Think about how much money you would have made had you bought property in the Bakken Shale eight years ago… #-ad_banner-#As recently as 2006, an acre of land in this desolate North Dakota region was selling for as little as $500. That means back then you could have purchased a 200-acre plot for no more than $100,000. Then the “American Energy Boom” hit. Suddenly, acreage that was once thought of as worthless farmland instantly became invaluable as people became aware that the Bakken was home to massive amounts of untapped oil and gas reserves. As a result, today that same… Read More

Think about how much money you would have made had you bought property in the Bakken Shale eight years ago… #-ad_banner-#As recently as 2006, an acre of land in this desolate North Dakota region was selling for as little as $500. That means back then you could have purchased a 200-acre plot for no more than $100,000. Then the “American Energy Boom” hit. Suddenly, acreage that was once thought of as worthless farmland instantly became invaluable as people became aware that the Bakken was home to massive amounts of untapped oil and gas reserves. As a result, today that same 200 acres could be worth over $4 million… Landowners weren’t the only ones who would have gotten rich on the deal either. Investors in companies exploring the Bakken were rewarded with small fortunes as floods of new capital poured into the region. For example, Kodiak Oil & Gas (NYSE: KOG), one of the first companies to start drilling here, ran from $0.25 a share in 2009 to $11.81 today — a staggering 4,438% gain over that time. It’s the same story for Continental Resources (NYSE: CLR) and Painted Pony Petroleum (TSX: PPY), two of the other major players… Read More

I love reading emails from subscribers. And in my capacity as Chief Investment Strategist for three of StreetAuthority’s most popular newsletters, I get a lot of them. I try to answer as many as I can, and even make a point to feature some of the best reader questions in my issues. One email recently came to my inbox that I thought was worth sharing with subscribers. I notice that the majority of companies in your portfolio are in the mining sector. Do you also cover oil and gas? — Tom W., Plover, Wis. The answer is an emphatic… Read More

I love reading emails from subscribers. And in my capacity as Chief Investment Strategist for three of StreetAuthority’s most popular newsletters, I get a lot of them. I try to answer as many as I can, and even make a point to feature some of the best reader questions in my issues. One email recently came to my inbox that I thought was worth sharing with subscribers. I notice that the majority of companies in your portfolio are in the mining sector. Do you also cover oil and gas? — Tom W., Plover, Wis. The answer is an emphatic yes. The petroleum sector has treated me very well over the years — one of my first recommendations as an analyst was Russian oil explorer Valkyries Petroleum, which returned 186% in under a year. #-ad_banner-#That said, there’s a well-worn saying among commodities investors: “If you’re not a contrarian, you’re a victim.” Natural resources are notoriously cyclical: When they’re at a low, they’re likely to go higher. And conversely, when a sector is flying high, there may be considerable downside ahead when the inevitable pullback or complete bust comes. The oil and gas sector strikes me more as the latter these… Read More

When it comes to commodities, investors typically make a classic mistake: They shun them when they are out of favor, and they load up on them when prices are surging. The contrarian view is so much more profitable. #-ad_banner-#For example, I noted a few months ago that an extended period of oversupply had pushed coffee prices down to multi-year lows, but added that “signs are emerging that current coffee prices are causing too much distress among coffee growers. Yearlong protests in Brazil, the world’s largest coffee producer, has led the government to take action to prop up prices. The iPath… Read More

When it comes to commodities, investors typically make a classic mistake: They shun them when they are out of favor, and they load up on them when prices are surging. The contrarian view is so much more profitable. #-ad_banner-#For example, I noted a few months ago that an extended period of oversupply had pushed coffee prices down to multi-year lows, but added that “signs are emerging that current coffee prices are causing too much distress among coffee growers. Yearlong protests in Brazil, the world’s largest coffee producer, has led the government to take action to prop up prices. The iPath Pure Beta ETN (Nasdaq: CAFE), which had lost more than 30% of its value at that point in 2013, has rebounded 50% since then. Coffee prices are simply responding to the first rule of economics: Falling prices lead to falling supply, which eventually moves below levels of demand, providing a boost to prices. In the case of coffee, a change in growing conditions also affected those factors. Indeed, the impressive rebound in gold prices and natural gas prices are also the result of changes in demand. The factors impacting coffee, gold and natural gas are specific to those commodities and… Read More

It’s funny where money is made sometimes. I have a friend who decided a decade ago to buy a bankrupt motel in the middle of the swamp in northern Alberta. Most of the passers-by here were forestry workers, dropouts looking for a place to disappear, or migratory birds.  At the time, it seemed crazy. #-ad_banner-#I saw the same friend a few years after the purchase. The hotel, he told me, was booked solid for the next five years — upward of 300 rooms at $250 per night.  The modest investment paid him millions over the course of the next several… Read More

It’s funny where money is made sometimes. I have a friend who decided a decade ago to buy a bankrupt motel in the middle of the swamp in northern Alberta. Most of the passers-by here were forestry workers, dropouts looking for a place to disappear, or migratory birds.  At the time, it seemed crazy. #-ad_banner-#I saw the same friend a few years after the purchase. The hotel, he told me, was booked solid for the next five years — upward of 300 rooms at $250 per night.  The modest investment paid him millions over the course of the next several months.  This incredible turnaround was spurred by some big changes in the area that were driven by natural resources development. My friend bought the hotel just as the oil industry in that part of the world was on the cusp of commercializing vast deposits of unconventional petroleum lying just below the swamps. Those billion-barrel fields would quickly become such a big story in the petroleum business that the formerly unknown town became a household name on the tongues of politicians, industrialists and investors globally. That place was Fort McMurray — ground zero for the development of the Canadian oil sands. Read More

In hindsight, the gold bugs were operating under the wrong investment thesis. They assumed that aggressive stimulus policies by the Federal Reserve and other central banks would lead to ruinous inflation. Yet after more than $1 trillion in stimulus — in just the U.S. — price pressures have been non-existent. Europe is even treading perilously close to deflation these days. Yet as 2013 turned out to be a miserable year for gold investors, the precious metal has made a sharp U-turn in 2014. Surging demand from China has pushed gold prices to four-month highs. Chinese consumers bought more than 1,000… Read More

In hindsight, the gold bugs were operating under the wrong investment thesis. They assumed that aggressive stimulus policies by the Federal Reserve and other central banks would lead to ruinous inflation. Yet after more than $1 trillion in stimulus — in just the U.S. — price pressures have been non-existent. Europe is even treading perilously close to deflation these days. Yet as 2013 turned out to be a miserable year for gold investors, the precious metal has made a sharp U-turn in 2014. Surging demand from China has pushed gold prices to four-month highs. Chinese consumers bought more than 1,000 tons of gold in 2013, according to the World Gold Council, as investors seek a safe haven at a time when real estate prices appear to be in a bubble. #-ad_banner-#Yet investors shouldn’t be assuming that we’re now at the start of a fresh bull market in gold. The “gold as inflation hedge” strategy is officially dead, and although China and India remain active buyers of gold, many central banks are in the process of shedding their gold hoards. Some investors may be getting carried away with renewed bullishness for gold. The Market Vectors Junior Gold Miners ETF… Read More

For the past decade, investors, government regulators, and concerned citizens have focused on a pair of catchphrases: “climate change” and “off the grid.” #-ad_banner-#The rapid deployment of solar and wind power played into both of those themes. These power sources generate zero pollution and can help to reduce demand on the world’s aging electrical grid. Yet as I just noted in my recent review of a new set of rising stars in the clean energy space, hydrogen power suddenly has a new lease on life. Through hydrolysis, the universe’s most abundant element can be used to create electricity while producing… Read More

For the past decade, investors, government regulators, and concerned citizens have focused on a pair of catchphrases: “climate change” and “off the grid.” #-ad_banner-#The rapid deployment of solar and wind power played into both of those themes. These power sources generate zero pollution and can help to reduce demand on the world’s aging electrical grid. Yet as I just noted in my recent review of a new set of rising stars in the clean energy space, hydrogen power suddenly has a new lease on life. Through hydrolysis, the universe’s most abundant element can be used to create electricity while producing zero emissions. A range of companies are now seeing steadily rising sales as they develop hydrogen-powered fuel cells for a range of applications. The key phrase there: “a range of companies.” Though this technology is undeniably exciting and will likely play a key role in our energy future, there are so many companies working to lure customers that competition is fierce and pricing is tough. That’s why I suggested caution with Plug Power (Nasdaq: PLUG) and FuelCell Energy (Nasdaq: FCEL). In 2012, these firms had gross margins of minus 55% and 4%, respectively. They may look to make it up… Read More

For a brief moment in 2006, the hallways at Ballard Power (Nasdaq: BLDP) were filled with good cheer. President George W. Bush had just touted the promise of hydrogen power in his State of the Union address, and Ballard’s shares tripled nearly overnight. Yet those high hopes for the company — and its investors — were soon dashed. Ballard didn’t see any bump in revenues, and shares eventually crashed to fresh all-time lows. #-ad_banner-#Ballard’s not alone. Key rivals in the emerging field of alternate power generation also went into hibernation after that bout of euphoria in 2006. Hopes… Read More

For a brief moment in 2006, the hallways at Ballard Power (Nasdaq: BLDP) were filled with good cheer. President George W. Bush had just touted the promise of hydrogen power in his State of the Union address, and Ballard’s shares tripled nearly overnight. Yet those high hopes for the company — and its investors — were soon dashed. Ballard didn’t see any bump in revenues, and shares eventually crashed to fresh all-time lows. #-ad_banner-#Ballard’s not alone. Key rivals in the emerging field of alternate power generation also went into hibernation after that bout of euphoria in 2006. Hopes for this industry rose anew after the election of President Barack Obama. He had been expected to be a supporter of such companies, but their revenue bases failed to get any sort of traction in the first years of his presidency. (Recently, the Obama administration has thrown renewed support for hydrogen power and fuel cell technologies, though at much more modest levels than had once been expected.) Despite the lack of massive government support, these alternative energy stocks are back — in a big way. Ballard Power, along with its peers, is in the midst of… Read More

I have a small television in my office tuned to CNBC. I keep the sound off. It’s not that I rely on it for information — rather, I like to have some idea of what the herd is thinking and what they’re being told. As always, the whole story isn’t being discussed. #-ad_banner-#So far this year, the Dow Jones Industrial Average and the broader S&P 500 Index are off about 3.7% and 1.6%, respectively. Although these seem like modest pullbacks, many investors remain nervous for a couple of reasons.  First, 2013 brought the type of outsize gains that haven’t been… Read More

I have a small television in my office tuned to CNBC. I keep the sound off. It’s not that I rely on it for information — rather, I like to have some idea of what the herd is thinking and what they’re being told. As always, the whole story isn’t being discussed. #-ad_banner-#So far this year, the Dow Jones Industrial Average and the broader S&P 500 Index are off about 3.7% and 1.6%, respectively. Although these seem like modest pullbacks, many investors remain nervous for a couple of reasons.  First, 2013 brought the type of outsize gains that haven’t been enjoyed in many years. Second, many investors are still shell-shocked from 2008-2009, so any volatility whatsoever sends them running for cover. If a low-single-digit pullback makes them nervous, the pullbacks I’m about to discuss might really freak them out.  I’ve found a handful of high-quality stocks that are trading at an average discount of 16% to their 52-week highs, with an average dividend yield close to 5%. These are well-run companies — two in high-growth industries — with strong business models. Held as a basket, all three provide excellent diversification. Olin Corp. (NYSE: OLN ) Olin is one of… Read More

It’s been more than two years since gold prices peaked. Since then, precious metal prices have been in a well-defined bear market despite the widespread belief that the Federal Reserve’s stimulus programs would naturally send them higher. #-ad_banner-#Ironically, as the Fed finally begins to taper its bond purchasing program, precious metal prices now appear to be bottoming. Although it may seem counterintuitive at first, the fact that gold is rallying right now actually makes perfect sense. For quite some time, the Fed has kept interest rates artificially low and injected capital into the U.S. economy by purchasing massive… Read More

It’s been more than two years since gold prices peaked. Since then, precious metal prices have been in a well-defined bear market despite the widespread belief that the Federal Reserve’s stimulus programs would naturally send them higher. #-ad_banner-#Ironically, as the Fed finally begins to taper its bond purchasing program, precious metal prices now appear to be bottoming. Although it may seem counterintuitive at first, the fact that gold is rallying right now actually makes perfect sense. For quite some time, the Fed has kept interest rates artificially low and injected capital into the U.S. economy by purchasing massive amounts of Treasury bonds and mortgage-backed securities. Gold bugs claimed that these capital injections would lead to high levels of inflation as more dollars were forced into the financial system. This didn’t happen because the velocity of money was so very low. Despite the low interest rates, banks were not lending capital to borrowers, and businesses were not borrowing money for growth investments. In short, the cash was just sitting stagnant instead of being put to work to help the economy grow. Today, however, the tide is beginning to turn. The U.S. economy is finally showing signs of a recovery,… Read More

Once again, U.S. stocks ended the week with only a small change after high daily volatility. But after two days of large gains to end the week, bear market fears seem to have subsided. Two-Day Rebound Eases Concerns of Market Drop SPDR S&P 500 (NYSE: SPY) gained 0.84% last week. The small gain masks the size of the moves seen during the week. SPY traded as low as $173.71 on Wednesday and as high as $179.87 on Friday, a jump of 3.55% from low to high in only two days. That two-day gain retraced about half of… Read More

Once again, U.S. stocks ended the week with only a small change after high daily volatility. But after two days of large gains to end the week, bear market fears seem to have subsided. Two-Day Rebound Eases Concerns of Market Drop SPDR S&P 500 (NYSE: SPY) gained 0.84% last week. The small gain masks the size of the moves seen during the week. SPY traded as low as $173.71 on Wednesday and as high as $179.87 on Friday, a jump of 3.55% from low to high in only two days. That two-day gain retraced about half of the market’s January decline.#-ad_banner-#​ Friday’s gains came after the unemployment report delivered data consistent with slow but steady economic growth. The unemployment rate fell to 6.6%, just above the Federal Reserve’s target of 6.5%. The recently popular workforce participation rate increased slightly, and the number of long-term unemployed and discouraged workers fell slightly. While employment gains are slow, the most recent report was consistent with economic expansion. In the past, recessions have started when the unemployment rate drops below the level the Fed considers to be the natural level of unemployment. Right now, the Fed believes full employment would be… Read More