It doesn’t matter whether you believe in “Peak Oil” because this isn’t about Peak Oil coming to fruition. Peak Oil believes that oil discoveries have peaked leading to oil production’s inevitable decline.

This crisis will be strictly man-made. Governments and oil companies have already planted the seeds of the next great energy crisis. And there’s nothing anybody can do to prevent those seeds from sprouting.

The U.S. government got its religion late. But it’s now following the lead of European governments in limiting the use of fossil fuels through taxes and restrictive regulations.

That’s bad enough in itself. But then there’s the roller-coaster ride which oil prices have taken. The price of oil fell more than $100 from over $140 to under $40 (before going back up again).  Oil companies everywhere had the same response. They all cut back on oil spending and production…

•    OPEC has cut back production by 2.2 billion barrels a day.
•    UAE has put off plans to expand oil production by 1 million barrels a day.
•    Saudi Arabia has delayed two $10-$20 billion refining projects (and may cancel them altogether).
•    Russia’s biggest oil company, Gazprom, has slashed production spending by 24 percent.
•    Venezuela, Nigeria, Malaysia and other national oil companies have cut back on their capital spending.
•    Statoil, EnCana, Petro-Canada, Suncor, Imperial Oil, and Royal Dutch Shell have all delayed or cancelled major        projects in Canada’s vast but expensive-to-produce oil sands.

How bad are these cutbacks? Just ask the widely respected oil consulting agency, the International Energy Agency. It recently warned of a “second capacity crunch” causing widespread underinvestment in the oil industry.

Oil’s recent price rise could have loosened up oil producers’ purse strings. But oil companies are facing increasing disincentives from a government trying to replace fossil fuels with renewables.

If you want to know how the CEOs of Big Oil feel about the Obama administration’s energy policy, just ask Jim Mulva, head of ConocoPhillips.
This global oil company has operations in more than 30 countries. Mulva said last week that government intervention in the energy market “has an impact on the willingness of companies to pour billions into the development of new projects.”

In the meantime, the Obama administration is spending hundreds of millions of dollars on renewables, like the $467 million to encourage the development of geothermal and solar energy.|

The result? Geothermal and solar energy will have slightly bigger pieces of the energy pie. But oil priced at over $150 per barrel will kill the U.S. and global economic recovery in its infancy.

The cost of plastics and resins will go way up. Gas prices will surge over $5/ gallon. New highs in jet fuel will crash several airline companies. Actually, practically everything will cost more. I don’t think that’s what these governments have in mind.

And even with ample government support you shouldn’t invest in geothermal or solar companies. They will still depend on government subsidies to compete with the price of electricity generated by – take a guess – fossil fuels.

Instead you should invest in oil producers but not just any oil producer. Thanks to vast underinvestment and government policies, the price of oil will sky rocket. The only thing keeping the price of oil from going higher right now is that we’re still in the middle of the worst recession in seven decades.

But once demand returns, watch out.

Total’s CEO Christophe de Margerie says that a rise in demand while supply is constrained will unleash oil prices again.
And Mitsubishi warns that spare capacity will quickly disappear when oil demand picks back up.

But, as I said, most oil companies have cut back production and spending. That’s going to prevent them from getting windfall profits from soaring oil prices.

But four of the world’s major oil companies haven’t cut back on spending. Three of them are Exxon Mobil, Chevron and Thailand’s PTT Exploration & Production. But by far the best oil investment you could make is in a fourth big oil company.

Last year it spent 34 percent more on drilling for oil. And this year it’s spending 19 percent more. While the other oil majors are cutting back on spending and facing stagnant output, this company plans on raising production by 7-11 percent a year. I’m predicting its shares will go up at least 80 percent over the next three years, and the gains could be much bigger than that.

I’m sorry but I can’t give you the name of the company because it’s my latest recommendation to readers of my INCOME service. They deserve first crack at this company, especially since its price is so cheap at the moment. But if you’re interested in this company, just click here for more information, including how to sign up in order to get this company as your first recommendation.

Source: The Coming Global Blackout

]]> http://www.contrarianprofits.com/articles/the-coming-global-blackout/18794/feed 0 http://www.contrarianprofits.com/articles/the-top-5-oil-stocks-for-2009/16949 http://www.contrarianprofits.com/articles/the-top-5-oil-stocks-for-2009/16949#comments Wed, 20 May 2009 20:31:54 +0000 J. Christoph Amberger http://www.contrarianprofits.com/?p=16949 On June 10, 2008, Alexei Miller, CEO of Russia’s Gazprom, told a French audience that crude oil prices would reach $250 a barrel in 2009. His former Gazprom cohort and then freshly minted Russian prime minister Medvedev did him one better… pegging crude oil prices at $500. Was it wishful thinking? Did the gentlemen overdose on “hard-money” investment newsletters and Peak Oil Theory? We may never know.

After dropping from $147 last July close to $30 this past winter, crude oil is now trading within a reasonably tight track around $40 and $57.

Now it’s on the move again, breaking through $60 right at the beginning of the summer driving and hurricane seasons.

But oil companies’ proud profit margins of yesteryear have disappeared… along…

Here he tells us that his recommended stocks have “upward potential” and that “The Eastern European energy crisis is far from over… and I believe we will be served well holding on to these stocks for the long term!”
This from Amberger:

Back in November 2008, I went on record predicting an energy stand-off between Russia and Ukraine that would pitch Europe into a deep freeze. (Here’s what I said.) It came to pass on New Year’s Eve, when Russia shut down gas deliveries to Ukraine.

On the surface, this conflict was about natural gas. Russia, through its capitalist arm Gazprom, wants to become the energy monopoly of the EU. Ukraine is in the way: While George Bush was president, the country sought to join NATO and the EU—breaking for good with Soviet-era Russian hegemony. And while the Nordstrom pipeline beneath the Baltic Sea is still in the planning stages, most of the gas destined for delivery in Europe has to pass through Ukrainian pipelines.

And Ukraine may just refuse to play ball.

Because Russia has shifted into a placeholder war pattern within Ukraine—attempting an escalation of the political war between Western-minded President Viktor Yushchenko and the ambitious pro-Russian populist Prime Minister Yulia Tymoshenko.

One of our recommended stocks, BMB Munai Inc. (AMEX:KAZ) went up over 31% today. Toreador Resources Corporation (NASDAQ:TRGL) was up 24%. And Total (NYSE:TOT), the main long-term beneficiary, ended the day up a respectable 8%.

Of course, timing is everything, and our initial positions had taken a beating in the collapse of energy prices and foreign equity markets.

But today’s moves validate our initial assessment of these stocks upward potential.

Read the full article here: Gas wars re-ignite in Ukraine!

Considered to be a beneficiary of the tightened household budgets, the company reported a paltry 1.7% increase in same-store sales. As a result, it cut its earnings outlook.

Thomson-Reuters was right about one thing, though: Higher-end retailers got spanked – some of them quite dramatically. For example, Saks (NYSE: SKS) posted a 20% decline in same-store sales, while Gap (NYSE: GPS) sales sank by 14%.

So how can investors play this? If you’re like me, when bad news hits, you look to snap up quality companies on the cheap. But retail stocks are just too dangerous right now. While taking the opposite approach of the main sentiment often pays off, I expect retail to head lower for the next few months.

If you’re looking for bargains, buy the retailers’ goods, not their stocks.

A New Cold War

No progress.

That’s the verdict from the latest round of talks aimed at solving the increasing crisis over Russia’s decision to cut off gas supplies to the Ukraine – one that is affecting gas supplies throughout Europe in the depths of winter.

European Union officials, plus those from Russia and the Ukraine were set for more negotiation in Brussels today, but those talks were cancelled, despite a meeting between Russia’s Gazprom CEO Alexei Miller and Oleg Dubyna of Ukrainian firm Naftogaz in Moscow on Wednesday evening.

The dispute stems from a disagreement over prices, contracts, unpaid bills from the Ukraine to Russia in 2008, and Russia’s accusations that the Ukraine has stolen gas from pipelines that pass through the country. And as tensions have risen, Russia shut the taps off a week ago – a move that has resulted in some EU nations (mostly in eastern and central Europe) seeing their gas supplies dramatically curtailed, or cut off entirely, because Russia accounts for about 25% of EU gas supplies – 80% of which are pumped through the Ukraine, according to the BBC.

Countries not receiving any gas at all from the Ukraine include the Czech Republic, Romania, Greece, Austria, Bulgaria, Hungary and Croatia.

Flash back two years and you’ll find a mirror image of the situation today, when Gazprom and Ukraine battled over gas supplies and caused shortages in several EU nations.

This dispute will eventually be resolved, but with much of the EU in the midst of a brutal cold spell, it can’t come soon enough. Meantime, Gazprom has vowed to pump extra supplies to the EU through other non-Ukrainian pipelines.

Source: Retailers Battle Sales Slump… Bank Of England Battles Recession… Russia And Ukraine Battle Each Other

“With most of the world either at, or in, recession, the case for a sustainable rally in commodities looks unpersuasive,” wrote Edward Meir, of MF Global (NYSE:MF).

Crude had risen overnight, after the rocket attacks on Israel out of Lebanon, but it promptly got whacked back down again as economic negativity is trumping Middle Eastern tensions for the moment.

And, hopefully, gas will begin flowing to western Europe again soon. Russia’s Gazprom said it will resume supplies through Ukraine as soon as international monitors are deployed and have full access to gas-transport facilities in Ukraine and Russia

Source: Crude Moves Lower

The world’s gold market’s were closed on January 1st, but once early morning trading began on January 2nd in the Far East, the price spike in gold was killed immediately…and it became obvious that someone (JPMorgan -NYSE:JPM-, perhaps?) didn’t want gold to rise and confirm that bullish technical indicator I just spoke of, so it was taken down with some authority…as was silver. This lasted until about 1:00 p.m. in Hong Kong, when both metals began to recover somewhat…but the selling pressure showed up again as soon as London opened, and continued that way, with both metals on the defensive when New York opened. Gold was not allowed in positive territory for the rest of the N.Y. trading session, but silver was allowed to tack on about 40 cents. Both metals would have done better yesterday, but it was obvious that someone didn’t want runaway prices to the upside during London or New York…which is what would have happened if the moonshot open in gold that began in early Tuesday morning Globex trading had been allowed to run its natural course.

In Tuesday’s trading, gold open interest rose another 2,142 contracts to 300,448…with silver open interest actually declining 441 contracts to 85,312 contracts. New Year’s eve’s (Wednesday) open interest changes on the big spike showed an open interest increase in gold of a largish 6,203 contracts to 306,651. Silver o.i. rose 611 contracts to 85,923 contracts. It will be of great interest to see what Friday’s open interest figures are like once they become available on Monday morning.

The other item of interest on Monday will be the latest Commitment of Traders report. It will be interesting to see what the CFTC uses for a cut-off date. But regardless of which day they pick…neither Wednesday’s nor Friday’s dramatic action in gold and silver will be in that one. We’ll have to wait four more days until next Friday to see who went long and who sold short these last couple of trading days.

In gold news, the usual N.Y. commentator was not pleased (nor was I) about Indian imports of gold for December and all of 2008…”Yesterday the Bombay Bullion Association announced that India’s December bullion imports dropped 81% from last year to 3 tonnes…and that the full year’s imports were only 402 tonnes, down 47% from 2007’s 759 tonnes.” Equally disappointing was Turkish demand in December…a miniscule 227 kilos. His closing comment was the following…”The rally appears to be fuelled entirely by Western speculative sentiment, which can be very powerful. But with such a weak base in physical demand, it is likely to be short lived.” We’ll see. And lastly, I see that the GLD ETF (NYSE:GLD) added another 150,000 ounces on December 29th to a new record high total of 780 tonnes…if you believe that they actually have all the gold they say they do, that is. Oops…one more thing…”Apex Silver Mines (AMEX:SIL) Limited has received a delisting notice from the NYSE.” If you’re wondering why…just take a look at their hedge book…and the current zinc price.

In other news: an aljazeera.net story where the headline read…”Russia cuts gas supply to Ukraine”…”Russia’s state gas monopoly Gazprom has cut all gas supplies to Ukraine after talks over payments owing and 2009 prices failed.” In a Bloomberg story, a sure sign that there’s big trouble in the municipal bond market is the fact that Pimco is postponing dividend payment on a pair of closed-end municipal bond funds. (Here’s another case where investors should be more concerned about a return of their investment, rather than a return on their investment. – Ed) In a cnn.com story I see that five Democratic governors have asked Uncle Sam for a cool $1 Trillion in aid to the country’s 50 states for various and sundry things. And from The King Report…”2008 will be a year of historic imfamy. The S&P 500 declined 38.5%, the biggest drop since 1937. The Dow Jones Industrial Average declined 34%, the largest drop since 1931. It’s highly unlikely that 2009 will be as ugly. But this does not suggest that it will be a ‘good’ year. ”

Today’s first story is about the man behind the printing presses in Zimbabwe. If you read his bio, he’s obviously not the sharpest knife in the drawer. But what the story does show, is how tyranny can keep a country in fear. The story from the L.A. Times is entitled “Zimbabwe’s Money Man Plans to Keep on Printing”…and the link is here.

The next story is from forbes.com. It’s columnist Dan Gerstein’s last offering of the year, and he lets it all hang out. It’s entitled “Dangerous Thoughts: The Most Distrusted Institution in America”. The link is here.

In the next story, British savers are about to find themselves in the same boat as their American counterparts…0% interest on their accounts. The story is from telegraph.co.uk in London where the headline reads “Savers facing accounts with no interest”…and the link is here.

Lastly is the latest from James Turk over at goldmoney.com. His commentaries are always happy reading…and this one is no different…as he discusses the enviable record that the US$ gold price has racked up. The story is entitled “Gold Climbs Again – Eight Years in a Row” and the link is here.

I need to confess that I have no idea where the S&P500 will be in a year’s time. But given the catastrophic economic conditions we find ourselves in, I’m convinced that governments around the world will increase the intensity with which they will be attempt to save the world with monetary and fiscal measures. As pointed out in last month’s report, this will increase volatility and should be ‘gold friendly’. – Marc Faber

Today’s ‘blast from the past’ is from the 1970s. I hadn’t heard this song in ages until I dug it up on the Internet about two weeks ago. It’s got a great driving beat…and I hope you enjoy it…so turn up your speakers and then click here.

Despite the big day on the US equity markets yesterday, nothing has fundamentally changed. How long this ‘rally’ lasts remains to be seen. But when the economic, financial or monetary systems cough up their next hairball, we’re going to see another nasty turn to the downside…and gold will be the only show in town…just like it’s been for the last eight years in a row.

Source: And Then There’s This…Monday, January 05th, 2009

A month ago, I asked my colleagues at TFN to think about the year ahead… the events that will shape the year both politically and financially. In short, to come up with realistic “Predictions for 2009″. As history is fast-forwarding, some of these events have already taken place. Others look increasingly probable… and not half as far out as they appeared just a month ago.

Here they are, in no particular order

*** Dollar hits parity against euro by June 2009.

*** Oil bottoms at $12 per barrel by April 2009.

*** Gold falls to $500 as Indian economy crashes and Dubai abandons spending spree.

*** Russian troops wearing Gazprom uniforms invade Ukraine to “protect” natural gas pipeline. The Russian stock market collapses. Three European energy stocks soar. (Yes, there’s still time to buy!)

*** US inflation dips to zero; interest rates too.

*** US unemployment hits 10% by January, 15% by April

*** Despite $25 billion in loans, GM files for bankruptcy

*** Abu Dhabi, Dubai and Bahrain abandon building projects for lack of credit and crashing oil revs. “Tower of Babel Syndrome”

*** China hit by bad loan scandal, excessive government spending, faltering exports, rampant inflation, civil unrest

*** China turns aggressive toward Taiwan, buoyed by pacifist White House

*** Australia and Canada have credit rating slashed, economies hit hard; currencies plummet

*** Junior mining companies, green energy tech, and marginal oil exploration (shale, sands, deep sea) go bankrupt by the hundreds

*** France jockeys for superpower position within EU

*** Major terrorist attack on US soil; Obama declares national emergency, establishes National Security Force

*** MRSA epidemic turns deadly

*** The healthcare industry will be burdened by increasing costs and regulations. But this news has been discounted for several months. Instead of trying to pick the winners and the losers in the industry, play a sector-wide ETF likes VHT and XLV. Short Big Pharma as companies are hit by government-backed liability suits and new influence of the trial lawyer lobby; watch anti-business courts penalize companies for research and development.

*** Obama will raise the cap gains rate to 30%, knocking out new capital inflows into market, triggering stampede of asset sales as investors rush to avoid Obama’s doubling of the tax rates next year.

***US Economy turns European: Unemployment extends towards double-digit territory. Wages drop and Washington creates massive infrastructure spending initiatives and corporate incentives to bring manufacturing back within American borders. Efforts fail because no company would want to do major capital investments in a country w/ 60+% income taxes, unfirable workers, compulsory health insurance even for temps. Despite showcase infrastructure projects, lack of community tax base and dying private initiatibve, American cities start looking like East Baltimore.

***  Tata Motors aready bought Jaguar & Range Rover: Maybe now it will buy Ford or GM? Detroit gets its bailout, but it is not enough to keep GM from asking for more. The core assets of the company are bought by a better-positioned rival like Volkswagen and its pension burden is dumped on the federal government. Car dealerships, at least the ones still around, are empty. You have to blow the dust off the windshield to see the sticker price. Major dealers like AN go bankrupt as they are too big to hide from the storm.

***US Auto parts industry goes bankrupt as its main customers wither. Foreign manufactures  like Wonder Auto thrive as used cars require increased maintenance.

*** Churches will see greatly increased attendance. Alcoholism and drug abuse will rise. Crime will be out of control in many suburban neighborhoods (racial tensions). Buy a gun and invest in VICEX. Casinos go broke for lack of travel, penny-ante online gambling runs rampant.

*** The value of the American dollar continues to gain strength. Boeing sees large forex bonus as it gets back in business. U.S. exporters are reeling from the double hit of global recession and increased cost to overseas customers.

*** No action is  taken against Iran, even during a military attack on Israel. The withdrawal from Iraq will be rapid, followed by withdrawal from Afghanistan and abandonment of the region to Taliban, Russia & China. Millions of dead in subsequent Iraqi civil war. Nobel Prize for Peace 2010 goes to Obama & Ahmadinejad as Shiites commit genocide in Iraq.

Source: Major Financial Events and Developments of 2009

But still, the merger of two small AIM–listed resource stocks Victoria Oil & Gas (VOG) and Bramlin (BML)may be more than just a case of two drunks leaning on each other for support. Sharing the same chairman, Kevin Foo, they should at least be pretty familiar with one another and the link goes rather deeper than this.

‘Blue sky’ potential

The major shareholder of Victoria Oil & Gas is the Abu Dhabi-based, Noor Petroleum. Not only does Noor know of Bramlin, it is also introducing into the enlarged group the assets of Falcon Petroleum (PFC). Victoria has signed a twelve month option to acquire the latter, which consist of exploration licenses over 45,000 sq kms of land in Mali and Ethiopia.

This adds some ‘blue sky’ potential to the group. But the more immediate areas of interest are Victoria’s operations in the former Soviet Union and those of Bramlin in Cameroon. The share price of Victoria today is just 6p. But back in 2006 they hit 260p after independent consultant, DeGolyer & MacNaughton, estimated that its West Med project in Siberia contains 1.1bn barrels of prospective recoverable oil equivalent, mostly in the form of gas.

The shares became a great favourite of private investors, but this reserve estimate was subsequently reduced by 9% putting the shares into a tailspin from which they have never recovered.

West Med is located in the Nadym-Pur-Taz region of Western Siberia. Along with the Yamalk region of Russia, this is the heartland of Gazprom and holds approximately 20% of the world’s proven gas reserves. West Med lies next to the super-giant Medvezhye field and about 120km from Urengoy, the largest gas and gas condensate field in the world.

This clearly has massive potential but production is some way off. Victoria has appointed GeoDynamics to conduct a passive seismic survey this winter focused on a new target location, and then drilling of the next exploration well is not expected until 2010 with a further two wells scheduled for 2012.

Jackpot potential put off course – but new deal could produce cash flow

So although Victoria may eventually hit the jackpot here, for the time being it is costing it money and its plans have been blown badly off course by the suspension of production at its Kemerkol field in Kazakhstan. This 65 sq km license area to the east of the Caspian Sea was put into production in March 2006, and in the first half of this year it produced thirty thousand barrels.

However, in a stark illustration of the perils of doing business in the region, Victoria then faced a challenge to its title to Kemerko, a challenge that was upheld by a regional court. Victoria has taken the matter to Kazakhstan’s Supreme Court and hopes for a ruling very soon. In the meantime, it has countered with its own action for breach of warranties against one Olga Elfteriadi. It is claiming $14.75m – the original cost of the license – as well, possibly, as the $23m that it has spent developing the field.

Victoria is confident of winning the day, but the court action has meant that it has had to suspend production at Kemerkol. So one attraction of the deal with Bramlin is that it with it a property that should soon be producing some cash flow. This is Bramlin’s Logbaba project, which is located within the eastern suburbs of Douala, the economic capital of Cameroon.

Not yet on City radars

Four wells were drilled here by Elf back in the 1950s, all encountering gas. An evaluation of only a small section of the area by RPS Energy in July found reserves with a net present value of $169m. Given that industrial users sit almost on top of the field and otherwise have to pay about $23/mcf for imported gas from Equatorial Guinea, they should certainly be prepared to pay the $15 proposed by Bramlin while the task of supplying them should be neither too difficult nor expensive. Bramlin has already signed some letters of intent with customers and plans to start drilling early next year with first deliveries scheduled for late 2009.

With Victoria issuing 163 million new shares to acquire Bramlin, the new group will still be valued at only £26m, just over half the £50m value at which City investors are perceived to take an interest in small companies.

However, Victoria has raised the possibility of acquiring further distressed oil and gas companies, while its share price could of course rise depending on progress in Cameron and the Former Soviet Union. But with many of Victoria’s shareholders suffering from burnt fingers they are unlikely to take too much on trust.

This one has not yet got the credentials that make it a good “bounceback belter” candidate for 2009 – not like the three I’ve just uncovered here.

As tensions rise in the Middle East over Iran’s recent missile launches, one glaring fact comes home to us: Energy resources located far from the madness of the Middle East have never been more valuable.

The big winners from this are going to be Africa and the Central Asia. We’re already positioned to profit from West Africa’s oil boom through our investment in one small AIM-listed company. Increasingly, I’ve been looking for the best way for Profit Hunter readers to cash-in on the scramble for Central Asia’s energy resources.

The New Great Game

In the 19th century, Britain and the Russian Empire contested for strategic influence in Central Asia. Historians dubbed it the Great Game. Today, we’re seeing a much more diverse bunch of players in the region. The Russians are still in there, but so are the Americans, the Chinese and even the Indians.

In the past few years, these countries have been setting-up military bases across the region. The Americans have several bases in Central Asia, including Afghanistan. The Chinese and Russians have a military presence there and even India, the smallest player of the lot, has set-up an air force base in Tajikistan.

And it’s all about protecting their growing energy interests in the region.

There is a huge amount going on here

I’ve talked quite a bit about how China has already invested more than $30 billion in African oil and gas assets in order to lock-up a secure supply of energy for its industries. But it’s a long way from Africa to China. So, the Middle Kingdom’s rulers are looking for energy sources closer to home that are going to be harder to disrupt if there’s ever an international conflict.

Good thing for them that they’re right on the doorstep of one of the most energy-rich regions on the planet…

Right now, Russia is the biggest player in Central Asia’s energy industry. Its gas monopoly, Gazprom, is the biggest buyer of Central Asian gas. But China is now building a alternative pan-Central Asia gas pipeline that will link the Caspian Sea gas reserves to its energy-hungry market.

This is the first major independent gas link connecting Central Asia with eastern markets while bypassing Russia. China’s pipeline will start delivering gas by 2010 and should be completed by 2013.

Again, we’re seeing something similar happen in Kazakhstan, the region’s biggest oil producer. About four-fifths of Kazakhstan’s oil is now exported through Russia’s pipeline system. Half of the rest is exported through the Georgian Black Sea port of Batumi. The rest goes to China, which wishes to quadruple its oil imports from Kazakhstan from 100,000 to 400,000 barrels per day by the end of the decade.

As part of their economic drive into the region, the Chinese are now setting-up an extensive network of railway links to the oil-rich regions of Central Asia Their network will begin in the western Chinese province of Xinjiang and run to Kyrgyzstan, Uzbekistan and Kazakhstan.

The new rail links are meant to break China’s dependence on sea routes which are closely monitored by US military ships, for its energy supply. The scale of China’s plans in the region is already setting-off alarm bells in the S government and in Indian oil companies seeking oil assets in Central Asia.

Now India itself is on the verge of signing a $7.5 billion deal with Iran to build a natural gas pipeline that will run across its old rival Pakistan and help provide the energy it needs to fuel its economic growth.

Meanwhile, the Americans are promoting a $7.6 billion gas pipeline that will run from Turkmenistan down through Afghanistan, Pakistan and India. Turkmenistan is sitting on the biggest gas reserves in Central Asia. The pipeline is part of the Americans’ plan to keep Iran isolated by providing India with an alternative source of energy and to break Russia’s dominance of Central Asia’s energy resources.

How you could profit from this

Oil hit another new high of $147.50 last week and that could go a lot higher if Israel and the US actually do launch a strike on Iran. Add-in growing energy demand from India and China, and you can bet that the contest for Central Asia’s energy resources is just getting started.

It’s all fascinating to watch as a geo-political contest, of course. But what we’re interested in is a way to profit from the development of Central Asia’s energy resources. And the number of actors involved in this new scramble means that we could find that opportunity just about anywhere.

Just last month we saw a Mongolian oil-exploration company listing here in London. Incidentally, that’s the first Mongolian company that I’ve come across listed on any international market.

Fortunes are going to be made by those positioned to benefit from the flood of new investment flowing into Central Asia’s energy sector. Here at Profit Hunter, we’re keeping our ears close to the ground on this opportunity. In the meantime, you can read all about the totally off-beat backdoor play that we found on the other super-hot energy region, West Africa, by clicking here.

Regards,
Manraaj Singh
Editor
Profit Hunter

Sources: The Struggle for Central Asia’s Energy Resources

If you don’t recognize the name — and don’t worry, most won’t — Erin Callan is the chief financial officer of Lehman Brothers (LEH:NYSE).

Or was the CFO, rather, because Ms. Callan holds that title no more. She was ousted this morning, along with chief operating officer Joseph Gregory, as a result of Lehman’s nearly $3 billion loss. Someone had to take the fall. She and Mr. Gregory were offered up to the volcano.

Ten days or so ago, Taipan Daily tagged Lehman Brothers as a downside bellwether. (You can read it here.) Watch LEH and watch the Philly Bank index, we said. Now they are both in the tank — and the markets are, too.

Our own Adam Lass, the (rather outspoken) editor of WaveStrength Options Weekly, was on this beat long before anyone else. As I wrote to you this past Monday, Adam has been pounding the table with gusto on his bearish bank bets. WOW readers have been doing quite well in result.

He’s been cleaning up in the Dow Jones, too… on May 21, as part of his “Storm Warning” program, Adam asked WOW readers to buy September DIA puts. The max gains on that position (as of yesterday, I believe) were 67%. They are, no doubt, up more today, with the Dow swimming in red as I write.

Yesterday, I asked Adam to give the lay of the land from his perspective. He replied with an open letter from New York City. Prophetically enough, given this morning’s big news, the event on Adam’s mind was the big Bear-Lehman lacrosse game. He expounds on market conditions, too, of course. Read on to find out what our bank-beating, Dow-drubbing options guru has to say.

Warm Regards,

JL

Wall Street Fiddles While America Burns

You can sit on the sidelines watching your money vanish… or you can gain 80% by summer’s end by Adam Lass, Editor, WaveStrength Options Weekly

Dear Justice,

I could write to you about oil today. It would be so easy… the headlines are chock full of crude gyrations. One moment they’re touting a pending drop as soaring prices cut into demand. The next thing you know, some wag at Gazprom is calling for $250 a barrel by this time next year. (I’m sure you’ll be addressing that soon.)

However, I’m fairly sure most of our readers are up to date on oil, and just how badly oil prices are choking off the U.S. economy. (One need do little more than open the latest gas card bill, and the pain becomes apparent.)

But… are they aware of how Bear Stearns recently rose from the dead to crush cross-town rival Lehman Brothers?

I am speaking, of course, of Tuesday night’s lacrosse game up in the 100-degree heat of Harlem’s Baker Field, where Bear’s doughty lads (and a few stand-ins from Bank of America) put the harsh realities of the Street behind them for a few hours. The Bear boys may have been down and out in the broader scheme of things. But for the course of this lacrosse game at least, they stood tall over their fellow white-collar athletes.

The final score: Bear Stearns, 11; Lehman Bros., 4.

Now, I know that this feat sounds small in the context of the huge sea changes happening to Wall Street these days. Quite frankly, though, it’s amazing that Bear’s walking zombie fate hasn’t spread to more players in the Gotham League.

Why, just the other day, the game’s big loser, Lehman Brothers, added its name to the ever-expanding roster of multibillion-dollar bleeders, upon reporting a $2.8 billion quarterly shortfall.

Judging by the ensuing plunge in LEH shares, this announcement actually surprised some investors, who were happily fantasizing that the financial sector’s troubles had somehow ended.

This is a damn shame, because there was a plethora of clues available to anyone with eyes to see. In the case of Lehman, one could simply have noted hedge fund manager David Einhorn’s very public PowerPoint presentation, where he deftly uncovered the cherry bombs lurking in LEH’s books.

Yes, yes, I know that LEH execs have complained that Einhorn was “talking his book” and supporting a big short position. Then again, Mr. Einhorn is the one who was right, while Lehman CEO Dick Fuld was utterly, awfully wrong when he claimed “the worst is behind us” back in April.

I will tell you right now that the worst is not behind LEH. Nor is the worst behind its fellow Gotham League players.

Pluck any name you want off Wall Street’s roster, and I am willing to bet you dollars to donuts that they are still sitting on a vast hoard of incendiary Level 3 assets.

If you’re not familiar with Level 3 assets, just close your eyes and think of toxic waste. These ticking time bombs are various financial devices wherein significant assumptions or inputs are used in the valuation technique, based upon inputs that are not observable in the market… thus requiring “internal information” to be used.

Street insiders describe Level 3 assets as “mystery meat.” And when you hear “internal information,” that’s a euphemism for “we dunno.” The traders are as clueless as the cafeteria lunch ladies when it comes to pricing this stuff. And yet the corporate shills try to tell folks like you and me that this “mystery meat” is really filet mignon.

Meanwhile, Wall Street’s best and brightest goof around, beating each other up with lacrosse sticks alongside the Hudson, while their sponsoring houses destroy shareholder wealth at a prodigous rate unseen since the “Great Falls” of Enron and Long-Term Capital Management.

The financial sector — as exemplified by such proxies as the Standard & Poor’s Financial Select Sector SPDR ETF (XLF:AMEX) – has given up some 41% over the past 12 months.

It is not done yet.

Since last May, my proprietary WaveStrength charting system has yielded clear sell signals against such supposedly reputable companies as Bank of America (BAC:NYSE), JP Morgan (JPM:NYSE) and Wells Fargo (WFC:NYSE). These signals allowed my readers to convert Wall Streets self-inflicted bleeding into 652% gains.

Here and now, that system indicates just as clearly that you should purchase XLF December 22 puts (XLF XV), available as I sit to write for $214 per contract and sporting a delta of 0.37. These contracts will earn you gains of 17% for every dollar Wall Street foolishly squanders this summer… playing games while America burns.

Yours truly,

Adam