The Federal Reserve is trapped and bluffing.#-ad_banner-# While the market worries about the Fed reducing the size of its monthly bond purchases, I predict the exact opposite will continue to happen for at least through next December after the midterm elections. The most powerful central bank in the world will actually increase spending. And because of that, two companies in one forgotten sector could see triple-digit gains in coming months, and they’re already sporting rare yields as high as 7.1%. I’ll share specific details on these investments in a moment. First, here’s why I think the Fed is… Read More

The Federal Reserve is trapped and bluffing.#-ad_banner-# While the market worries about the Fed reducing the size of its monthly bond purchases, I predict the exact opposite will continue to happen for at least through next December after the midterm elections. The most powerful central bank in the world will actually increase spending. And because of that, two companies in one forgotten sector could see triple-digit gains in coming months, and they’re already sporting rare yields as high as 7.1%. I’ll share specific details on these investments in a moment. First, here’s why I think the Fed is trapped and bluffing: As the Fed continues to threaten the market with its stated desire to taper, global economic growth projections continue to decline. Just last week, the Organization for Economic Cooperation and Development (OECD) downgraded its global growth projection for 2014 from 3.1% to 2.7%. It raises the question: If the Fed was unable to pull the trigger on a taper when the global economy was projected to grow 3.1%, how is it going to taper now that the global economy is showing signs of weakness? The answer is, it can’t. The Fed has to keep the money spigot… Read More

The major oil companies (also known as Supermajors) have long been known for their steady growth and cash flow generating capabilities. This has translated into share buybacks and rock solid dividends for investors.#-ad_banner-# But what happens when the United States threatens to become energy independent? Well, that would seem to be great news for the major oil companies that have exposure to the fast growing oil and gas shale plays scattered across the United States. The International Energy Agency (IEA) believes the United States can become the world’s top oil producer by 2015, with complete self-sufficiency being achieved in less… Read More

The major oil companies (also known as Supermajors) have long been known for their steady growth and cash flow generating capabilities. This has translated into share buybacks and rock solid dividends for investors.#-ad_banner-# But what happens when the United States threatens to become energy independent? Well, that would seem to be great news for the major oil companies that have exposure to the fast growing oil and gas shale plays scattered across the United States. The International Energy Agency (IEA) believes the United States can become the world’s top oil producer by 2015, with complete self-sufficiency being achieved in less than two decades. The Supermajors that are leveraged to oil production will be the biggest benefactors. There’s one major U.S. oil and gas company that is heavily levered to liquids, as opposed to lower margin natural gas. This same company has also transformed itself into the largest U.S. exploration and production company, having divested its lower growth downstream operations. This Supermajor looks to be one of the markets best investments for 2014, while also paying the highest dividend in the exploration and production (E&P) space. With a 4% dividend yield, ConocoPhillips (NYSE: COP) is that company. However, it’s not just… Read More

Following the basic rules of supply and demand can yield winning investment strategies — regardless of the industry.#-ad_banner-#​ Of course, this rule holds more weight in the commodities sector than any other. Falling supply and rising demand can yield robust gains, though this entire asset class has gone the wrong way in 2013. Supply has overwhelmed demand, and the prices for most commodities have been flat to down. The PowerShares DB Commodity Index ETF (NYSE: DBC), which tracks energy, mining and agricultural commodity prices, is off nearly 10% this year, badly lagging the S&P 500’s 25% gain. Read More

Following the basic rules of supply and demand can yield winning investment strategies — regardless of the industry.#-ad_banner-#​ Of course, this rule holds more weight in the commodities sector than any other. Falling supply and rising demand can yield robust gains, though this entire asset class has gone the wrong way in 2013. Supply has overwhelmed demand, and the prices for most commodities have been flat to down. The PowerShares DB Commodity Index ETF (NYSE: DBC), which tracks energy, mining and agricultural commodity prices, is off nearly 10% this year, badly lagging the S&P 500’s 25% gain. In response to falling prices for many commodities, producers have been restraining output, and if the laws of economics apply, then supply should fall below the levels of demand, leading prices to firm up. That process is surely underway in many areas, but unfortunately will take a considerable amount of time to play out. Here’s a deeper breakdown of specific commodity trends, and how they will likely fare in 2014. Gold And Silver​ When companies decide to invest millions to develop a gold or silver mine, then they better have a long-term focus. It can take years… Read More

There are many different approaches that an investor can use to succeed. The key is to find the approach that works for you.#-ad_banner-#​ Personally, I operate best when I think of a stock as a small ownership interest in a company and not a piece of paper to be traded on a frequent basis. My approach is to buy shares in a company I like at an attractive valuation and let management build wealth for me over the long term.  That said, if I had the ability to be a market timer, that is what I would do. Read More

There are many different approaches that an investor can use to succeed. The key is to find the approach that works for you.#-ad_banner-#​ Personally, I operate best when I think of a stock as a small ownership interest in a company and not a piece of paper to be traded on a frequent basis. My approach is to buy shares in a company I like at an attractive valuation and let management build wealth for me over the long term.  That said, if I had the ability to be a market timer, that is what I would do. It would be far less stressful (not to mention rewarding) if I could accurately time the low point for a stock and buy only then.  Ordinarily I’m very skeptical of my ability to pick the bottom for a stock — but today, I have a pretty good feeling about one. The company is Canadian light oil producer Lightstream Resources (OTC: LSTMF). I think this month could represent a long-term bottom for a company turning a corner. Lightstream has a market capitalization of over $1 billion and production exceeding 46,000 barrels of oil equivalent (BOE) a day. If you name a… Read More

Insiders in the natural resource business often talk about “shopping season” this time of year. But they’re not referring to Christmas presents. As I’ve discussed before (see “The Little-Known ‘Glitch’ That Could Lead To 53% Gains), this is the time of year when many natural resource investments can be had at bargain prices.  This is particularly true for the smaller firms that my premium natural resource newsletter, Junior Resource Advisor, was created to focus on — the kind of companies that offer potential for double- or even triple-digit gains through the discovery of major mineral or petroleum deposits. #-ad_banner-#This month’s… Read More

Insiders in the natural resource business often talk about “shopping season” this time of year. But they’re not referring to Christmas presents. As I’ve discussed before (see “The Little-Known ‘Glitch’ That Could Lead To 53% Gains), this is the time of year when many natural resource investments can be had at bargain prices.  This is particularly true for the smaller firms that my premium natural resource newsletter, Junior Resource Advisor, was created to focus on — the kind of companies that offer potential for double- or even triple-digit gains through the discovery of major mineral or petroleum deposits. #-ad_banner-#This month’s buying opportunity is upon us — ironically — because 2013 has been a difficult year for many resource companies. With commodities prices falling, a large number of firms have seen their share prices decline. Sentiment has in fact turned down to such a degree that many of these firms are selling for cash flow multiples lower than we’ve seen in decades. I’ve been purchasing a number of these companies for my portfolio over the past few months. One such company I recently told my Junior Resource Advisor subscribers about is selling for less than twice its after-tax income. The thing… Read More

After steadily returning an average of 18% a year for the past decade, gold is headed for its first annual loss since 2000. All told, gold prices have fallen over $450 an ounce since January — a 27% decline in just under 12 months.     In part, the gold market is suffering thanks to the economic recovery. Since gold is usually seen as a “safe haven” investment, an improving economy puts downward pressure on gold prices. Other headwinds include low inflation rates… surging equity values… and an overwhelmingly bearish sentiment facing commodities altogether. #-ad_banner-#Before I go any further though,… Read More

After steadily returning an average of 18% a year for the past decade, gold is headed for its first annual loss since 2000. All told, gold prices have fallen over $450 an ounce since January — a 27% decline in just under 12 months.     In part, the gold market is suffering thanks to the economic recovery. Since gold is usually seen as a “safe haven” investment, an improving economy puts downward pressure on gold prices. Other headwinds include low inflation rates… surging equity values… and an overwhelmingly bearish sentiment facing commodities altogether. #-ad_banner-#Before I go any further though, I want to note that it’s never a bad idea to devote at least a small portion of your portfolio to precious metals. Since these assets are generally insulated from rising price levels, metals like gold are a good way to hedge against inflation risk. But gold bullion is not the subject of today’s essay. Instead of touting the monetary benefits of the world’s oldest currency, I want to tell you about one of the most overlooked (and misunderstood) areas of the gold market…  I’m talking about gold stocks. “Gold stocks” is a financial synonym for gold mining companies —… Read More

The appeal of clean energy stocks is evident. Billions of dollars are at stake as the world tries to wean itself off fossil fuels.#-ad_banner-# There can be little doubt that clean energy will account for at least 20% to 30% of our total energy picture a few decades from now. But the road is bound to be bumpy. The sudden plunge in solar stocks in 2011 and 2012 — not to mention their remarkable rebound this year — highlights just how risky these clean energy stocks can be. Indeed, many investors have concluded that they just can’t stomach that degree… Read More

The appeal of clean energy stocks is evident. Billions of dollars are at stake as the world tries to wean itself off fossil fuels.#-ad_banner-# There can be little doubt that clean energy will account for at least 20% to 30% of our total energy picture a few decades from now. But the road is bound to be bumpy. The sudden plunge in solar stocks in 2011 and 2012 — not to mention their remarkable rebound this year — highlights just how risky these clean energy stocks can be. Indeed, many investors have concluded that they just can’t stomach that degree of risk. But there is a better way: a focus on companies that already derive significant revenue streams in support of clean energy projects. These stable firms don’t own breakthrough technologies, but they are helping the industry pioneers to scale up their production. And in light of the long-term future for clean energy, these firms face robust growth potential. My favorite pick in this group: Spain’s Abengoa (Nasdaq: ABGB), which derives more than $10 billion in annual sales by helping construct clean energy power plants, water desalination systems, biofuel production facilities and highly efficient energy transmission networks. Abengoa’s Steady… Read More

People ask me about my most profitable investment. It was an investment I made back in October 1999. Today, it pays me a yield equivalent to 27%, and it has forever changed how I look for income opportunities. #-ad_banner-#In 1999, I was speaking at an economic conference in New York. During one of the breaks, I struck up a conversation with two gentlemen who both happened to work in the oil and gas business. At the time, I was doing some consulting work for a lawsuit involving a number of large oil companies and had been knee-deep in oil price… Read More

People ask me about my most profitable investment. It was an investment I made back in October 1999. Today, it pays me a yield equivalent to 27%, and it has forever changed how I look for income opportunities. #-ad_banner-#In 1999, I was speaking at an economic conference in New York. During one of the breaks, I struck up a conversation with two gentlemen who both happened to work in the oil and gas business. At the time, I was doing some consulting work for a lawsuit involving a number of large oil companies and had been knee-deep in oil price and production data. Oil and natural gas prices had been on a steady 20-year decline following the “oil shock” of 1979. By the time 1999 rolled around, analysts had universally soured on the sector. Prices were going lower, they said. In March 1999, The Economist devoted a whole issue to the glut of world oil.  Discussing the future price for oil, The Economist said, “$10 [per barrel] might actually be too optimistic. We may be heading for $5.” In October 1999, I didn’t agree with the analysts or the common view that oil prices were going to sink lower. As… Read More

Gold is getting hammered, and the pain in the sector is putting gold bulls in a panic. The yellow metal is down more than 27% year to date, and in just the past month, gold prices have tumbled more than 7%.#-ad_banner-#​ The latest decline in gold came on Tuesday, when it traded lower by as much as 2.7%, breaking down below very weak support levels around $1,225. About the only hope for gold longs here is to pray for a bad jobs number Friday, as that may keep the Federal Reserve from tapering sooner rather than later. Yet… Read More

Gold is getting hammered, and the pain in the sector is putting gold bulls in a panic. The yellow metal is down more than 27% year to date, and in just the past month, gold prices have tumbled more than 7%.#-ad_banner-#​ The latest decline in gold came on Tuesday, when it traded lower by as much as 2.7%, breaking down below very weak support levels around $1,225. About the only hope for gold longs here is to pray for a bad jobs number Friday, as that may keep the Federal Reserve from tapering sooner rather than later. Yet aside from prayer, what can a precious metal investor do if he wants to stay in metals but get out of the sinking ship that is gold? One answer would be to seek shelter in another precious metal, one that’s also benefiting from strong industrial demand tailwinds, and that metal is palladium. Rather than trading palladium on the commodities futures market, a prospect I find fraught with difficulty, I prefer to use exchange-traded funds (ETFs) such as the ETFS Physical Palladium Shares (NYSE: PALL). PALL has held up very well this year when compared with other precious metals. The ETF… Read More

It’s no secret that there’s a horizontal oil boom happening in the United States today. What is less appreciated is how unique this boom is to the United States. There are lots of places in the world that have oil in the ground that horizontal drilling and multi-stage fracturing could exploit. But more is required than just having the oil. The U.S. is unique in that it provides the perfect combination of the ingredients necessary to allow for the horizontal revolution to take off.#-ad_banner-# Let’s tick the boxes on these ingredients. First, the U.S. has the oil in the ground… Read More

It’s no secret that there’s a horizontal oil boom happening in the United States today. What is less appreciated is how unique this boom is to the United States. There are lots of places in the world that have oil in the ground that horizontal drilling and multi-stage fracturing could exploit. But more is required than just having the oil. The U.S. is unique in that it provides the perfect combination of the ingredients necessary to allow for the horizontal revolution to take off.#-ad_banner-# Let’s tick the boxes on these ingredients. First, the U.S. has the oil in the ground trapped in large quantities in tight/shale oil rocks that horizontal wells and multi-stage fracturing can exploit. Second, the U.S. already has in place a network of thousands of miles of pipelines that were originally used to develop conventional oil plays. Third, the U.S. has the thousands of drilling rigs required that are needed to drill these unconventional fields that have low rate wells and require constant drilling. Fourth, the U.S. has the thousands of skilled energy workers required to accomplish the massive amount of drilling, fracturing and completion work that is required. Fifth and perhaps most importantly, the United States… Read More