You see this used all the time by people marketing investment books or seminars. I won’t go into the fairly long explanation I read by a China linguistics expert as to why this is not accurate. We’ll look at that another day.

What is true, though, is that often a temporary crisis can indeed lead to a genuine opportunity. Today I want to talk about one such outstanding opportunity that investors with a little sense of adventure and some spare cash should consider.

On 2 August 2007, a mini-submarine dropped a titanium capsule on the ocean floor beneath the North Pole. In the capsule was a Russian flag.

In what the New York Times labelled at the time, “an openly choreographed publicity stunt”, the Russians were making a symbolic gesture.

In a brazen display to the world’s media, they were laying claim to the Arctic’s vast oil and mineral treasures.

Almost to the anniversary of this particular gesture of war-mongering from the Russians, came another: the Russian slap-down of Georgia.

When Georgia President, Mikheil Saakashvili, launched his ill-conceived attack against the breakaway region of South Ossetia, he did so under the misguided assumption that he would have the support of Western government.

But, Western powers have been preoccupied with Afghanistan, Pakistan, Iraq and Iran. Russia took the chance to throw its weight around, knowing that no one was going to rush to defend Georgia, even if Georgia had applied to join NATO.

We’ve all seen the results. Georgia has been on our TVs and on the low-numbered pages of our newspapers for the last couple of weeks. Its troops were decimated, its tanks destroyed and its Government was shown in no uncertain terms who’s boss in the region.

What’s clear is that by attacking an American ally that was being considered for NATO membership — and getting away with it — the Kremlin demonstrated that Russia is, without any doubt, the region’s dominant power.

But nowhere in the mainstream press has there been any talk of investment opportunities in all of this. No one has been looking beyond the headlines to see how Georgia stacks up. Maybe now that the Russians are preparing to pull their troops out that’s all about to change.

Certainly, that’s what colleague Manraaj Singh’s been banking on. Tucked away in our emerging markets cubbyhole here at the Fleet Street’s HQ, Manraaj has been working on an outstanding investment idea. At last it’s ready and now you have a chance to make a very decent profit as this recent temporary crisis fades and Georgia’s excellent growth credentials start to attract smart investors once more.

Manraaj was already looking at investing in Georgia before fighting started on 7 August. In fact, he was coming back for more, having already taken profits from an investment there at the tail end of last year.

Georgia is a great growth story, as Manraaj explains:

“Georgia rarely got a mention in the press before this conflict broke out. But it’s been one of the hottest growth stories over the last five years.

“The country declared independence from the Soviet Union in April 1991. From 1995 to 2003, Georgia was led by the former Soviet Foreign Minister, Eduard Shevardnadze as President. He introduced democratic reforms. But he failed to tackle widespread corruption.

“In November 2003, he was replaced by the U.S.-educated current president, Mikheil Saakashvili at the head of coalition of reformers and democrats. Under him, Georgia has made huge strides in tackling corruption. Large swathes of the economy have been privatised. And he has taken a strong pro-Western stance.

“The reforms have had a huge impact. The economy grew by 12.4% in real terms last year. And it is expected to grow by 9% cent this year and next. The average Georgian had an annual income of just $686 at the start of the decade. That could reach $3120 by the end of this year. People in this tiny country are getting richer very, very fast.

“And foreign investment has been pouring in. The country received $1.4 billion in foreign direct investment last year. That was 30% higher than the $1.1 billion the year before.”

But the average investor hasn’t been taking note of this potential. And why would they? You never hear about Georgia — until now, that is.

And the most exciting thing is that since Georgia has been front-page news in the mainstream press, Georgia-related investments have been universally beaten down. Nothing has changed as far as long-term prospects for Georgia are concerned, as you’ll see when you read Manraaj’s report.

For a true profit opportunity coming out of a temporary crisis, read Manraaj’s essay here

Suddenly it seems that everyone wants to buy dollars. The buck has just risen to its highest level against the euro for 6 months, as traders predict that the eurozone economy is heading for protracted problems.

But don’t believe everything that you read in the press. Our man Tom Bulford’s just come back from his holidays in the Seychelles ands he witnessed first hand a different story. Read on to find out about the impressive vote of confidence he witnessed for the euro and why the dollar is no longer the king of currencies.

Ben will be back tomorrow.

Best regards,

Frank Hemsley

Source: The Tiny London-Listed Share That’s On The Brink Of Doubling In Post-War Georgia

This week, Russian President Dmitry Medvedev and Georgian President Mikheil Saakashvili are already planning to sign a peace plan. But still the damage has already been done – particularly to the Russian ruble.

Honestly, what happened to the ruble this week is pretty common during wartimes. So this begs the question: How does a war affect a currency?

Well, as I often say: Money hates instability. There is nothing more unstable and unpredictable than a war where anything can happen. You also never know how long one will last, who will win, and what will be lost along the way.

As an investor, you’re left to suspect the worst. That’s why most investors grab their money and run to safer, more stable countries until the coast is clear.

Russia Declares War and
the Ruble Sinks 4% in 5 Days

To this day, Russia still has a bad reputation for decades of shady dealings. As such, investors never seem to fully trust the Russian markets. If a conflict breaks out, investors rush in and grab their cash even faster than they would another country.

And that’s exactly what happened when Russia declared war on Georgia.

Check out the chart of the U.S. dollar vs. the Russian ruble below. You’ll notice the ruble tanked over 4% in just 5 days after war broke out.

With Leverage, You Can Turn that 4% move into 400% Profits

Now that may not seem like much to you. But you have to remember that small movements in currencies add up to a lot in trading accounts.

Spot Forex accounts are commonly leveraged 100 to 1 or even 200 to 1. So a 4% move can be magnified to equal a 400% to 800% move in just 5 days.

If you bet against the ruble just as the Russians declared war, then you would be sitting on some healthy profits right now. However, if you bought the ruble formerly because it has done well in this “energy/commodity” boom, then you probably watched your account sink into the negative territory over the last few days.

Most trading accounts can’t take 400% to 800% losses on their positions over a five-day period and survive.

So ruble traders really had a wild ride since this began.

Is the War Over Yet?

Let’s suppose for a moment that the war truly is over and things somewhat revert back to normal (a Russian normal anyway). If that happens, then Forex traders will probably see it as a buying opportunity and grab the ruble once again at bargain prices.

However, if the conflict isn’t truly over, or if another one erupts, then you will see the rollercoaster ride begin again.

It takes a strong stomach to invest in the ruble right now. Much of the time it has been a very profitable “one way bet” against the buck since 2003. However, in times like these, you never know what the Russians are going to do.

On the other side of the coin, if you’re pulling money out of Russia, you’d better hide behind another BIG country. So many traders ran to the U.S. dollar since it’s the “Big Brother” that might be able to protect them and their money.

However, other traders chose to run to the “risk adverse” currencies of the Japanese yen and the Swiss franc. Both of these currencies have torn a chunk out of most currencies over these same five days with the exception of the U.S. dollar.

Right now, the buck can’t seem to do anything wrong and is rallying against any currency I have on my screen.

So war really “stirs the pot” because it not only causes money to run away from the country at war but also it has to find a hiding place. That hiding place won’t be the same for every investor. It may be two or three of the other biggest currencies in the market.

Bottom line: Money tends to run for cover at the first sign of conflict and tiptoes back in later after the conflict ends. Something to keep in mind the next time a war breaks out…

SEAN HYMAN, Currency Analyst

Source: Why a War Can Kill a Currency and ‘Also’ Hand You 400% or More

But here’s something the markets aren’t yet factoring in — the possibility that Georgia’s pro-Washington president launched an attack on ethnic Russian enclaves in Georgia to create a diversion for Russia in the event of a U.S. or Israeli attack on Iran.

Let’s back up for a moment. Middle East newspapers are buzzing with reports that two U.S. aircraft carriers, the Roosevelt and the Reagan, are heading toward the Persian Gulf. (The Lincoln is already there.) The Roosevelt took part in war games along with British and French vessels off the U.S. East Coast a few weeks ago — a fact that leads a blog called Europe Business to speculate all three of those nations are preparing a naval blockade of Iran. Here’s what makes that so interesting:

There is a great fear that Russia and China may oppose the naval and air/land blockade of Iran. If Russian and perhaps Chinese naval warships escort commercial tankers to Iran in violation of the blockade it could be the most dangerous at-sea confrontation since the Cuban Missile Crisis. The US and allied Navies, by front loading a Naval blockade force with very powerful guided missile warships and strike carriers is attempting to have a force so powerful that Russia and China will not be tempted to mess with. This is a most serious game of military brinkmanship with major nuclear armed powers that have profound objections to the neo-con grand strategy and to western control of all of the Middle East’s oil supply.

The Russian Navy this spring sent a major battle fleet into the Mediterranean headed by the modern aircraft carrier the Admiral Kuznetsov and the flagship of its Black Sea Fleet, the Guided Missile Heavy Cruiser Moskva. This powerful fleet has at least 11 surface ships and unknown numbers of subs and can use the Russian naval facility at Syria’s Tartous port for resupply. The Admiral Kuznetsov carries approximately 47 warplanes and 10 helicopters. . . .

A strategic diversion has been created for Russia. The Republic of Georgia, with US backing, is actively preparing for war on South Ossetia. [Ed. note: This was written the day before the war broke out.] The South Ossetia capital has been shelled and a large Georgian tank force has been heading towards the border. Russia has stated that it will not sit by and allow the Georgians to attack South Ossetia. The Russians are great chess players and this game may not turn out so well for the neo-cons.

Of course, there’s no telling if this is how it will play out. The foreign-policy insider website Swoop ignores this scenario in its weekly Monday-morning briefing, focusing instead on what the lame-duck government in Israel might do.

At the July 30^th US-Israel strategic dialogue, US officials cautioned Israel against military action. However, they recognize that Israel will act according to its own interests, not in accordance with US instructions. A senior State Department official told us: “The reality is that we would not necessarily be able to detect an Israeli attack until shortly after it is launched.”

You’d think for $3 billion a year in aid, Washington might get a 48-hour heads-up to move forces into position. But maybe not.

In any event, either of these scenarios — a U.S. blockade or an Israeli attack — could quickly drive oil from $117 to $200. And of course, there are other scenarios under which it could happen, too. We’ll be keeping our eye on the ball here while establishment media focus on the Olympics and the extramarital affairs of former presidential candidates.

Source: $100 oil on hold

But, as you’ll see below, now could actually be the perfect time to invest in both of these countries.

Let’s take Russia first. The Georgian conflict helped wipe 6.5% off Russia’s stock market on Friday. It is the latest in a string of events that have damaged investor confidence recently.

One of these is the interminable TNK-BP saga. BP and a group of Russian oligarchs each own half the venture. The Russians have made life difficult for TNK-BP’s foreign employees. Visas have been refused. Chief executive Robert Dudley has quit the country. His finance director has resigned.

Understandably, this has spooked foreign investors.There was also Vladimir Putin’s comment about Mechel, the Russian coal and steel firm. In June, Putin denounced the firm’s pricing policy, and accused it of tax evasion. His comments helped wipe $60 billion off the stock market.

And now, of course, there is a war. So you’d expect us to advise investors to stay the hell away, right?

Wrong!

“Buy when you hear the gunfire” is a commonly-heard phrase in investment circles. When everyone else is panicking, cool heads can set themselves up for spectacular gains.

My colleague Manraaj Singh looks for investments where most others fear to tread. As it happens, his Profit Hunter service has previous in Georgia. Last year, Manraaj’s readers made a tidy profit on one Georgian investment.

As I write this, Manraaj is tucked away in his cubbyhole looking for a way to get back in!

Is he mad? See for yourself tomorrow when Manraaj reveals his latest thoughts on this prospective play.

Meanwhile, Garry White takes a look at Russia. He gives us the top five reasons why he likes the place — and tells you how you could get rich the Putin way…

Finding profits in an unpopular place

“Naturally, when people think of the Congo today, they remember the violence… the wars… the corruption… the extreme poverty,” writes Manraaj Singh in his latest investment report.

But, as Manraaj points out, it’s also one of the most mineral-rich places on earth. It is another example of a place most investors are scared by — much to their detriment.

Manraaj has found a unique mining company that could soon control nearly half the world supply of one critical metal.

“Investors are nervous because it operates in the Congo,” says Manraaj. “So its share price is still trading well below what it’s really worth.”

To make real money, you often have to completely ignore mainstream advice. If everyone knows about it, the opportunity has passed.

Manraaj’s latest report offers you the chance to buy against the grain. Read on to find out how much this one share could make you

Until tomorrow

Ben Traynor,

Editor

Source: Why Investors Shouldn’t Fear The Conflict In Georgia