Tom Bulford (Penny Sleuth):

Joseph Stalin does not sound like a very nice man to have worked for.

He had this idea that digging up coal from underground in order to burn it as soon as it reached the surface was a bit of a waste of time and effort. Why not simply burn it while still underground and then simply draw up the heat and gases through a pipe?

Convinced that this was a smart idea he set his scientists to work on the problem. Unfortunately for twelve of these scientists, they failed to do so and Stalin had them executed.

But to be fair to Stalin, his idea was right but just a little ahead of its time. Last week the UK Coal Authority granted a license to Clean Coal, a subsidiary of the quoted Anglo-American (ticker: AAL) to put Stalin’s theory into practice.

Under the North Sea, within ten kilometres of the coast, is enough coal to satisfy UK demand for at least ten years. The difficulty is getting it out.

But thanks to a new technology called Underground Coal Gasification this is no longer necessary. Let me show you how it will work.

How to make hard-to-reach coal fuel a power station

A drill will bore its way through the ground at somewhere, on land, close to perhaps Grimsby. Having reached the required depth it will then take a ninety degree turn and head out sideways underneath the coastline until it hits the coal seam.
Next a second bore hole will be drilled into the coal seam. Once that is done the coal will be set alight underground, and will be constantly fanned by oxygen fed down one of the pipes. Up the other pipe will come a methane-rich synthetic gas able to fuel a power station.

This will not be the first time that this has been done. Similar projects are already up and running. In the course of investigating a penny share company last week, I came across another such plan.

This was Strategic Natural Resources (ticker: SNRP), and I managed to catch up with chief executive Jeremy Metcalfe, a man whose enthusiasm and energy defies his seventy years. . .

Click here for the rest of Mr. Bulford’s report at Fleet Street Invest, UK.

When combined with iron or nickel, it is used to create corrosion- and wear-resistant, high-strength products. It’s also contained in both lithium and nickel rechargeable batteries.
That means a lot of demand now and into the future. But right now, hardly anybody’s mining it. See, as the economic crisis wormed its way into industries across the globe, demand for cobalt softened. One year ago, cobalt was priced over $50. Today it’s priced at around $16.
Notes can reveal that one tiny company holds the key to the U.S. supply of cobalt. And it just got final clearance to break ground on one of the biggest moneymaking mines the U.S. seen in decades. The supply shortage could launch this penny stock to $10… $12… even $18 by November 20, 2009.

Part of the reason is the company’s high profile on Wall Street – it’s arguably the most popular penny stock out there. And why shouldn’t it be? After all, the company is the exclusive provider of satellite radio and in-car TV broadcasts for almost 20 million paying subscribers in the United States and Canada.

But to assume that all the interest in Sirius XM (NASDAQ:  SIRI) is because of the company’s great growth prospects would be dead wrong. Scores of investors want to see this company crash and burn.

As of last month, almost 5% of shares available to the public were short Sirius XM, and while that might not sound like a lot of shares, it’s 25% more short interest than even beleaguered Citigroup is facing.

Part of the reason for that dichotomy of investor sentiment is the battle between the company’s cash-machine business model and its over-leveraged balance sheet. At present, the $1.4 billion company is sitting on around $5 billion in long-term debt – a number that’s grown 260% in the last year largely as a result of the merger between rivals Sirius and XM.

Can Sirius Scrape up the Cash?

But Sirius XM isn’t insolvent – yet. Last year, the company generated $1.7 billion in revenues, and much higher numbers are all but guaranteed for this year as a result of the merger. Add to that the last-minute $530 million cash infusion Liberty Media Corp. agreed to lend to Sirius XM last month, and this company is certainly adept at eeking by the guillotine.

That skill is part of the reason SIRI shares have appreciated so dramatically in 2009.

In the case of Sirius XM fundamentals (like the company’s income statement and balance sheet) are squarely pitted against its business (like the fact that it provides a great service). Now, more and more, investors are counting on the business side to win out.

After all, the Sirius and XM merger is estimated to generate $400 million in excess costs this year alone.

Believe the Hype

Indeed, media sentiment has even changed for Sirius XM. Where financial writers used to lampoon the flailing company, they’re now standing behind its prospects for turning a profit in 2009.

“Things are going so well for Sirius XM Radio these days that it doesn’t even have to say a word for positive things to happen. All it has to do is sit tight as those around it generate headlines favorable to the satellite-radio operator,” said the Motley Fool’s Rick Munarriz in an article about trends that should be a boon to the Sirius XM bottom line.

Analysts too are flip flopping over to the side of Sirius XM, estimating a narrow loss for the coming quarter and a target price more than 16% above what the stock trades at today.

As investors, we’ll just have to wait until earnings season to see whose side ends up the victor in this battle royale. Whatever the future holds for SIRI’s stock price, the one constant is that the ride is sure to be a wild one. Until then, I’ll just stick to listening to Sirius in my car, not watching it in my portfolio.

Source: Are Investors Finally Getting Sirius?

It all began in 1994, when one of my brother’s college buddies began talking about the big checks his girlfriend was receiving as a member of a hot, new Multi-Level-Marketing “opportunity.” His friends joined and soon convinced others to enter. Business was booming.

Then the money stopped.

Like many of these stories, the company went under – its investors and many of its employees were out countless millions – many losing more than just money.

And now I had the opportunity to sit down with the founder of one of these debacles. One who had wantonly misspent revenues on such extravagances as chartered corporate jets to Paris and Friday lobster dinners.

Before I blew him off entirely, I realized that this was a rare opportunity to get into the mind of a fraudster. I said “yes” to Randy’s visit and was soon sitting in front of him.

He’d flown down to Puerto Rico to try to coax me into joining him in his next scheme. I welcomed the opportunity to understand the mental wiring of a financial criminal.

Unlike this meeting, where I could see the culprit face-to-face, most Americans never get to meet the person who is trying to scheme them.

Financial Fraud – Always Such Nice, ‘Honest’ People

He explained that he didn’t begin in financial fraud, but that he started as a salesman for a penny stock “pump and dump” scheme in New York. When it ended, he’d made a lot of money as a brilliant – yet dishonest – salesman for a dishonest business.

He was soon invited into a vitamin scheme preying on financially unsophisticated elderly people where the FBI temporarily locked him up. In the federal penitentiary he learned that it was easier to steal money from the public through Multi-Level Marketing since intentional fraud would be re-interpreted by bankruptcy courts as “miss-management.”

As an investor and consumer you’ll be bombarded by all sorts of “opportunities” that come your way – from any number of unexpected sources. It may be your barber or hairdresser who’s just learned of a “hot” opportunity.

It may be an old friend from college.

Each “opportunity” will have a reasonable story. The fraudsters will have all sorts of evidence to bolster their “sterling” reputation. But that’s just the start of the bait they’ll dangle in front of you.

Making things even harder, the friend or colleague that contacted you will have already been pulled into the con’s web of lies. As an unsuspecting promoter, they’ll express concern or even anger over your disbelief. But you’ll lose your you-know-what if you hand over your money – and your friendship or family relationships will end even worse.

Financial Fraud & Off-Shore Banking

There has been consistent number of financial fraud in “off-shore banking” scams. And I am approached for help at least two or three times a year by individuals who have lost money in an international con-job.

Bermuda has two major sources of foreign revenue for its population; tourism and offshore insurance/finance. And while there are many legitimate offshore investments, there are just as many schemes and con artists eager to steal your money. Just watch the show American Greed on CNBC and you’ll quickly see what I mean!

Local politicians protect fraudulent operators in order to avoid any negative press in the U.S. and European markets that drive their industries. They fiercely protect their market – even if it means you get hosed.

The sad irony is that these schemes gush such fat geysers of ill-gotten cash that conmen protect themselves with expensive legal defenses – paid for by the victims.

They use the world’s legal system to hose the innocent by taking advantage of laws that sometimes seemed designed to protect crooks, particularly the draconian British libel laws that exist in many offshore financial centers.

Since the fraudster suddenly controls millions – or billions – there’s always an unscrupulous attorney willing to file a defamation lawsuit against any and all whistle-blowers. It leads to a situation where many frauds aren’t discovered until it’s too late.

6 Simple Steps to Avoid Financial Fraud

When you’re presented with an “opportunity”, there are a number of ways to give it a “sniff test” and tell if it’s legitimate.

1. Sounds Familiar

Does it look like anything you’ve ever heard of or seen before? It’s amazing how many versions of pyramid schemes or Nigerian scams there are out there. If it sounds similar, chances are it is.

2. Trusted Sources

Does this investment come from a trusted source? This is the hardest hurdle for most to get by. Bernie Madoff seemed to have an impeccable resume and background, and it’s why his fraud went on for so long. Do your own reference checks.

3. The Pudding

The proof is “in the pudding” as they say. If you ask for performance results or documentation to back up claims, they should easily provide the information. Information should be available on a quarterly basis.

4. Information Demands

If someone were to walk up to you and ask for your credit card number, you’d say no. But you’d be surprised to find out the number of people who give up sensitive information – like bank account numbers and personal data – for an opportunity to collect untold millions. When someone requires something like this without a reasonable expectation, warning flags should go up.

5. Your Uncle

Imagine you had a skeptical uncle (some of us don’t have to imagine it). If you presented the opportunity to him, what would be his response? If your uncle doesn’t approve, then neither should you.

6. Embarrassment

Would you have any qualms about sharing this investment with your friends and family? What about if it went badly? If you would feel that any investment of yours isn’t something that you’d be embarrassed to share, then that should tell you something.

Finally, it never hurts to be overly cautious. Take your time and do your research. It won’t stop all the scams and fraudsters out there, but it can protect you from the thousands of other snakes in the grass.

Source: Financial Fraud: 6 Simple Steps to Protect Yourself

Approved by the FDA in early 2006, Sutent is the first drug to be simultaneously cleared for use in two different types of cancer – kidney and stomach. Sales leapt to $600 million last year and may cross the $1 billion mark this year… giving it “blockbuster” status.

Those revenues would make the average biotech stock explode. Onyx Pharmaceuticals, for example, enjoyed a similar launch with kidney-cancer drug Nexavar in 2005. Shareholders saw 300% gains in two years.

So who made a killing on Sutent? No one. That’s because Sutent accounts for less than 5% of its maker’s sales. And despite Pfizer’s success with the drug, its revenues are essentially flat. Shareholders are down 30% since the launch.

Compare that decline with Genentech, the world’s biggest biotech and the cancer market’s biggest player. Its stock is up roughly 60% since its top-selling cancer drug, Avastin, was approved in 2004.

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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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Good cancer drugs command huge price tags, some as much as $65,000 per year. And cancer causes more deaths than any other disease. The cancer-drug market is forecasted to double in the next five years to $85 billion per year.

So Sutent was Pfizer’s first salvo in the battle for Genentech’s market. The company has boosted its cancer research spending to roughly $2 billion per year, about 20% of its massive research and development budget. And it has 18 new cancer drugs in its pipeline.

Yet, as long-time Growth Stock Wire readers know, I believe Pfizer’s efforts are too little, too late… The drugmaker has already lost $6 billion in annual sales in the last two years as blood-pressure drug Norvasc and allergy drug Zyrtec have lost patent protection. And Sutent can’t compare to Pfizer’s biggest winner, Lipitor, which loses patent in 2011.

Pfizer would need a dozen or more drugs just like Sutent to replace the $12 billion in lost sales from its Lipitor franchise. The company would be enormously lucky to turn one or two of its 18 other candidates into a blockbuster product, let alone 10 or more.

Pfizer’s efforts in the cancer field are admirable. And, yes, Sutent is a fantastic drug. But the company’s hard work and big spending won’t save its shareholders. Pfizer will be dead money for years to come.

The same is true for the rest of Big Pharma. Sales worth $100 billion are set to go off patent by 2012. The big drugmakers won’t be able to innovate their way out of that.

What they will do is try to buy their way out, cherry-picking the best drugs in development from the biotech sector by buying entire companies. Of course, there’s a limited number of attractive biotechs… and a dozen or so big drug companies on the prowl. Pfizer and its peers will have to pay biotech shareholders hefty premiums to win the bidding process. In the end, Big Pharma investors lose, biotech investors win.

It’s likely Pfizer – or some other big drug stock – is hiding out in your retirement portfolio. If so, the position is down 30% or more over the last four years. Do yourself a favor: Dump your shares immediately and consider taking a look at the biotech sector.

Pfizer and the rest of Big Pharma may not fall very much from here, but even the biggest blockbusters won’t give these stocks the boost they need.

Good investing,

Rob
Source: Do Yourself a Favor and Dump These Stocks Immediately

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.

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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.

–”China may be chasing Twiggy,” reports Matthew Stevens in today’s Australian. “There is talk in New York that the Rudd Government has approved an application from China’s Baosteel to acquire 16 per cent of the iron ore maverick, Fortescue Metals Group (ASX: FMG). Fortescue says it does not know whether its biggest Chinese customer has even made an application to the Foreign Investment Review Board, let alone received a green light.”

–Fortescue is the low-hanging fruit in the iron ore sector. It’s easy pickings. It aims to be the third major ore producer in the Pilbara, behind BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO). It’s not surprising that Baosteel-China’s largest steel maker-would go over the biggest plum in the pie.

–What IS surprising is just how far into the iron ore sector Chinese companies are drilling for ownership of undefined resource bases that are years away from production. It speaks to the strength of demand for iron ore…and the itch in Chinese pockets to trade U.S. dollars for real assets before the dollar falls even more…or before the Chinese revalue their own currency.

–First up on the menu yesterday was FerrAus (ASX: FRS), a member of the North West Iron ore Alliance we mentioned last Thursday. China’s Shanghai-listed Western Mining Company announced its intention to take a 10% stake in FerrAus at $1.15 a share through a share placement arrangement. Regulators have to approve the deal.

–Here’s the interesting thing about this deal; Western Mining is a base metals miner. It doesn’t even produce iron ore. It just likes the cut of FerrAus’s jib. And for its part, Adelaide-based FerrAus hasn’t even proven up its indicated resource of 43 million tonnes. But hey, when the market value of the assets is going up, these kinds of deals get done.

–And there are more of them. Gindalbie Metals (ASX:GBG) shot down rumours that Angang and Iron and Steel was seeking to increase the 13% stake it already has in the mid-West iron ore junior (a member of the Geraldton Iron Ore Alliance). Investors may or may not have been convinced. But they seemed to like Gindablie’s announcement that it would spend $10 million this year on 12 drilling targets that it hopes will yield 80-100 million tonnes of hematite ore in the Pilbara. The shares closed up 16%.

–And the beat goes on. Prosperity Resources (ASX:PSP) announced that Shougang Holding Limited would buy up to 19.9% of the company through a share placement. To be honest, we had never even heard of Propserity Resources until this morning. Perhaps we are not digging and drilling thoroughly enough.

–We do like at least one thing about the company, though-its ticker symbol. PSP is the acronym we’ve taken to using for a new research service we hope to launch soon, the Penny Stock Prospector.

–We want to offer your our research into the junior mining and energy shares…and hopefully suss out the shares that are moving. It will be as close as you can get to pure speculation. But there’s so much going on in the resource sector now that it’s more than we can cover in Diggers and Drillers.

–Low-hanging fruit is easy to pick. But there’s plenty of fruit on the tree if you’re willing to shake the tree a little. If the PSP sounds like something you’d be interested or you have a hot share tip you can’t wait to share, drop us a line at dr@dailyreckoning.com.au

–By the way, the Koreans are getting busy too. Posco, the world’s fourth-largest steel maker, announced its intention to buy 19.9% of Sandfire Resources (ASX:SFR). The mineral grab goes on.

Source: www.bigcharts.com

–What do you think of the chart above? Seriously. Can you really believe spot crude oil is up 53% in the last year? Oil rocketed up in New York overnight, busting through US$120 before settling just below at US$119.67 by the time trading got going thismorning in Sydney.