“I don’t know if I will live to see it,” said Brazil’s president Luiz (Lula) da Silva a couple weeks ago. “But Brazil has to transform itself into a big power in the 21st century. We have everything to make it happen. We are not talking about a little country here.”

No, indeed. Brazil is not “a little country” anymore. Any prudent investor has to consider how to hitch a ride on the Brazil growth story. Brazil is transforming into one of the world’s great powers in this century. It’s important to follow the news from Brazil. At the same time, you have to know where to look, and how to read between the lines.

By official count — what the Brazilian government will confirm — the rocks of Brazil hold nearly 20 billion barrels of proven reserves. That number is on par with the total for U.S. oil reserves, including Alaska and the Gulf of Mexico.

It’s an impressive number, but then there’s also the unofficial Brazilian reserve count. How much oil is “really” down there under Brazilian jurisdiction? It depends with whom you talk. Some Brazilian officials will smile and say the country has 50 billion barrels of resources. If the Brazilians can tap into this treasure, it adds up to more than twice the total reserves of the U.S., including Alaska.

Other knowledgeable — VERY knowledgeable — Brazilians give much larger estimates. I’ve seen estimates that place the resource number at “over 100 billion barrels.” This puts Brazil in with the largest of the large oil nations, such as Iraq, Iran and Saudi Arabia.

These massive oil resources offshore Brazil lie beneath deep water and thick layers of salt. And since it’s all within Brazilian waters, the government of Brazil is increasing its control over offshore development. This way, Brazil will have its own oilmen keeping an eye out for the overall national interest — and making big money for the Brazilian treasury.

The new level of Brazil’s state control over oil development is a strategic decision. Brazil is counting on the hydrocarbon resources to help propel it forward as one of the world’s major powers. And the development in Brazil will control the destiny of a good number of players in the OI portfolio.

Many companies whose fate is tied to the wheel of the Brazilian ship of state are in that portfolio. All of them have operations that span the globe. They’re not a pure play on Brazilian energy development. Just the same, it’s nice to know that they’ll be pulling down a big chunk of business in one booming region over the next couple of decades. As I see it, these firms are long-term core holdings for any diversified energy portfolio.

Gold on the Move

This week, the price of gold touched $1,040 per ounce. Silver also took the elevator to higher floors, to now over $17 per ounce. It’s been good news for all of the gold and silver miners in the OI portfolio.

We’re way up on many of the miners I’ve added this year to the OI portfolio. Some of the beaten-down guys are also showing us their inner Lazarus as precious metals prices soar.

What’s with the Rising Tide?

I just love it when the stocks in the OI portfolio are going up. It beats the heck out of what we experienced last October with the meltdown, that’s for sure. And it makes it easier to be the editor of a financial newsletter that focuses on precious metals, energy and other natural resources.

What’s going on? What’s with the rising tide? I believe we’re seeing some short covering in the precious metals arena. It has always amazed me in the past couple of years that there were people out there shorting gold. Huh? It’s like that scene from the movie The Deer Hunter in which Robert De Niro is playing Russian roulette with a pistol holding bullets in the chambers. You don’t have to be crazy to short gold, but it helps.

I may not have the same eyesight today as back when I flew Navy jets. But how close do you have to look to see that the U.S. dollar is in trouble? Yet people still want to bet on the dollar and against gold? Hey, it’s a free country. And I’ve spent the past few years feeling pretty lonely at times as I described my vision of monetary gloom and doom.

So now the dollar is dropping due to bad news on many fronts. The U.S. economy is NOT “recovering,” contrary to the propaganda from Washington. Unemployment is up, and it’ll stay up for a long time. There’s a structural readjustment going on within the U.S. economy, and it’ll take years (maybe decades) to play out. Meanwhile, U.S. tax policy, energy policy and the overall political process are a train wreck in living color. Can anyone explain to me how this has a happy ending?

The world, of course, is noticing. Now we read about a group of nations (the usual suspects, but add in modern allies Japan and France) trying to figure out how to ditch the dollar and use some other medium of exchange to trade oil. It’s not exactly a new rumor, but now it’s getting traction. And like people smelling smoke in a crowded theater, dollar holders are looking for the exit signs.

Is anyone surprised at this? How much fiscal and monetary abuse can the greenback stand? Hence, the precious metals prices are levitating.

We’ll probably see a pullback in precious metals prices, but that’s just going to be profit taking and the market working its magic. Long term, the metals are still going up.

It’s part of the long-term thesis of Outstanding Investments. Go with precious metals. Go with energy plays. Go with solid resource plays.

Until we meet again,
Byron King

Source: Energy, Brazil, Gold: What More Could You Want?

It’s a world shrouded in deep myths and folklore that include stories of people losing their homes, or having 5,000 bushels of soybeans dumped on their front lawn.

I’m talking about the commodities world, of course.

But despite these tall tales, commodities aren’t necessarily dangerous investments. Not if you know what you’re doing and take adequate precautions. Rather, the “secret society” stuff comes from the belief that the sector is a murky one that many investors simply don’t understand. Just the mere sound of “commodity futures and futures options contracts” was enough to send people running for cover…

However, nothing could be further from the truth when dealing with commodities. And over the past few years, we’ve seen great changes in the financial world that have opened the doors to this “secret society.”

Step Out of Your Comfort Zone… Don’t Be Afraid of Futures & Futures Options

I’ll tell you what I’ve told my friends and acquaintances over the years: Don’t be scared of commodity futures and futures options, they’re essentially little different than stock and stock options. If you know how to trade stocks and stock options, then there’s no difference from futures and futures options.

For example, if you can buy and sell IBM (NYSE: IBM) shares and IBM options, then why can’t you buy and sell sugar futures and sugar options? There is no difference. As long as you have an idea of where an investment (be it IBM or sugar) might move to and its underlying fundamentals, then what is there to be scared about?

Here’s the problem as I see it (based on my 18 years of experience in the commodities sector): Most people just don’t know enough about the underlying fundamentals of commodities – how/why soybeans, cocoa, cotton, or live cattle trade in a certain way. The majority of people know stocks and that’s that. They don’t like change and are fearful to step out of their comfort zone.

But all commodities that are available to trade on various U.S. exchanges are highly regulated. They have strict rules, which are efficient and assure the integrity and safety of your capital.

So if you’re looking to add some great potential gains to your portfolio, then consider what commodities can do for you…

Four Commodities… Four Explosive Moves

Want some examples of how explosive the world of commodities can be? Just look at these moves for oil, natural gas, gold and silver over the past year…

How would you have liked to hop aboard some of those moves?

Oil: When it started rising in 2007 and topped in 2008, it encompassed a staggering $90,000 move if you’d held just one contract. And the freefall that ended last March brought in an unheard of $110,000 for anyone being bearish.

If you’d held 10 contracts during those moves, you could have seen gains of over $1 million! And that’s just one direction. Double it if you went both ways.

Natural Gas: The move up in the summer of 2007 to the top in 2008 encompassed an $85,000 move, while the drop back down to the lows hit just two weeks ago and saw an even larger haul of $110,000. And this was for holding just one measly little contract. Imagine if you had 100 contracts.

Gold: From the gold chart below, you can see the trend higher from 2002. But even if you got onboard as late as 2006, the move could still have netted you $45,000.

Silver: A bullish position taken in 2006 would have scored $60,000 on just one contract. And if you’d hopped on the bear train near the highs in the spring of 2008, you could have pocketed another $65,000 just six months later.

This is some serious money folks.

And the great thing about commodities is that it’s normal for them to cycle from highs to lows and then back again. This gives you opportunities to profit on the way up and the way down. Moreover, it’s in contrast to the stock market, where most moves are biased to the upside.

Now, if you want to profit today…

Three Reasons Why You Should Trade These Four ETFs

Due to the changes that have taken place in the commodities world, regular investors have a chance to take part in the sector without leaving the comfort of a stockbroker.

We’re talking about commodity-related exchange-traded-funds (ETFs), which mimic the moves of the underlying asset. So you can use them to play some of the most popular and active commodity markets.

For example, if you’d like to go for oil, natural gas, gold, and silver, consider these ETFs:

• Oil: United States Oil Fund (NYSE: USO)
• Natural Gas: United States Natural Gas Fund (NYSE: UNG)
• Gold: SPDR Gold Shares (NYSE: GLD)
• Silver: iShares Silver Trust (NYSE: SLV)

If you want to gain exposure to the often lucrative commodities world, here’s why you should trade these ETFs…

1. Simple: ETFs trade like stocks, so you can buy and sell them as you would with shares of any other company from a regular stock brokerage account. So you don’t even need to get involved with commodity brokers, futures, or futures options contracts.
2. Options: The ETFs also have options available, which offers you more leverage and can reduce your risk.
3. Liquidity: Because all four of these ETFs are the largest ones available for their respective commodities, there is enough volume to be able to get in and out quickly and safely.

Next time, I’ll show you one of my favorite ways to use an options strategy to execute a bullish commodity trade. But in the meantime, check out those ETFs above.

Good trading,

Lee Lowell

Source: Four Easy Ways to Trade the World’s Top Commodities

And falling on its face, dead to the world, is what America so richly deserves, as it was built upon the idiocy of ignoring the Constitution (“Money shall be only of silver and gold”!), and then committing the folly of a fiat currency (“create as much paper money as the Federal Reserve wants!”) and insane degrees of fractional reserve banking (“we can loan as much as we want without limit!”) so that socialists and commie-think morons in Congress can deficit-spend us (“free lunches for everybody!”) into ruination.

For those who take everything literally, be aware that there was nothing in the book about giants actually falling and hitting the ground with a big “thud” or anything, but there was plenty about why it fell, mostly reasons that fall into the categories of stupidity, ignorance, corruption and greed.

Unfortunately for me, it’s taking me a long time to read it because I cannot read much of the book without suddenly leaping to my feet and shouting, “We’re freaking doomed!” and running to the cozy safety of the Cozy And Safe Mogambo Bunker (CASMB), whereupon I nervously sweep the perimeter with the periscope and thank my lucky stars for gold, silver and oil, because I know that no matter how bad things get, those three things will go up in price.

And this “sell high” part of what will happen in the future is what comes after the “buy low” part, which is Right Freaking Now (RFN), and it will be RFN for a long time to come as the dollar loses more and more buying power due to the sustained over-creation of money necessary to soak up the enormous, monstrous debt that the federal government will be peddling for years and years.

I am sure that Mr. Panzner comes to the same conclusion, although if you call him up to confirm this and, after he answers, “Hello?” you ask, “Do you recommend buying gold, silver and oil because they are sure to go up in price with the roaring inflation in consumer prices that will consume us because the loathsome Federal Reserve is creating so much excess money and credit so that the despicable Congress can spend a third of GDP – and deficit-spend a seventh of GDP! – and anybody who says otherwise is some kind of mental defective or has some kind of mutant spore from outer space, or CIA thought-control waves, controlling his brain? Yes or no?” he will say, instead of just answering my simple question, “What?” which is certainly not responsive!

Naturally, your eyes narrow to suspicious slits, and you wonder why he is evading my simple question! What’s he up to?

Perhaps the answer is hidden in his vision of the future, which would be important to someone like you because you are intelligent and clever enough to discover some profitable venture in it, whereas I am too stupid and dull-witted to see entrepreneurial opportunity, and can only look at gold, silver and energy as investments of choice due to the wonderful simplicity of the lesson of the last 4,500 years of history whenever a country was so stupidly ignorant, greedy and selfish as to produce an excess of money.

Since I have never seen you before, I know that you are a stranger around here, a stranger that doesn’t usually hang around with lowlife bums like me, pathetic mental midgets who are incapable of putting simple picture-puzzles together, or forming coherent thoughts to reach any conclusion that is not laid out in front of me, usually with someone literally standing right there, pointing out the obvious, to make sure I don’t miss it.

So, for you smart people who can see the silver lining in a dark cloud and prosper while all else is misery and suffering, he writes, in a paragraph that I consider to be as chillingly prescient as it is succinct, “Businesses will find it hard to thrive, let alone thrive, amid increasing violence and conflict, shortages and logistical interruptions, and a breakdown of markets and financial mechanisms. Individuals will be forced to rethink livelihoods, lifestyles, living arrangements, and locales. Political structures will be in flux. Around the globe, gangsters, maniacs and mobs will compete with established regimes for the reins of power. Nuclear attacks, domestic terrorism and other threats that once seemed so remote to most Americans will become an all-too-frequent reality. So, too, will breakdowns, epidemics, and other fallout stemming from economic deterioration, growing social unrest and criminality, and a forced shift toward greater self-sufficiency.”

He concludes that “For many Americans, the years ahead will be nothing short of a modern Dark Ages”, although he obviously does not mean you, personally, since you are so smart that you will make fortunes despite any “hard times”, and he obviously does not mean me, either, because I own gold, silver and oil! Whew!

So while you make your fortune “the hard way” by poring over annual reports and prospectuses to laboriously winnow the wheat from the chaff, I will just lazily watch gold, silver and oil go up and up in price, as is seemingly guaranteed by the entire historical record of the world, although I may be the first to actually ever wax lyrical and say, “Whee! This investing stuff is easy!”

It does not explain, however, why Junior Mogambo Ranger (JMR) Doug B. sees it as “Gee, this psychopathic world-domination stuff is EASY!” or why I agree with him and say, “And so it is, JMR Doug! So it is!”

Source: Golden Shelter from Falling Giants