Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

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

6 Critical Money Making Rules