Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Winning the Global War for Natural Resources

Commodities / Analysis & Strategy Jan 31, 2007 - 08:54 PM GMT

By: Money_and_Markets

Commodities

Although Hezbollah, al-Qaeda, and the war in Iraq often grab the headlines, I think the global battle for natural resources will probably define the 21st Century when it's all said and done. This war isn't fought with bullets … yet. Instead, it's fought with contracts and trade agreements as countries like China, India, Russia — and, yes, the U.S. — struggle for economic hegemony.

Here are just a few of the latest moves ...


  • Russia recently surpassed Saudi Arabia to become the world's largest producer of oil and gas, and it's ripping up contracts and forcing new deals on customers from Western Europe to the Asian steppes. The country uses its muscle to reward allies, like Armenia, by charging them much less for natural gas than critics like Georgia.
  • Last month, Russia threatened to revoke permanently the operating licenses of Western oil majors in the Sakhalin-1 and Sakhalin-2 project, while state-controlled Gazprom is excluding all foreign (notably Western) energy majors from its giant Shtokman gas project.
  • Sinopec, China's state-controlled oil company, is selling a 25% stake in an east China refinery to Saudi Aramco. This deal could give the Saudi company a major foothold in China's fast-growing market.
  • Sinopec is also signing a $100 billion deal to develop Iran's Yadavaran oil field.
  • Plus, India and China (who often compete with each other) recently agreed to form a joint venture to acquire oil and gas assets in Africa and Latin America.

Right now, this race for the Earth's scant supplies of oil and other natural resources is an ever-present force burning in the background. But like a low-intensity brushfire, it could quickly erupt into out-of-control flames.

Investors who are prepared stand to make big profits. Those who ignore the risks might simply get burned. Before I give you two investing approaches, I'd like to tell you about …

Three Trends That Threaten To Push Up Prices at the Pump
Three Trends That Threaten To Push Up Prices at the Pump
The race for natural resources is on … and for good reason. There are at least three big forces that could really cause energy prices to rocket higher.

First, the Western oil majors — like ExxonMobil, Chevron, BP, and Shell — are failing to replace the reserves they pump. In 1997, they were able to replace 140% of their reserves; in 2005, they were able to replace only 75%! This indicates just how hard it's becoming to find oil. Everyone's trying to grab what they can, while they can. And as you know, limited supply will likely equal higher prices going forward.

Second, new oil exchanges are springing up around the globe. Qatar and Dubai are each starting their own, and India is planning to start one in Mumbai. In the beginning, these three exchanges will trade oil in U.S. dollars … but they'll be able to switch to other currencies. Rather pointedly, Russia is also starting up a new exchange in St. Petersburg next year. All Russian energy products now trading in New York will return home, and the trades will be priced in rubles.

What's the big deal? The greenback is propped up by the fact that oil is priced in dollars. If that advantage gets taken away, the wobbly U.S. currency could tumble even lower than it has recently. The deeper the dollar plunges, the more oil will cost us.

Third, global oil use continues to climb. It hit 84.5 million barrels per day in 2006r and should average 85.9 million barrels per day in 2007, according to the International Energy Agency. That's more than 59,600 barrels a minute!

What's driving that demand? Well, the Chinese put seven million new cars on the road this year alone. But before we point fingers, remember that U.S. gasoline consumption is still rising, too.

America has 5% of the world's population yet consumes 25% of its energy (two-thirds of which we have to import). That's not just vulnerability … that's a disaster waiting to happen!

Reason: Other countries are quietly trying to gain an upper hand. For example …

rise of Russia as an energy empire

Russia Is Building An Empire of Energy

I first wrote about the ongoing battle for natural resources in “ The Great 3-Way Race for Energy ”. Since then, the biggest development has been the rise of Russia as an energy empire. Indeed, U.S. Senator Richard Lugar recently labeled Russia an "adversarial regime" that increasingly uses its growing energy dominance as a powerful geopolitical weapon. He warned that this could lead to an economic "catastrophe" for the United States.

What comes next? In an interview with the British newspaper The Guardian , respected economics professor Peter Odell points out that once-mighty Western oil majors now control just 9% or 10% of the world's oil reserves.

According to Odell, Russian and Chinese state-owned oil companies could make hostile takeover bids for key Western oil companies. With a few bold moves, they could wipe away what little control over the global markets the Western oil majors have left.

Of course, we don't have to allow those takeovers. But countries like China and Russia could simply refuse to do business with any Western oil company they can't buy.

The problem is clear. And unfortunately, it doesn't just apply to oil. The same scenario is playing out in other areas like strategic metals – copper, nickel, tungsten, uranium, and more. Supplies are getting tight, and countries like China and Russia are both slowing down their exports of these metals, and running around the world to lock up any other available supplies.

The Good News: We Can Still Win and You Can Make Money in the Process

Make no mistake, this is a dangerous situation. And it's all the more dangerous considering the insane clown posse we have running Washington.

However, there will be winners in this global war for natural resources, and I still believe many of them will be right here at home. I'm talking about the oil explorers and producers … the operators of miners and mills … and other natural resource companies right here in the U.S.

A flood of money will continue pouring into these markets, and plenty of American companies are finding resources both at home and in friendly countries that won't slam them with sudden tax hikes or outright takeovers. On top of that, many of these stocks are trading at dirt-cheap valuations! But they won't stay that way for long.

If you want to take a diversified approach, you can always invest in a nice natural resources mutual fund like U.S. Global Investors Global Resources Fund (PSPFX). This no-load fund has a low expense ratio of 1.3% and should make the most of the next flood of money into global energy.

But for real outperformance, I'm sticking with the individual companies that will make the most of the global rush for natural resources. And here's the simple three-step approach I'm going to take ... it's one that you can apply to your own trading:

  1. I'm going to pick my investments by looking at both the fundamental and technical pictures.
  2. Then, I'll pick a price I'm willing to pay, along with two profit targets (one short-term and one longer-term). I'll also figure out where my stop-loss will be. That way if the trade goes against me, I'll get out with a small loss rather than a big one.
  3. Because nothing goes up in a straight line, I'll go long or short. I won't get married to an investment – the goal will be get in, make quick profits, and get out.

That's the approach I'm taking with my new service, Red-Hot Resources . No big explanations … no long holding periods … just quick trades for serious traders, backed by macro — and micro-analysis. If that sounds like something you're interested in, you can find out more by CLICKING HERE or calling 800-430-3683.

I'll be making the first trade early next week. After all, the race for natural resources is only going to escalate from here. Get in early or you just might miss the boat.

Yours for trading profits,

Sean Brodrick

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in