spiral. And if prices keep rising, and if Federal Reserve policymakers keep cutting short-term interest rates, the dollar will continue to lose altitude against other key global currencies. OPEC members will counter the greenback decline by marking up the price of crude, causing prices to increase still more in dollar-denominated terms.

• Cruising Goes Global: As an increasing number of households in China, India and other advancing overseas economies join the world’s middle class, they’ll start making such basic purchases as electronic goods, houses – and automobiles. The fact that China’s oil imports jumped 18% in one month is evidence enough that this is happening. And the fact that leading India automaker Tata Motors Ltd. (TTM) has unveiled a $2,500 car, the Nano, underscores that international carmakers are looking to recruit a whole new group of motorists. The fallout: For U.S. refiners, oil will first get lots more expensive, and then supplies will start to dry up as countries opt to halt exports and keep the precious black gold for themselves.

Oil Becomes a Strategic Asset

Oil prices have made a major move in the past five years – just as the emergence of China, Russia and several other key economies transformed crude-oil pricing into much more of a global game. High prices have sent cash pouring into the coffers of oil-producers in Asia and the Middle East. Many countries have used that capital to finance global investment initiatives, creating government-controlled “sovereign wealth funds” to do their bidding.

Little wonder crude oil has become a strategic asset – as well as an energy source.

“As oil and other fuels become a more and more precious resource, OPEC countries, China, Russia and others will begin holding back oil, instead of putting it into the market,” Fitz-Gerald says. “That’s going to be devastating in the short-run.”

Some big oil consumers such as the United States have lobbied OPEC to boost production in order to bring market prices down. But it’s done no good: Members of OPEC have said over and over that market supplies are adequate and that the surging prices are not something that they can control.

China – a growing consumer of oil – has embraced a different strategy: To create captive supplies of crude, China has demonstrated that it’s more than willing to endure controversy and cut deals with countries U.S. refiners either can’t or won’t deal with. China Petroleum & Chemical Corp. (SNP), and PetroChina Company Ltd. (PTR) – two of China’s biggest oil companies – have invested in such political hot spots as Africa and Iran.

The Chinese government, desperate to lock down supplies of such crucial natural resources as metal ores and crude oil, has sealed deals with Sudan, Chad and the Congo. African Business reports that trade between Africa and China has advanced at a rate of 40% a year since 2001. In 2006, bilateral trade between the two was $50 billion.

Already, 14% of China’s oil imports come from Angola. About 60% of Sudan’s oil goes to China.

To understand why you should heed Fitz-Gerald’s observations, it’s important to understand just how far ahead of the pack he’s been – and how far ahead he remains – when it comes to predicting long-term energy trends and investment opportunities.