• Reliable sources of energy.
• A modern, efficient infrastructure, consisting of a good road and rail system, reliable power grids and high-speed digital communications networks.

And if a country wants to be considered a “global economic powerhouse,” it’s nearly impossible for it to do so without these critical building blocks.

So it’s not too surprising that China is spending unprecedented amounts of money to beef up its infrastructure.

It’s also spending huge amounts of money on long-term oil and gas contracts. And with nearly $2 trillion on hand, it’s the perfect time for China to go on an energy acquisition spree.

Right now, it’s spending like a thirsty sailor on shore leave…

You see, despite the recent pullback in the Chinese stock market, the country is still on an economic roll that will continue for the next 50 years. According to The Economist, China’s capital spending is a whopping 44% of its GDP, and in raw dollars could exceed that of the United States for the first time this year.

And you can bet that its increase in energy use will track right along with its growth.

But China’s energy problems are similar to those of the United States: It doesn’t have enough of its own sources of fossil fuel to meet its needs.

So what is China doing to combat this? And is there a way to tap into this in terms of investing? Answers below…

China’s Energy Asset Acquisition Spree

At the moment, China is importing coal, liquefied natural gas (LNG) and crude oil. And to guarantee that those supplies are uninterrupted, it’s buying some major deposits of oil and gas, along with the refineries to process it.

We’re not just talking small potatoes, either. Since Christmas, China has been on an overseas energy asset acquisition spree. The country has spent a total of $17 billion, easily topping the $13.1 billion it spent in all of 2008. What’s more, the pace of acquisitions doesn’t appear to be slowing – and could even ramp up into 2010.

Many companies are teaming up, putting together joint deals that insure even the largest purchases have funding behind them. And some are very, very big. For example…

• In April, PetroChina (NYSE: PTR) partnered with KazMunaiGaz and plunked down a cool $5 billion to purchase JSC MangistauMunaiGas from Central Asia Petroleum. This was one of the first instances of Chinese firms partnering together to purchase a foreign oil company.
• June saw a highly publicized $20 billion deal, in which China National Petroleum Corporation joined forces with BP (NYSE: BP) to buy a 75% stake in the Rumaila oil field in southern Iraq. The consortium’s bid topped that of the Exxon/Mobil (NYSE: XOM)/Shell (NYSE: RDS) partnership.
• Just one month later, the China National Offshore Oil Company (NYSE: CEO) – often referred to as CNOOC – hooked up with Sinopec. The two of them coughed up $1.3 billion to acquire a 20% stake in a deepwater block off Angola from Marathon Oil.

China’s Knee-Deep In Canadian Oil Sands

Now, the Chinese have landed in Canada. And it’s not because they like hockey. They’ve quietly bought up several parts of different oil sands operations.

Just a few days ago, PetroChina announced a $1.7 billion deal, in which it will acquire a 60% stake in Athabasca Oil Sands Corp’s MacKay River and Dover oil sands fields.

This isn’t the first time that China has invested in Canadian oil sands. Back in 2005, CNOOC purchased a 16.7% stake in MEG Energy Corporation, while China Petrochemical Corporation plunked down $83 million for a stake in Syneco Energy, Inc.

So why is China interested in something like oil sands – oil that is very difficult and expensive to bring to fruition? Simple. All the easy, lucrative projects have already gone. It’s a disturbing indication of China’s quiet determination to increase its oil and gas reserves… at any price.

So what’s next?

How To Invest In China’s Energy Acquisition Express

As evidenced by the variety of different operations that China has acquired recently, the country is taking a shotgun approach to energy.

And while it’s not easy to see what it’s focused on next, the best way to play this trend is by owning shares of the buyer. This includes big Chinese oil companies like…

• PetroChina
• Sinopec (NYSE:SHI)
• CNOOC

All these firms have American Depositary Receipts (ADRs), which means you can trade them on the U.S. exchanges.

One note of caution before you do, however: If you read my colleague Louis Basenese’s piece on the China sell off earlier this week, he highlighted 10 reasons why the Chinese market is set to fall from here.

I agree with Lou – and I believe waiting until we see evidence that the Chinese markets have bottomed will represent an excellent time to take a position in some of these companies.

Good investing,

David Fessler

Source: China’s Energy Acquisition: Three Ways to Invest in China

“The Obama administration, for example, expects to run $9 trillion in deficits over the next 10 years – and that number is based on a recovery! Imagine what will happen if the economy doesn’t recover?”

Now, that’s a nice comforting thought to start our day right? NOT! WAKE UP! Morning has broken, and the coffee is on… If you are still of the thought that this is all going to end up seashells and balloons, then you need to stop and smell that coffee!

Oh brother! Looks like I’m full of you know what and vinegar this morning! Let’s try to calm down, Chuck, you’ve only just begun to write, you don’t want to peak so soon!

OK… Yesterday, I told you that the Asian stocks had sold off and that risk assets were being taken off the table. But that didn’t last long, and by mid-morning, I witnessed a nice currency rally, that wiped out the overnight selling. At one point during the morning a customer called to buy some euros, and when the sales person asked me for a price, I said, “you know, they may want to come back tomorrow morning, after the overnight markets beat the euro up, like we’ve so many times lately.”

But wait! That did not happen last night! So, I was wrong! The euro is getting some real love this morning after German unemployment fell in August, which was totally unsuspected. Euros and Swiss francs are the only currencies I see that have gained on the news this morning. So the Big Dog, euro, must have told the other little dogs to “stay on the porch”… Stay Rex!

German unemployment fell by 1,000… OK, now I know that this has the same feeling as removing a bucket of sand from a beach, when unemployment in Germany is 3.46 million! But, I never said that Germany’s economic recovery was a tidal wave! It’s smoking embers, that are in need of stirring, some small twigs, and leaves… My beautiful bride is an “expert” and getting a fire started like that, I should send her over to Germany, that would really kick the domestic demand to another level! HA!

Baby steps… That’s the way we’re going here… So, we’ve had IFO and ZEW think tank reports on Confidence all print stronger… We had the GDP surprise on the upside… And there was something else last week, but it slips my mind right now. The point here is that the Eurozone’s largest economy is waking up… We just have to hope it doesn’t hit the “snooze” button, now!

A reader sent me a note yesterday asking if I thought there would be a collapse of the Eurozone and thus the euro… If I had $5 for each time these stories have hit the streets, I would be sipping on a multi-colored drink in a tall glass with one of those tiny umbrellas, in a tropical setting… The point I’m making here is that on the outside Spain and Italy have problems… But what’s changed? These two had problems before they joined the Eurozone, and have had problems since joining the Eurozone… Me? I totally believe that these two get down on their knees each night and give thanks for being allowed to join the Eurozone!

So… In case you missed my answer in there… I don’t see that happening, at least not in the near future…

OK… Enough of that! The Reserve Bank of Australia ( RBA )met last night, and left rates unchanged, as suspected they would, and the following statement regarding their thoughts on the economy was relatively upbeat… However, the markets were looking for an indication of “when” the RBA would hike rates, and that didn’t happen… So… The markets were disappointed, and when they are disappointed with a Central Bank, they take it out on the currency! So the A$ got pounded overnight.

Now… Aussie GDP for the 2nd QTR is going to print tonight, I would have to think that the RBA maybe had a peek at the report, and thus their gearing down the interest rate hike talk… So… We could be looking at even weaker A$ prices tomorrow morning… Unless, that is, 2nd QTR GDP is as strong as it was once believed it would be!

Did you see where Canada printed a HUGE Deficit last week? Not a good thing… But, the Canadian balance position has teetered back and forth between Surplus and Deficit, but recently has remained in the red… You know me and deficits, so, I put a red mark next to the Canadian dollar / loonie… But then, you hear news like last night… Get this! PetroChina has agreed to pay C$ 1.9 Billion for a stake in a Canadian oil sands project. PetroChina will buy 60% of Athabasca Oil Sands Corp.’s MacKay River and Dover oil-sands projects.

That’s 1.9 Billion Canadian dollars / loonies that will have to be purchased… And You would have to think that China will be spending the “few loose dollars” they have in their pockets, which would put pressure on the green/peachback!

Canada is still in a recession, here folks… But… Could these be cheaper levels given the merger and acquisition activity? Only the shadow knows!

OK… So, here I am, 1 hour from when I began writing this morning, and all that glossy and shiny talk about the euro’s rally is fading… The Big Dog has lost 1/4 euro in the past hour… So… I wasn’t wrong after all!

OK, you’ll love this, or maybe you won’t, but I do, and since I’m writing this letter, I get to talk about it! HA!

Here’s the title of the story that flashed across the screen, and of course, caught my attention… “Goldman Sachs Wrong on Economic Recover, Macro Hedge Funds Say”

You’ve got me on this one! I’ve got to read on… “Paul Tudor Jones, the billionaire hedge-fund manager, who outperformed peers last year, is wagering that Goldman Sachs Group, Inc. and Morgan Stanley to it wrong in declaring the start of an economic recovery.”

“If we have a recovery at all, it isn’t sustainable.” One Hedge Fund Manager said… Calling this a “ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”

WOW! These guys must be reading the Pfennig! OK, I kid, because these guys would never bet caught with the Pfennig in their hands… They probably put it between the pages of the “Economist” so that others think they’re reading the Economist! HAHAHAHAHAHAHA!

Speaking of “must be reading the Pfennig”… I saw a thing that came across my desk yesterday that 57% of Americans would vote out every politician if the vote were taken right now! WOW! I didn’t know the Pfennig was read by so many people! Recall, I said weeks ago, to “fire them all”… Well, let’s hope that 57% grows to 95%, and Americans really do go through with their threat to vote them all out, if they continue to take us down the road to socialism / fascism / collectivism…

OK… You may recall a couple of weeks ago, I started asking you questions about the stock market rally, and it’s ability to continue on… I truly believed that the stocks were overbought, and the P/E ratios were out of control… Now, I see quite a few jumping on that bandwagon, and calling for a stock market reversal.

Do we really think the Gov’t will allow that to happen? Didn’t the President himself, say that he thought it to be a good time to buy stocks… Isn’t that sort of like a wink and a nod from the President that everything will be OK?

Beyond those conspiracy thoughts, let’s just say the markets get to go where the participants take them ( I know, it’s not reality, but let’s just play along ), and stocks begin to reverse their gains from March… I would think it to take an adverse affect on the currencies and their gains since March too… Throw Commodities in there too!

Now, in the old days, I would look at a stock sell off and say, currencies will rise… “Honey, put on the red dress tonight, we’re going out on the town!” but… These aren’t the old days… This is the new improved way of throwing all risk assets into the same barrel! And I don’t like it at all!

Ok… The Norwegian krone, traded with a 5 handle yesterday for the first time in a month of Sundays! It has traded back over 6 overnight… But, it was a good strong move from the krone yesterday nonetheless!

Well, today, we’ll see the ISM Index (Manufacturing) from August, and for the first time in 19 months, it is expected to be above 50! New readers might wonder what I’m talking about here… But it’s simple… 50 is a line in the sand that says any number below it represents contraction of manufacturing, and any number above it represents expansion of manufacturing… So, if it prints above 50 as expected one would say that manufacturing must be recovering…

Let’s look at that closer… Come on, closer, closer, closer! We’re experiencing a global recession, and global trade has been sketchy at best… But here’s U.S. manufacturing showing expansion… And… The rise has been quite steady since March… With March printing at 36.3, April 40.1, May 42.8, June 44.8, and July 48.9… See the steady rise?

What else has happened since March? That’s right, thank you for paying attention there in the back of the class! Yes, the currencies have been rallying VS the dollar… So, the dollar is much weaker than it was in March… The dollar index was 89.05 on March 5th, and today it is around 78… So… How did manufacturing / exports rise during this period of time? Because the dollar was weaker!

Let’s keep that in mind, eh? For if we get an adverse affect on the currencies from a stock sell off, this recovery in manufacturing could go kaput!

We’ll also see Pending Home Sales for July, and Vehicle Sales for August… Cash for Clunkers will push up the Vehicle Sales… But what happens next month?

Gold has backed off by about $8 in the past two days… It’s a dip… Therefore it must be an opportunity to buy at a cheaper price! I was reminding all my friends that we spent the weekend together at a lake, that I had told them to buy Gold $400 dollars in price ago… I was booed out of the room at that point, because you see, they didn’t buy it $400 dollars in price ago!

And on that note… I’ll head to the Big Finish!

Currencies today 9/1/09: A$ .8355, kiwi .6820, C$ .9125, euro 1.4295, sterling 1.6220, Swiss .9440, rand 7.7975, krone 6.0275, SEK 7.15, forint 192, zloty 2.8780, koruna 17.9110, RUB 31.8325, yen 93.10, sing 1.4430, HKD 7.75, INR 49, China 6.8303, pesos 13.44, BRL 1.88, dollar index 78.35, Oil $69.69, 10-year 3.38%, Silver $14.75, and Gold… $949.50

That’s it for today… Well, it’s been an unusually cool summer here in St. Louis… We had two separate weeks of hot weather, and that was it! It normally is much hotter, with very high humidity… I wonder what that means for this coming winter! UGH! Just found out yesterday that I won’t be going to Marco Island this December to speak like I had the previous two years… UGH! September is the last full month of baseball, and with the Cardinals in first place in their division, this should be a good month! There are two middle of the week day games in September, and I always enjoy those! So… Summer may be coming to an end, as along as September takes a long time to work through, I’ll be OK! All righty then, let’s get going on this Terrific Tuesday, the first day of September!

Source: More Baby Steps For A German Economic Recovery

Investment News Briefs Tuesday, September 1, 2009

At the same time, gasoline supplies fell by 1.6 million barrels, and distillates were off 300,000 barrels. Refineries were operating at 85.9% of capacity, vs. 86.3% a week earlier.

“This is a clearly bullish report,” said James Williams, of WTRG Economics. “The decline in crude, gasoline and distillate stocks should add to the current feeding frenzy in petroleum speculation.”

Meanwhile, the world’s proven oil reserves stood at 1.258 trillion barrels at the end of 2008, excluding Canadian oil sands, down 0.2% from 1.261 trillion barrels in 2007, according to BP’s statistical review of world energy released yesterday.

The review also said that global oil consumption fell by 0.6%, or 420,000 barrels a day, last year. It was the first decline since 1993 and the largest drop in 27 years.

Source: Crude Rally Rolls On

This from Money Mornings Peter Krauth:

There’s an epic confrontation brewing inside the new administration of U.S. President Barack Obama. And it has nothing to do with the controversial economic stimulus package, or the new banking-bailout blueprint that U.S. Treasury Secretary Timothy F. Geithner is expected to unveil today (Tuesday).

This “other” confrontation has to do with energy. And the two sides are very clearly delineated.

On the left is renewable energy. On the right: Secure access to oil.

Upping the ante in this already monumental debate is the huge decline in the stock and commodities markets – a skid that’s firmly etched in investors’ minds. Here’s why.

Anyone who followed the Obama campaign remembers his pledges to ensure forceful action aimed at reducing greenhouse gas emissions by raising energy efficiency, increasing the use of “greener” energy sources, and rolling out emissions standards that would apply across the nation.

And only a couple of weeks ago, as we sat fixated on his inaugural speech, the new president reminded us of the need to harness the power of wind and sun to safeguard the environment.

But he also unmistakably reaffirmed the importance of energy security to America.

So, in building his cabinet, President Obama has positioned some heavyweights to back up his words, on both sides of the debate.

The Dilemma

How will these seasoned veterans, as they set out to accomplish their own objectives, reshape the future of energy policy?

Well, one sure bet is to expect a regular stream of abundant pressure from the environmentalists. They will be eager to legislate new standards for greenhouse gas emissions, and they’ll appeal to the president’s stated goals of shifting energy use toward environmentally friendlier technologies.

But achieving a “greener environment” brings new costs, such as cap-and-trade schemes, carbon taxes and maybe even new gasoline taxes.

Yet right now, America is contending with the rawest of nerve endings in the form of a highly frail economy that is “teetering on the brink” of an even deeper downturn than we’re already ensconced in, thanks to escalating job losses and a massive credit drought.

So it’s naïve to think these factors won’t influence policy, at least in the near-to-medium term.

And, to add to the mix, we have to factor in a vital American concern: The U.S. economy would seize up like the Tin Woodsman in a monsoon without the continued supply of foreign oil.

The Team

Defending the “environmental camp” are Carol Browner, Lisa Jackson and Stephen Chu.

Browner, the former Environmental Protection Agency (EPA) administrator, is now adviser for energy and climate change.  Jackson, who spent 15 years with the EPA and most recently served as New Jersey’s environmental protection commissioner, will replace Browner as the new EPA administrator. And Chu, a Nobel Prize-winning physicist and vocal advocate of national-emissions caps, is now the U.S. energy secretary.

In the “secure energy” camp are Gen. James L. Jones and Hillary R. Clinton.

Gen. Jones is Obama’s new national security advisor. He is retired from the U.S. Marine Corps and was once the NATO supreme commander. Those who know him say he’s well respected (read tough) and fair, with the ability to assess a variety of options, no matter their source.

Probably the most prominent face on the team is that of Clinton, the new secretary of state. As most of us know, Clinton is an experienced politician, and is likely to wield considerable influence that we shouldn’t underestimate.

What’s Next?

So who will win out? And more importantly, how should you position your portfolio to benefit?
Obama will work hard to seek common ground. But I expect that the pressures of an economy on life support will prevail over the next 12-18 months.

Of the $850 billion stimulus package, a good portion is sure to find its way into green energy, but will only get spent by late 2010.  In the meantime, it will be too risky to cripple the economy further with additional tax burdens and higher costs.

In that case, you can look for the new president to enact legislation that is beneficial to the environment, but will only take effect within about two years.

That gives the economy a reprieve, and also allows the demand and price of oil to climb back toward the $70 to $80 a barrel, a level that would allow costlier oil production to turn a reasonable profit.

From an investment standpoint, then, a higher price, and a secure source of oil from U.S. neighbors, means the Canadian oil sands, natural gas, and conventional oil producers should be on your radar, experts agree.

What The Players Are Saying

Both Gen. Jones and Secretary of State Clinton recognize Canada as a stable and abundant source of oil.  That’s logical in my view, as Canada’s oil reserves are second only to those of Saudi Arabia.

[Editor's Note: By the way - and this is a point that both Money Morning Investment Director Keith Fitz-Gerald and investing icon Jim Rogers have repeatedly made - no independent source has been allowed to verify the Saudi numbers.]

And as it turns out, Gen. Jones is a staunch supporter of Canada and its oil sands.

As chairman of the Institute for 21st Century Energy, Gen. Jones has delivered a number of defining speeches in which he highlighted energy security as a top priority for America’s safety.

And the Institute supports both Canada and Mexico as strategic sources of oil as America tries to wean itself from the oil of “less stable” nations.  What’s more, 21st Century cautions that imposing costly climate change legislation could cause the already foundering U.S. economy to fail.

So while Canada and the United States have longed enjoyed a rather close relationship (usually friendly, though at times antagonistic), I do expect it will become more intense.  Scores of issues, including NATO, the Northwest Passage, harmonized emissions standards, and energy security will take center stage.
None of this has been lost on the new secretary of state either.

In her senate confirmation hearing, Secretary of State Clinton thought it vital to mention that “in our efforts to return to economic growth here in the United States, we have an especially critical need to work more closely with Canada, our largest trading partner, and Mexico, our third-largest. Canada and Mexico are also our biggest suppliers of imported energy.”

And just running my quick Google search also reveals that, according to the Energy Information Administration, Canada (in top spot) supplies nearly 50% more oil to the United States than does Saudi Arabia (in 2nd spot).  And Mexico’s (3rd spot) level of oil exports to the United States are shrinking, as its main oil field, the Cantarell Complex, has peaked, and now depletes around 15% per year.

Facts are facts, and President Obama knows that a healthy U.S. economy needs Canada’s secure oil.  Investing in alternative energies is the right action to take, but the costs are high, and the output and payoff are years away.

Early this year, President Obama will go to Canada on his first official foreign visit.  And Canadian Prime Minister Stephen J. Harper is likely to remind the new president of an important statistic:  Alberta’s oil sands already export 500,000 barrels of secure oil to the United States every day.

How To Play This Trend for Maximum Output

Two of the biggest names in Canadian oil should benefit as this scenario plays out. They are Suncor Energy Inc. (SU) and EnCana Corp. (ECA).

Suncor is an integrated energy company, and one of the largest oil sands companies around.  This is no junior explorer.  It produces 220,000 barrels of oil equivalent per day (BOE/D).  And the company is currently tremendously undervalued.

They have ambitious plans to expand as well, to 550,000 (BOE/D) by 2012. Current oil prices would not justify the investment, but that’s if you think oil’s staying at $40, which I don’t.  Refining and marketing are also significant to Suncor’s business.  The company’s 160,000 (BOE/D) refining capacity provides a higher value with respect to its oil sands assets.

Downstream, Suncor also owns 300 Sunoco gas stations in Canada, 44 Phillips stations in Colorado, and offers diesel fuel to corporate clients directly from its Canadian terminals.  All of this ensures direct access to customers for the company’s end products, which protects cash flow under tight credit conditions.

In order to process all that tar sand into oil, Suncor needs plenty of natural gas.  And it’s established a significant collection of natural gas projects that are able to amply supply its internal production, while generating excess to sell into the market. This internal natural gas asset bodes well for the company’s self-reliance, as well as its investment attractiveness.

And interestingly enough, Suncor has forayed into alternative energies, as well.  The company has four wind farms in Ontario, Alberta and Saskatchewan, and runs the largest ethanol facility north of the U.S. border.

Both of these “green” energy projects help provide two vital benefits:

• Diversification.
• And carbon credits.

Should a cap-and-trade scheme eventually be implemented, these credits would help offset current production emissions.

Suncor needs $49 a barrel oil to break even. So unless you think that we’re going to remain at or below that level for an extended period, you’ll want to own this company for the long term.

The aforementioned EnCana is another leading oil-and gas-producer in North America, with 100% of its production and reserves on this continent. Natural gas production is in the neighborhood of 2.2 billion cubic feet per day, and oil and natural gas liquids are about 120,000 barrels per day, with about 50,000 of that from oil sands.

Together with ConocoPhillips (COP), EnCana has formed an integrated North American heavy oil business.  EnCana’s contributions to this 50/50 venture are two oil sands projects with 6.5 billion barrels of recoverable resources. Conoco’s contributions are Illinois and Texas based refineries with heavy oil processing facilities.

About 80% of EnCana’s current production is in natural gas, which is interesting for two reasons:

• First, natural gas was recently trading at roughly $4.50 per thousand cubic feet (Mcf), yet the company has hedged its production through October ‘09 at $9.15 Mcf, allowing for considerable profit protection.
• Secondly, natural gas is likely to be favored by the new Obama administration – especially for power generation, since it burns much more cleanly than coal.

For the investor seeking an energy play, EnCana is also a more conservative pick than Suncor, due to its higher relative natural gas revenue, its venture with ConocoPhillips, and more diversified sources of income.

And recently, Innovest Strategic Value Advisors (a New York based research firm) included EnCana in its Top 100 list of most sustainable large companies in the world, citing EnCana’s above-average investments in renewable energy.

Yes, it’s true that oil sands production brings about higher greenhouse-gas emissions.  But oil-sands producers are aware of this.  The province of Alberta will spend $2 billion to develop new methodologies to sequester large amounts of carbon dioxide underground to negate these unwanted effects.

So when you boil things down, Canada is far and away the largest, nearest, most reliable source of friendly oil for the United States.  And until the U.S. economy recovers during the next year or more, transforming “green” energy into “affordable” energy will remain more of a challenge than a reality.

Source: Two Ways to Profit From the Obama Administration’s Energy Dilemma

“As the post-Memorial Day hangover lingers, and $4 per gallon gasoline becomes a national reality, expect more and more daily energy prognostications,” says William Patalon III in Money Morning.

“Goldman Sachs Group Inc. (GS) already is on record for $200-a-barrel oil. As you all know, our own Keith Fitz-Gerald has projected a crude-oil price of $225 a barrel. Do I hear $250? What about $5 a gallon gasoline by July 4th?

“Sometimes, these daily price gyrations take on lives of their own, but at the end of the day, the basic laws of supply and demand always work themselves out.”

There’s a new oil rush going on in Alberta, Canada, says Alex Green in InvestmentU: “Alberta’s oil sands are the largest known reserve of oil on earth containing between 1.7 and 2.5 trillion barrels.”

“For decades, these sands weren’t even considered part of the world’s oil reserves because the oil there wasn’t economically extractable at prevailing prices using then-current technology. But times have changed… And the new gold rush is on.

“Here’s the kicker: Exploration of Alberta’s oil sands is virtually risk-free. You can’t drill a dry hole here. There’s no drilling at all. It’s a mining operation – and the reserves are thoroughly outlined. So what you really need is a company with plenty of machinery, money and manpower to dig it up and process it as quickly as possible.”

Read on here to find out the one undisputed blue-chip play on Alberta’s oil sands.

According to the London Times, the price of sulfur has risen from $50 to $500 a ton in under a year. More from this report:

“Shell is one of the most-efficient producers of sulphur,” Barry Clarke, a sulphur market analyst for Pentasul, said. Shell produces about 3.5 million tonnes of sulphur, much of it from its Canadian oil sands business, and its cost, Mr Clarke reckons, is merely the rail freight cost of getting the sulphur to a port, about $25 a tonne.

Mr Clarke agrees that sulphur, once a burden, could earn the oil industry billions this year. “It’s going to show up in the earnings of companies,” he said. The price is expected to rise further with spot cargoes changing hands for as much as $700 a tonne. Demand for metals is also keeping sulphur bubbling, as sulphuric acid is used in the mining industry to leech metal from ore.

“The biofuel boom has kicked off a big increase in the demand for sulfuric acid,” says Chris Mayer in The Daily Reckoning.

“In fact, some 60% of the sulfuric acid ends up in agriculture. The surge in ethanol production is a double whammy on sulfuric acid. First, all that corn needs fertilizers. And second, the ethanol facilities themselves also use sulfuric acid in their own processing. A typical ethanol facility requires 2,000-4,000 tons of sulfuric acid per year.

“Then there is that great demand pull from China and India. Traditionally, these two countries produced what they needed. But now their own rapid industrialization has turned the tables. They’ve switched from being exporters to importers of sulfuric acid.”

Read on to find the only “pure play” on sulfuric acid spot prices — a little-known company that’s one of the world’s largest suppliers of sulfuric acid.

One hundred ninety-five dollars is the “live-out allowance” here in Fort McMurray. This place is ground zero for the Athabasca tar-sand boom. That money amounts to hardship pay, and the miners here need it.

Fort McMurray isn’t a big town. It has just three exits on the only highway within 100 miles. Forty years ago, there wasn’t much here at all. Now it’s one of the fastest-growing towns in Canada… and the extra $50,000 or so a year those miners earn puts a lot of juice into the local economy.

I spoke to a mortgage broker here yesterday afternoon. She told me they did a billion dollars in mortgages in Fort McMurray in 2007. You’d have to sell three beachfront condos a day for a year to make that kind of money in Florida. In Fort McMurray, they did it selling mobile homes.

A typical doublewide mobile home costs around $450,000 here. A modest two-bedroom with a garage, under 1,600 square feet, will set you back nearly $700,000.

That isn’t likely to decline anytime soon. Everyone is spending money up here, and the population will continue to increase. In 1963, one company mined the tar sands. Now, more than 60 companies are falling over one another for acreage. With oil over $100 a barrel, mining this trillion-barrel deposit is just too profitable, and too safe to ignore.

———- Advertisement ———-
Penny Stock set to drill Canada’s largest oil sands field

Canada’s single largest oil sands holding – over 707,700 acres – is now controlled by a tiny $4 stock

They’re conducting tests to determine how much oil is buried beneath their land… Preliminary estimates are 60 BILLION barrels of oil.

The results are due back in any day… that’s when I expect this tiny company’s share price to rocket to $20… $30… possibly even $50 a share.

To read more on the story, click here.
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I see three important factors that set the tar sands apart from nearly every other large petroleum deposit in the world… factors that continue to justify your investments in the area.

1. Canada’s oil sector is private. Last week, I talked about the increasing power of state-owned oil companies. In places like Saudi Arabia and Venezuela, huge government-run companies control all aspects of oil production. Canada’s government stays out of the oil-production business.

2. Canada operates under the rule of law. I love Canadian and Australian natural resource investments. These countries have long histories of being investor friendly. Russia and Venezuela have a tendency to screw companies and individual investors.

3. Canada has a short, safe, efficient transportation route to its largest consumer – the United States. Saudi Arabia can’t say this. Its oil production is threatened by instability… and the transportation route is half the world.

These three reasons will drive an explosion in Canadian oil sands. Production will climb from 1.1 million barrels per day in 2006 to 3.8 million barrels per day in 2020… That’s 250% growth in just 14 years.

Alberta has 857 projects on the books worth $169 billion. Those projects include everything: mines, electrical generation, parks, biodiesel plants, and roads.

However, the bulk of that money comes from oil-sand development. This is one of the greatest growth stories on the planet right now. And there are lots of ways to get in…

You can buy Suncor Energy and make decent gains, but it’s like the Microsoft of the oil sands. Everybody knows about it. I prefer sticking to smaller producers and infrastructure ideas.

I still like Husky Energy for a refining infrastructure play. It’s one of Canada’s largest and most powerful oil companies… and it counts the brilliant Li Ka-shing (China’s richest man) as a big investor. Its early investments in heavy oil refining have made it one of the largest refiners in the region. S&A Oil Report readers are up about 55% on the stock… and I see bigger gains ahead.

You can also buy natural gas for a play on Canadian oil sand development. Mining and processing the oil sand consumes huge amounts of natural gas. More and more of Canada’s natural gas exports to the U.S. will be diverted to the oil sands, which should support North American natural gas prices.

Whichever route you choose, I recommend you choose it soon. I believe a long era of high oil prices is ahead… and buying into Athabasca is the safe way to profit.

Good investing,

Matt Badiali

P.S. Most investors have no idea that the development of Athabasca is also a tremendous opportunity to collect some of the highest income payments in the world.

Source: Three Reasons You Need to Invest in Tar Sands Today

A: No. You can make gasoline out of asphalt. Oil is a hydrocarbon, which is a fancy name for a long chain of carbon, hydrogen, and various other atoms.

The smallest of these chains is methane gas (cow flatulence), made up of one carbon and four hydrogen atoms. The really long chains, like asphalt or the bitumen from oil sand, can be “cracked” into smaller pieces to make gasoline and heating oil.

Some refiners lack the ability to crack extra-long hydrocarbons, and must rely on “lighter” crudes. But these days, those crudes are harder to find and carry a premium price tag.

So several companies are either updating their refineries or building upgraders. An upgrader is simply a pre-refinery, where they can clean up bitumen, remove all the impurities (like salt and sand), and chop it into shorter chains so regular refiners can handle it.

As these upgraders come on line, demand for the oil sands’ bitumen will skyrocket, pushing prices up. That’s great news for big oil sands players, like Suncor. But the triple-digit gains will come to the smaller oil sands outfits Wall Street has yet to discover. Click here to read about one of my favorites right now.

Q: When I began to buy gold, I bought IAU instead of GLD. Their performance is the same, but everyone seems to recommend GLD and never IAU. Have I made a major mistake? – D.H.

A: Nope, your investment is fine. IAU and GLD both hold bullion, i.e. physical gold. The big difference between the two is size: GLD has a market value of $19.2 billion, while IAU is only about $2 billion. So anyone who wants to buy large blocks of shares will choose the more liquid option, GLD. But their price performances are virtually identical.

Besides the bullion funds, you can buy ETFs to bet on gold miners and gold futures. Take a look:

As you would imagine, bullion is the most straightforward. These funds have a vault full of coins or bars that, theoretically, cover the shares.

The only futures fund on there is DGL. But using gold futures seems like an unnecessarily complicated way of tracking the price of gold, so I’m not fond of it.

The last fund is simply a basket of gold-mining companies that tracks the AMEX Gold Miners Index (^GDM on Yahoo). The top five holdings – Barrick, Goldcorp, AngloGold Ashanti, Newmont, and Goldfields – make up about 36% of the index.

These big miners are underperforming bullion ETFs over the last two years (GLD is up 27% while GDX is up about 17%). But I think this fund will do well when we reach the mania stage in the gold bull market.

For investors who simply want exposure to gold or mining, these funds are an easy place to start.

Good investing,

Matt

P.S. If you have another exchange traded fund you use to buy gold, send me the symbol so I can tell people about it. I’m always looking for new ideas.

Source: Why Athabasca Crude Oil Will Be Worth More and More

It was cheap. The world’s cheapest stock market at the time. It was hated. Investors were worried the country would be invaded by China. It was in an uptrend. Taiwan’s stock market had just broken out to a new multiyear high.

We love to see all of these conditions for a trade in DailyWealth. When an asset is extraordinarily cheap and hated (or ignored), there’s little risk you’ll lose money. And by waiting for an uptrend before buying, you avoid tying your money up in a dead market for years.

In my Quant Trader service, we bought shares in the Taiwan Fund (TWN) to capitalize on the Taiwan opportunity. The trade worked out wonderfully for a few months… but we stopped out of the position this February as markets around the world plunged. It’s a shame… because this trade has huge potential.

So what do we need to see before jumping back into Taiwan?

The governments of Taiwan and China have been arguing over the jurisdiction of Taiwan for over 50 years. China has vowed to bring Taiwan back under its rule by force if necessary. This political risk is the reason why Taiwan was, and still is, so cheap.

———- Advertisement ———-
Canada’s Untapped Oil Sands Province

About 99% of the money that’s been made in Canadian oil sands, so far, has come from just one Province: Alberta.

But what almost no one realizes is that there’s a region of Canada that geologists believe holds even richer oil deposits than Alberta.

The Regina Leader-Post writes, “Although the Alberta oil sands tend to get most of the publicity, the oil sands in [this secret region] contain ’significant world class deposits’ that are of ‘top quality.’”

Even better, a tiny penny stock has been chosen to lead the way.

Click here for the full story.
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However, nowadays relations are improving…

The recent election of Ma Ying-jeou brings hope that the two governments will forge new diplomatic and economic ties over the next few years. This is a huge plus for Taiwan. It’s one of the most advanced countries in Asia and home to giant semiconductor and electronics manufacturing industries… so a friendly China will make for a good trading partner.

Another sign I like to see when investing in an Asian market: Legendary investor Jim Rogers has named Taiwan as one of his top spots for new money right now. He believes China and Taiwan will merge their economies and currencies together. This would likely create a huge stock market boom in Taiwan. And boy do these stocks have room to run…

As you can see, Taiwan is still extremely cheap and the long-term uptrend that began in 2003 is still in place. However, the short-term trend is down. The Taiwan Fund is down about 11% over the last month.

The U.S. and China are Taiwan’s two largest trading partners. So, Taiwanese stocks tend to fall alongside China and the U.S.

Again… that’s the short-term picture. Taiwan is a great place to hunt for long-term investments in the Asian economic boom.

The trouble with big stories like Asia is there’s usually too much hype surrounding them to get a great deal on assets. That’s not the case with Taiwan. It’s still cheap, and most folks are ignoring the opportunities. All we need is the uptrend before we stand to make huge returns here.

Good investing,

Ian Davis

P.S. I plan on letting readers of my Quant Trader service know the best time to buy this market. Right now, Quant Trader is only available to members of the exclusive S&A Alliance. Click here to learn about the best deal ever offered on joining this club.