Briton Ryle - Angel Publishing

Most Investors Don't Know This Oil Secret...

As a loyal reader of Wealth Daily, you've probably heard plenty about North Dakota's Bakken oil pool.

After all, we were among the first investors to recognize the incredible potential of this unique shale oil formation... and Wealth Daily readers have gotten the profitable details on top Bakken oil producers since 2007.

So, you may be interested to know that the latest assessments flowing out of the Bakken suggest there is much more light, sweet crude there than previously believed...

I'll to get right to the point.

Here are a couple quotes from two of the biggest oil companies in the Bakken, Continental (NYSE: CLR) and EOG Resources (NYSE:EOG).

From Continental's CEO Harold Hamm:

"The latest game changer is the Three Forks lower benches. We've literally found an additional oil saturated reservoir in the Bakken that again, makes this world-class oil play bigger and better."

From Continental's President Jeff Hume:

"I believe we just have a larger petroleum storage system than we previously thought, and the reserves will increase as we get that data in hand, and that will be later this year."

From Continental's Senior VP Jack Stark:

"Continental acquired 6 cores of the entire Three Forks formation in 2011 and discovered there were up to 3 additional layers within the Three Forks formation. The significance of this discovery, and what makes it such a game changer, is that the volume of oil in play for the field almost doubles with these added reservoirs."

And from EOG CEO Mark Pappas:

"...we have more potential upside and growth opportunities than we've previously indicated... we're much more excited than we were a year ago about our remaining Bakken and Three Forks potential."

These insiders are estimating Bakken recoverable oil reserves may be 60% higher than currently thought... and it all has to do with layers.

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Shale is a sedimentary rock, meaning it is layered. Further exploration keeps turning up deeper layers of oil-producing shale.

At first it was just the Bakken, the upper level. Then they found the Three Forks Formation beneath the Bakken. Together, the Bakken and the Three Forks have around 3.5 billion barrels of recoverable oil.

More recent drilling revealed the Sanish formation under the Three Forks, which has another 1.5 billion barrels of oil.

But now companies are finding more oil below the Sanish level — and they're pretty excited about it.

Continental is in the process of selling off other assets and plans to focus all of its future spending on its Bakken holdings.

That's right, Continental — the same company that drilled the very first Bakken well in 1995 — is going "all in" on the Bakken.

Knock, Knock: This is Opportunity

The vast majority of investors have never heard of the Bakken.

Even those who know about the Bakken don't know that there could be 60% more oil there.

This is what you might consider "breaking news."

The U.S. Geological Survey is currently reassessing the Bakken's recoverable reserves. Results are due in 2013, but I guarantee the "whispers" will begin circulating sooner than that. In fact, they may have already started.

Oil prices have dropped sharply over the last few weeks as investors are terrified of what the lunatics in Greece will do next...

And they've pushed my favorite Bakken stocks down to the point where they trade with P/Es of 7, even 5! If reserve estimates jump 60%, these P/Es would effectively be 3 and 4.

But don't worry — those ultra-low P/Es won't last...

Stay tuned,

Briton Ryle
Analyst, Wealth Daily

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Is This CEO a Crook?

Aubrey McClendon was once a Wall Street and investor favorite as he grew Chesapeake Energy (NYSE: CHK) to be the second largest natural gas company in America, after ExxonMobil (NYSE: XOM).

His seemed like a “can't miss” business plan...

In 2008, as natural gas traded for $14 per mcf, the stock hit $70 a share.

Even in 2011, Chesapeake netted nearly $2 billion in profits.

As CEO of Chesapeake, McClendon cashed in. In 2009, his compensation was better than $100 million.

McClendon is currently a billionaire... but he may not be for long.

This CEO Accidentally Reveals a Big Secret

Experts say North Dakota's Bakken Oil Pool may hold 4-6 billion barrels of sweet, light crude.

But the CEO of the biggest Bakken oil company just let it slip that there's as much as 24 billion barrels.

The thing is, there's very little land left for drilling leases...

And that means Bakken oil companies may be worth 300%-400% more than most investors now believe.

You can watch this CEO's incredible video footage HERE.

Not much has gone right for Chesapeake — or for McClendon — lately...

The natural gas behemoth has been on the wrong side of plummeting natural gas prices.

To make matters worse, Chesapeake has spent more than $10 billion of natural gas and oil leases over the last five years.

The company now carries $13 billion in debt, for an awful debt-to-equity ratio of 69.

Analysts' estimates for future profitability have been falling just as quickly as natural gas prices, and the stock price has been falling as fast as Aubrey McClendon's credibility.

From Bad to Worse for Chesapeake

As if saddling Chesapeake with an incredible amount of debt wasn't bad enough, the SEC and the IRS are now investigating the fact that McClendon has taken out more than $1 billion in loans from his company.

One of McClendon's perks as CEO was that he could buy 2.5% of the output of all of Chesapeake's well operations.

It has come to light that he borrowed the money to fund the purchases from Chesapeake, and used the wells as collateral. Not only that, but McClendon reportedly ran a $400 million hedge fund that traded the very same energy futures that Chesapeake used as hedging mechanisms.

If that's not a conflict of interest, I don't know what is.

Aubrey McClendon has already been removed from Chesapeake's Board of Directors. Personally, I don't think he'll survive as CEO much longer.

And with Chesapeake's scattershot plan to fix its debt problems by selling natural gas assets and buying oil assets, investors have to wonder if the company itself will survive.

All this just as natural gas prices appear to be putting in a very important bottom for prices...

Natural Gas Prices Bottoming?

I want to be clear: I do not recommend owning the U.S. Natural Gas Fund (NYSE: UNG) for anything but a short-term trade.

The strategy of this ETF is broken and it perpetually loses value over the long term.

Still, in the short term it is useful for tracking important shifts in natural gas prices.

This is a two-year chart for the U.S. Natural Gas Fund.

It's ugly. Real ugly. But it's virtually impossible to miss the “V”-shaped bottom natural gas is making.

Why are natural gas prices moving higher? Because prices FINALLY reached the point where they were simply too low to ignore.

Where companies once depended on incentives to convert to natural gas, the cost savings of natural gas compared to other energy sources are now driving investment.

Manufacturers are switching to natural gas to run factories.

Utilities are buying natural gas turbines from General Electric (NYSE: GE) to generate electricity.

Truck and bus fleets are using more natural gas vehicles, because nat gas can save as much as $2 a gallon over diesel fuel. And natural gas pumps are cropping up at gas stations in states from Texas and Oklahoma to Florida and Illinois.

What's more, the U.S. government may limit natural gas exports to encourage use (and supply) here in America.

We are the very start of a huge bull market for natural gas.

Aubrey McClendon and Chesapeake may miss the coming boom time for natural gas, but you don't have to...

There are some terrific values in natural gas stocks right now. Some of these companies have very low debt and will do very well as natural gas prices rise.

These are the companies you want to position yourself in now.

Good investing,

Briton Ryle
Analyst, Wealth Daily

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What's Wrong with the U.S. Economy

Earlier this week, on Wednesday, the Durable Goods Orders number came in at -4.2%.

Durable Goods are defined as goods whose intended lifespan is three years or more. This report includes everything from washing machines to airplanes.

The Durable Goods report is considered an important leading indicator for the manufacturing sector.

So when Durable Goods Orders shrink by 4.2%, it's not a good thing. In fact, such a negative reading can stop a bull market in its tracks.

That's what happened last summer...

On July 27, 2011, Durable Goods number came in at -2.1%. It was dismal.

The S&P 500 had been flirting with 1,350 prior to that release. Nine trading days later, the S&P 500 had peeled off 237 points.

That's a 17% drop in just trading nine days.

It was only the potential for more quantitative easing from the Fed that kept that decline from becoming a crash...

Yukon Mushroom Picker Uncovers $160 Million Gold Deposit

His work has already netted him over $6 million...

And now hundreds of mining companies are flocking to this small part of Canada to secure their claim.

But you don't have to be a mushroom farmer or major mining company to profit from this new Yukon gold boom.

Click here for more information on how you can secure your own 127% gains.

The Fed answered with Operation Twist on September 21, 2011.

Now, let's fast-forward to this week's data. Not only did Durable Goods come in far worse than expected (the consensus estimate was for a decline of -2.5%), but GDP for the first quarter came in much worse than expected, at 2.2%.

The stock market hasn't started plunging on this, but investors are probably still asking themselves: What's wrong with the U.S. economy?

What's Wrong? Good Question...

Before we get to this question, let me start by saying you can never trust a headline number. You always have to read the fine print. And the details of first quarter GDP weren't as bad as the headline.

First and foremost, personal consumption (spending) was up 3%. Exports were also up, though only slightly, and residential investment was up nearly 20%.

So why does the headline number look so weak?

Overall, government spending fell for the sixth straight quarter. I think we'd all agree that this is actually a good thing.

And if the U.S. economy can continue to expand and push the unemployment rate down at the same time as government spending shrinks... well, that's the best possible outcome.

When you compare the U.S. solution for debt to Europe's, you can only conclude that the U.S. has done a far better job at balancing growth with spending cuts.

So, what's wrong with the U.S. economy?

It's the same thing it has been: debt, housing and unemployment.

We've known for a while now that there's only one cure for these ailments: time.

The Outlook for QE3

The stock market didn't sell off in reaction to weak Durable Goods and GDP.

In fact, stocks rallied.

There should be no doubt that part of the reason for optimism is that the Fed has said it would do more to help if the economy weakens. And by "help" the Fed means more quantitative easing.

Personally, I don't think the Fed will embark on QE3. There's just too much risk of inflation.

What's more, I think the Fed is better off showing some confidence in the U.S. economy, rather than reverting to more stimulus.

I'd love to hear Bernanke say the economy is doing better than expected at this stage of the recovery. (It won't happen, of course.)

What Should You Invest in Now?

I expect most investors would be surprised to see it, but Real Estate Investment Trusts (REITs) have been among the strongest stocks so far this year — an impressive turnaround for a sector that was absolutely crushed by the financial crisis.

But the combination of large dividends and upside potential makes these stock very attractive, especially in the current low-growth environment.

In fact, Canadian REITs are at a five-year high as office vacancies have dropped to just 8.2%.

Even better, office property values are expected to rise between 10% and 20% in Canada this year.

You'd be smart to keep an eye on REITs in our neighbors to the north until the U.S. economy finds its footing once again.

Until next time,

Briton Ryle
Analyst, Wealth Daily

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Gasoline Prices to Jump 15% (at least) in May

It doesn't please me in the least to tell you this. But gasoline prices are about to move higher by as much as 15% to 20%. I'm not saying this because of any mysterious patterns on the oil price chart...

And the reason has nothing to do with how much oil is being produced, or how much Americans are driving their cars...

No, the reason that gasoline prices about to go higher has to do with the fact that America's oil production is landlocked. The primary oil hub for the U.S. is located in Cushing, Oklahoma – hundreds of miles from any port.

There are two benchmarks for crude oil prices: West Texas Intermediate Crude (WTI) and Brent Sea Crude. WTI used to be the global benchmark, back when Texas was the world's biggest crude oil field. Then, as oil production grew around the world, the price of Brent Sea crude became important, too.

As you can see from the following chart, WTI and Brent prices have been roughly the same for years. But at the end of 2010, the prices started to diverge. Brent crude suddenly became more valuable than West Texas crude, even though it's not as “sweet.”

There's a very simple reason why Brent Sea crude prices are so much higher than West Texas prices. It's not demand, it's supply. American oil production is stuck in America. It's landlocked in Cushing, Oklahoma.

Why?

Because there is precious little pipeline capacity to take American oil to export terminals and thereby take advantage of the Brent price. Just about all of our oil goes to Cushing, Oklahoma and gets transported around the U.S.

If you follow the weekly oil inventory numbers, you know that, even though the amount of oil (supply) stored at Cushing fluctuates, there's always millions of barrels on hand.

The latest inventory numbers show that 41.18 million barrels of oil are in storage. And supplies have risen 22.9 million barrels in just the last month.

As for gasoline inventories, we have around 221 million barrels, while we're using around 8.74 million barrels a day. The U.S. is, quite literally, awash in both oil and gasoline.

The Cushing Landlock (not a wrasslin' move)

With so much oil and gasoline on hand, I'm sure many Americans wonder why gas prices still hover around $4 a gallon. It's a valid question, but you really only have to look as far as the margins at the nation's refineries to get an answer.

Valero (NYSE: VLO) is making $0.016 for every dollar's worth of gas they sell. That's it. They aren't even getting their 2 cents worth of profit. Tesoro (NYSE: TSO) isn't much better, with $0.018 per dollar in net profit.

The explosion in U.S. oil production has been a mixed blessing. Unemployment rates are virtually zero in oil areas like North Dakota's Bakken. But Bakken oil companies are forced to take below-market prices for their oil due to the lack of adequate transportation infrastructure. In an extreme example from early February, Bakken oil hit $71 a barrel at Minnesota's Clearbrook terminal as supply overwhelmed pipeline capacity.

It's strange, because Bakken shale oil is very high quality, light, sweet crude. It's much more desirable than the heavy oil coming out of Canada's oil sands.

If only oil from the Bakken and other U.S. fields could access the global market and the $118 per barrel that Brent crude is fetching...

This CEO Accidentally Reveals a Big Secret

Experts say North Dakota's Bakken Oil Pool may hold 4-6 billion barrels of sweet, light crude.

But the CEO of the biggest Bakken oil company just let it slip that there's as much as 24 billion barrels.

The thing is, there's very little land left for drilling leases...

And that means Bakken oil companies may be worth 300%-400% more than most investors now believe.

You can watch this CEO's incredible video footage HERE.

Where There's a Will, There's Seaway

The Seaway oil pipeline is owned by Enbridge (NYSE: ENB) and Enterprise Products Partners (NYSE: EPD). It carries imported oil from Freeport, Texas to Cushing, Oklahoma. At least it will for the next 3 weeks.

On May 17, the Seaway pipeline will reverse its flow. In less than a month, 150,000 barrels of American oil will flow from Cushing to Freeport's refineries and export facilities. By 2013, as much as 400,000 barrels of U.S. oil will have access to the global market and the Brent crude price.

This means the gap between the U.S. oil benchmark WTI (currently $102) and the foreign Brent crude oil benchmark (currently $117) is going to close. WTI prices could make a quick 15% move higher as U.S. oil gets more access to international prices.

Now, I'm not a politician. I can't tell you why we haven't figured out a way to keep U.S. oil here at home and ease the price at the pump. I can't explain how it makes sense to import oil and then export gasoline.

However, I am an investor. And I can tell you that U.S. oil companies will make a lot more money when the price of WTI surges higher. That $71 a barrel for Bakken oil could jump to $100... or higher.

One of my favorite Bakken oil companies is hitting its first year of solid profitability this year. Profits in the current quarter will be 1,300% more than the same quarter last year. For the whole of 2012, profits will be up 700%.

Big Numbers, Big Profits

Those are big numbers, but not surprising as the company goes from being barely profitable to solidly profitable. But earnings will rise 50% a year for the next 5 years. Now that's impressive growth.

Yet there's something that's even more impressive. The forward P/E for the next 12 months is 6.

That's right, 6! Project that out over 24 months and you get a P/E of 3 for 2013.

Exxon and its paltry 7% growth trades with a forward P/E of 9.

You're not going to double your money in 2 years with Exxon. But with this Bakken oil beauty, you could get a triple. Or more.

That's because, in the last quarter, this company had an average sale price (asp) of $85 a barrel due to the hedges it uses. (And for the record, hedges are good because they lock in a sale price and give the company some accounting certainty.) If oil prices run higher, this company will lock in a better sale price. Maybe 20% better. Maybe 30%.

I can also tell you that a jump in average sale price has an exponential effect on earnings. That's because you take no additional costs to sell at a higher price. If $85 a barrel gets you $4 million in net earnings, then $100 a barrel will get you $19 million in earnings.

So, the reversal of flow for the Seaway pipeline is a big catalyst for domestic oil stocks, especially those in North Dakota's Bakken.

Good investing,

Briton L. Ryle
Analyst, Wealth Daily

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Should You Sell in May?

Last year, the S&P 500 peaked on May 2 at 1,370.58.

By early August, it had dropped nearly 20% and was testing support at 1,100...

It took the S&P until last February 2012 to get back to that 1,370 peak.

In 2010, the S&P 500 hit an intra-day high of 1,219.80 on April 26.

By early July, the index hit an intra-day low of 1,010.91. That was a 17% decline — and it took until November for stocks to regain their April highs.

Yes, since the stock market bottomed on March 9, 2009, the simple “sell in May” strategy has been pretty darned effective.

Iran's Threats Could Make You Rich!

It's simple: Tension in the Middle East drives up energy prices.

This also makes the share prices of certain North American companies skyrocket — handing early investors like you massive gains.

The companies that stand to profit the most are outlined in this free report.

So it’s a pretty safe bet that we’re going to hear a lot more about the “sell in May” phenomenon. And we can assume that a lot of investors are going to have itchy trigger fingers poised over the “sell” button.

In fact, based on the price action we’ve seen following the Fed’s recent statements about QE3 — that it may not be necessary — we might suspect investors are playing it safe and not waiting for a late-April/early-May exit point.

But is selling out of stocks just because it’s April really "playing it safe"?

How to Play it Safe — and Still Grow Your Wealth

Bernard Baruch is credited with saying the main purpose of the stock market is to make fools of as many men as possible.

And it’s times like these, when investors become convinced of what’s going to happen next, that the stock market tends to do the exact opposite of what’s expected.

Now, I’m not saying that stocks will continue to rally — even though I can make a strong case for it.

And I’m not saying a multi-month 20% correction is at hand, even though there are risks out there.

What I am saying is that you can avoid the entire question of whether a correction is at hand, and simply keep your investment account growing larger and larger, every month...

Dividend Payments are at Record Highs

Companies on the S&P 500 will pay out more than $23 billion in cash dividends this year. That’s a record.

What’s more, dividend payments are increasing at the fastest pace in a decade.

Right now, investors have an incredible opportunity to lock in rock-solid dividend payments that run as high as 15%.

On top of that, some of the top dividend payers are cutting checks to their shareholders every month.

I’m sure I don’t have to tell you that cash payments go a long way to offsetting any downside the market might have in store for us...

And if the stock market keeps rallying, well, the dividend stocks will rally, too.

Dividend investing really is the best of both worlds.

Good investing,

Briton L. Ryle
Analyst, Wealth Daily

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Do High Gasoline Prices Make People Stupid?

As a Wealth Daily reader, this observation probably doesn’t apply to you.

After all, we’ve been discussing the energy situation in detail for a few years now.

And I know we’ve been “preaching to the choir,” because I see the emails from Wealth Daily readers who’ve nailed down terrific profits from the oil and natural gas stocks we cover...

Still, millions of Americans don’t seem to understand the energy market. It’s as if high prices at the pump are taking IQ points from them — and from our politicians, as well.

A recent Gallup poll found that 85% of U.S. adults believe the president and Congress “should take immediate actions to try to control the rising price of gas.”

I wonder what actions, exactly, these respondents think should be taken?

And do we really think we can lower the price of gasoline in global free market?

The $2.50/Gallon Promise

If he gets the Republican nomination to run for president, Newt Gingrich says he will put his “$2.50 a gallon” slogan on coffee mugs to celebrate his promise to lower gasoline prices for Americans.

GOP hopeful Rick Santorum says, “They [Democrats] want higher energy prices. They want to push their radical agenda on the public…”

House Speaker John Boehner has advised Republicans to tap into American anger over $4/gallon gas to score political points with voters.

Yes, somebody’s got to do something, alright... but what?

Is “Drill, baby, drill” the answer?

Oil Leases and the SPR

President Obama has responded by promising a coordinated release from the Strategic Petroleum Reserves.

But that doesn’t change the fact that the Obama administration hasn’t exactly been rolling out new offshore drilling leases — though leases have been extended since the Deepwater Horizon spill in April 2010.

And we all know what happened to the Keystone Pipeline.

The nonpartisan Congressional Research Service found that oil production on Federal land represents 7.5% of total oil produced from all onshore U.S. lands in 2011, even though the Federal Government owns more than 30% of the lands with oil-producing potential.

The Energy Information Administration (EIA) reports 3.7 quadrillion BTUs of energy from crude oil were produced from federal lands and waters in 2011. This is a 12% increase over the 3.3 quadrillion BTUs produced in 2008.

So while it may not be enough, there has been progress for oil production on Federal land... and there may be more, as Obama’s been entertaining proposals for opening up more drilling in Alaska.

But the real question is: Does the U.S. have enough oil to bring down the price at the pump?

Supply vs. Price

Over the last few years, U.S. oil production has risen around 20%, from approximately 5 million barrels a day to nearly 6 million barrels a day.

(Much of this increase has come from the Bakken Oil Pool — more on that in a minute.)

This nifty little chart shows there’s not much correlation between U.S. oil production and gasoline prices in the United States:

In the U.S., we consume around 19 million barrels of oil a day.

Adding 500,000 barrels a day — or even a million — in domestic production is quite literally a drop in the bucket.

Sure, increased production is great for employment in certain areas of the country...

Williams County, North Dakota, where the city of Williston is, has an unemployment rate below 1%. And the average salary is north of $90k a year. (You can find similar areas in Pennsylvania, Texas, and Colorado.)

But at its present rate of increase, U.S. oil production can't affect gasoline prices.

And even if every acre of idle oil-bearing Federal land could be pumping oil tomorrow, it would add less than two million barrels a day.

Now, I haven't delved into any arcane math to arrive at the numbers and conclusions I've presented here. It's basic back-of-the-envelope stuff.

And you don't have to be genius to see that the 35-day supply of oil in the Strategic Petroleum Reserve and the 15-day supply at Cushing, Oklahoma, aren't large enough to meaningfully offset supply concerns.

Ultimately, there is only one way to affect gasoline prices...

Yukon Mushroom Picker Uncovers $160 Million Gold Deposit

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A Cheaper Alternative

There's no doubt there's an Iran premium in oil and gasoline prices right now. Speculation may have driven oil up 15% above where it "should" trade, maybe 20%.

Whatever premium there is in oil prices, it just validates the fact that oil is a finite commodity.

Supply will always be threatened — until we have a viable alternative to oil.

And that alternative is natural gas.

The U.S. is awash in natural gas. We have so much supply, they are practically giving it away...

Storage facilities are running out of room; there could be no storage room left by November. Companies have already slowed production, and they may start capping wells.

Why aren't any politicians talking about this?

It's because of the national debt situation. For the Republicans' austerity platform, there's no way they can advocate the government's ability to subsidize the infrastructure build needed to boost natural gas as a transportation fuel, a la the Pickens Plan.

Utilities are turning to natural gas instead of coal as fast as they can. So is manufacturing. General Electric (NYSE:G E) and nat gas heavyweight Chesapeake (NYSE: CHK) recently announced an alliance to make compressed natural gas available at more filling stations.

How to Invest

Even if/when we use more natural gas, you're still not going to see "$2.50 a gallon" anywhere — except on one of Newt's coffee mugs.

Let the politicians be the dumb ones...

In the meantime, if you want buy some Chesapeake stock, that's a fine idea.

I also think small domestic oil exploration companies are an excellent idea. Oil prices could come down some, but the days of cheap oil are long gone.

~~wd_nat_gas3~~

Good Investing,

Briton L. Ryle
Analyst, Wealth Daily

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Is China's Economy Crashing?

A Bloomberg article published yesterday opens with the statement:

“If you look at the Chinese data, you should stop debating about a hard landing... China is in a hard landing.”

Morgan Stanley’s chief Asian strategist, Adrian Mowatt, goes on: “Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.”

China’s economy has been something of an economic miracle. It’s posted double-digit growth for as long as I can remember.

China’s constant trade surplus has filled the coffers with $3 trillion in cash, mostly U.S. dollars.

In the wake of the financial crisis, it was Chinese stimulus spending — not U.S. — that really boosted global GDP.

China has been the buyer of last resort for cement, steel, coal, copper, gold, oil — you name it, China buys most of it.

For the last year or so, China has raising reserve requirements for lending at its banks to combat inflation. And it’s worked. Prices have been coming down. Inflation is at a 20-month low.

Problem is, economic growth is slowing as well...

Collect a $1,638 "Rent" Check Every Month

Some investors have found a way to collect huge "rent" checks every month by partnering with one of the world's biggest "landlords."

One man from Ontario gets $1,638/month. Another in Arizona gets an amazing $5,969/month. One Texas man's checks have grown to $23,220/month!

And they're receiving these checks without owning any real estate!

To learn how you can join them, click here.

Recent economic reports show that factory output is increasing at the slowest rate in three years.

Retail sales are lower than estimates. Real estate sales were down 25% in the first two months of 2012.

But the biggest surprise may be that China actually posted a trade deficit — the biggest one in 22 years.

Numbers are one thing; charts tell the story better...

China buys — and uses — more coal than any other country in the world. And coal stocks have been getting killed.

Here’s Alpha Natural (NYSE: ANR):

Even with a small bounce over the last few days, the stock is down 28% from its highs just a month ago.

Copper is often referred to as “Dr. Copper” because it’s the only commodity with a PhD in economics.

And copper is giving a bearish assessment of China’s economic growth prospects, according to copper giant Freeport McMoran (NYSE: FCX)...

Freeport-McMoran is down around 18% since last month’s highs. It now trades with a very low forward P/E of 7.

Freeport-McMoran has been hurt by strikes at a mine in Indonesia. Still, the stock is also pricing in slower demand from China.

Of course, due to its giant foreign reserves, China has the ability to spend its way out of an economic slump. And it will almost certainly do so...

Because the one thing China can’t afford is angry citizens who can’t get jobs.

"Natural Gas can reduce fuel costs as much as 40 percent, based
on gasoline at $3.50 a gallon."

— Bloomberg, 3/7/12

Now meet the company that will supply nearly all of this cheap natural gas...

— Click Here —

So despite the bearish look of these charts, it may be a good time to pick up a little Freeport-McMoran.

The stock could easily have 20% upside over the next few months. And it pays a decent 2.6% dividend, too.

And there’s an emerging opportunity that may do much better than 20%...

One of the analysts here at Angel, Nick Hodge, tells me China wants to raise prices for a material called graphene.

Graphene is something of a “miracle” compound of carbon. It’s highly conductive. IBM is experimenting with it to make super-transistors and microchips. Graphene can also radically lower the cost of solar energy.

Right now, China owns something like 70% of the world’s supply of graphene. And they want to push the prices higher.

China did this with rare earth metals a few years back. The move pushed a leading rare earth stock from around $10 a share to over $70.

Nick is currently recommending a small mining company that has a tremendous supply of graphene in a mine that virtually no one knows about. He's prepared a video investment conference to get the word out about this stock to Wealth Daily readers, before he “goes public” with his profitable discovery.

This profitable is event is right around the corner — next Thursday, March 22, at 7 p.m. (EST).

And it’s totally FREE for Wealth Daily readers.

Space is limited for Nick’s presentation, and I understand it’s filling up fast. All we need is an email address so we can save your spot and send you the necessary information for Nick’s profitable presentation...

Take a moment to sign up here.

And one more thing: Happy St. Patrick's Day!

Sincerely,

Briton Ryle
Research Analyst, The Wealth Advisory

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This Could NEVER Happen in America

The latest Consumer Price Index readings just splashed cold water all over the hot rally we’ve been enjoying.

The Labor Department says gasoline prices jumped 0.9% in January. That, in turn, pushed consumer prices up 0.2% across the board...

For the trailing 12 months, inflation is rising at a 2.3% clip.

The Fed would have us believe this is within its target levels, and that its liquidity pumps should stay on full throttle for two more years.

But the rise in gasoline prices is worse than the standard inflation measure (CPI) tells us...

Gas prices have risen from $3.32 to $3.58 since the start of 2012. That’s a 7.8% jump. And it means real consumer prices have risen a lot more than 0.2%.

The gold market knows this.

That’s why gold prices surged the minute the Fed announced its reckless intention to keep interest rates low until 2014.

Gold is better understood as an inflation hedge than a safe haven: Gold prices don’t necessarily rise in times of crisis — but they do very well when inflation expectations are in the rise.

It’s often said that a news item in and of itself is not what’s important; it’s how the market reacts to the news that matters.

So while Bernanke’s interest rate decision is widely believed to be supportive of the economic recovery and the perpetually beaten-down housing market, gold is saying otherwise.

So is oil, for that matter.

And it is oil that has far greater implications for the U.S. economy that Bernanke is so intent on helping...

Economic history buffs know that oil price spikes tend to precede recession:

Oil price spikes brought on by the Bretton Woods in 1971 and the OPEC Oil Embargo of 1973-1974 preceded recession.

The Iranian Revolution (1978-1979) and the Iran-Iraq War (1980-1981) each led to separate bouts with recession for the U.S. economy, according to the National Bureau of Economic Research.

Oil prices doubled within months of the start of the first Persian Gulf War in 1990. Economic recession began in July of 1990.

Oil prices topped out at $147 a barrel in the summer of 2007. And the U.S. economy was in recession again in less than year.

(The financial crisis was a contributing factor to this last recession, but plenty of economists say that high oil prices contributed to the bursting of the housing bubble, which brought on the crisis.)

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The best part is the tenant is Wal-Mart... which means these checks can be expected to keep coming.

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I’m sure we could make a compelling case that the continued challenges for the U.S. economy are due to persistently high oil prices.

But I know that another spike for oil prices would soak up what little surplus we have and send the economy right back into decline.

The most frustrating part is that the United States has the resources to offset a spike in oil prices: an immense surplus of natural gas that is highly valued by other countries.

The $2.70 per Mcf we pay for natural gas in the U.S. is worth $15 in China and $17 in Japan.

And yet we refuse to sell — or use! — this incredibly valuable natural gas supply.

We have so much that natural gas companies like Chesapeake (NSYE: CHK) are shutting down production because it’s no longer economical. That’s insane!

Canada has a natural gas surplus, too. But instead of letting it sit in the ground, Canada is actively trying to sell it to the highest bidders, like China. They’re even getting China to help pay for a pipeline and LNG terminal to export natural gas to the East.

It goes without saying that the companies involved are about to make some windfall profits.

But you won’t hear about this kind of deal here in the U.S.

We’ll let our vast, undervalued natural gas reserves sit in the ground rather than use them to boost growth and as protection against rising oil prices, inflation, and recession.

Sell natural gas to the Chinese? Use it ourselves? Not in America...

Enjoy your weekend,

Briton Ryle
Analyst, Wealth Daily

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An Energy Deal Worth Trillions: Taking a Page from Rockefeller's Book
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Is Regulation Really What's Wrong with America?

Publisher's Note: As associate publisher and research assistant for The Wealth Advisory, Briton Ryle is the newest member of the Angel investment research team.

I thought his insight on what's really ailing the U.S. economy worthy of sharing in our Weekend Edition.

Have a great weekend,
Brian Hicks

Is Regulation Really What's Wrong with America?
By: Briton Ryle

How's the U.S. economy doing?

Ask a Harvard Business School grad that question, and you might get a pretty depressing answer.

A recent survey that polled 10,000 Harvard Business School alumni started with the question, "What ails the U.S. economy?"

And the answers were not at all good... 71% of the respondents say the ability for America to compete will decline over the next three years; 66% said we are falling behind emerging economies.

Why?

Well, according to the survey, it's pretty much everything: The tax code, political system, K-12 education, macroeconomic policies, legal framework, regulations, infrastructure, and workforce skills were all named as reasons for the decline in U.S. competitiveness.

The authors of the study explained: “For the first time in decades, the business environment in the United States is in danger of falling behind the rest of the world... With this, pressures on jobs, wages and living standards will only grow."

This may not be news to you.

After all, there's been plenty of press howling about how regulations are killing business. Bankers complain about the Volcker Rule and how it's hurting the banking business. But then, that was the idea, wasn't it?

Don’t forget, as Americans, we're realizing that all was not well on Wall Street at the end of 2007. Morgan Stanley (NYSE: MS) had $1.05 trillion in assets that were backed by just $30 billion of equity. That's completely insane.

So, after the financial crisis exposed our nation's bankers as a bunch of gambling lunatics, it seemed appropriate that they should be reeled in by increased regulation.

And we're seeing the results — in both bank earnings and their compensation structure.

Goldman Sachs' (NYSE: GS) earnings were down 67% in 2011. In 2011, Goldman set aside $12.22 billion to pay compensation and benefits for its 33,300 employees. That comes out to around $367,000 per person. Not bad, right?

Well in 2006, the firm paid out $16.46 billion in compensation and benefits — or roughly $621,000 per employee.

(Personally, I think a few high-profile prosecutions may have been more effective in dealing with the banks than adding regulations, but I could be wrong.)

So, are American banks less competitive? Maybe.

But not against European banks, at least...

Where is the U.S. Energy Policy?

Then there's the rejection of the Keystone Pipeline that was to bring more Canadian tar sands oil to America.

It's being used as Exhibit A for how our government is anti-growth and anti-job.

But the state of Nebraska didn't want the pipeline to run near the Ogallala Aquifer. And even though Transcanada (NYSE: TRP) agreed to reroute the pipeline, the fast-tracked application was still rejected.

Now Bloomberg reports Transcanada may be ready to propose a pipeline from the Bakken oil shale formation to Texas. In my opinion, that would be much better than the pipeline from Canada...

For one, Bakken oil is light sweet crude, as opposed to the carbon-intensive sour oil that comes from Alberta. And two, even though the Bakken formation extends into Canada, the U.S. side is more developed. A new pipeline could encourage more production and more jobs (even though the Bakken area already has an effective unemployment rate of zero.)

Still, I expect some version of the Keystone Pipeline project will eventually be passed.

But the debate over Keystone XL isn't really about jobs or oil.

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Within its borders, millionaires are being created by the day...

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It's really just another example of our broken political system, akin to the brinkmanship that nearly pushed us to default, rather than an indictment of the president (and trust me, I'm no fan of this administration's policies).

There have been plenty of accusations that carbon emission caps are job-killers. But the fact is these EPA regulations are encouraging utilities to switch to natural gas-fired electricity plants. General Electric (NYSE: GE) has been a big beneficiary as a major supplier of natural gas turbines.

We have to ask why natural gas prices are zeroing in on record lows.

In Japan, natural gas sells for around $15 mmBtu. In the United States, we have more natural gas than anywhere else in the world, and it sells for $2.50 mmBtu because we don't have enough demand.

Is this because of regulation — or a lack of incentives to boost the use of natural gas?

America's Shrinking Profit Margin

We can't ignore the fact that America's heyday was a direct result of cheap energy inputs to manufacturing. Cheap energy made for strong profit margins that could be transferred to workers via relatively high wages.

Globalization and expensive energy have changed that formula.

And clearly, the financial alchemy that created and popped the housing bubble and artificially ramped GDP and employment was no substitute for real growth. It was a wealth effect on steroids. And we know the use of steroids has a debilitating effect.

From this perspective, the drop in U.S. competitiveness is not a result of regulation. It's structural — and inevitable, as energy costs rise and global wages compete with each other.

The Bureau of Labor Statistics keeps track of why workers are fired. In 2010, 0.3% of the people who lost their jobs in layoffs were let go because of “government regulations/intervention”; 25% were laid off because of a drop in business demand.

That's the issue we're dealing with: lack of demand due to high unemployment and lost household wealth from the housing crash.

Sell Exxon!

It should be the best of times for the oil giant.

So why did it recently miss earnings estimates? And why are analysts lowering earnings estimates for the rest of the year?

The fact is Exxon's growth is over. There's a new generation of small oil companies that have secured a 24 billion barrel oil reserve in the Western United States...

They're lean, mean, and they're making investors wealthy. Get the details here.

We Have to Have SOMEONE to Blame

The authors of the Harvard survey conclude “it would be wrong to place either the U.S. competitiveness problem or its solution at the feet of the government” — but rather at business.

“Part of the business agenda for U.S. competitiveness,” they write, “is to stop taking actions that beneﬁt one’s own ﬁrm but, collectively, weaken America’s business environment.”

So Harvard Business School's own professors — who are not just academics, but corporate vets as well — are pointing the finger at their own students, past and present.

How interesting, they have seen the enemy and it is us. Or them.

As for me, I am absolutely bullish on American business and our ability to innovate and overcome.

Corporate America has already shown it can adjust to weak demand and a totally incompetent government.

Profits on the S&P 500 will hit a record this year. And that's in spite of the current business and economic climate, not because of it.

America is home to Apple (Nasdaq: AAPL) and Coca-Cola (NYSE: KO), Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC), Ford (NYSE: F) and Wal-Mart (NYSE: WMT).

There are only a handful of international brands that can compare to these names. And I don't expect that to change anytime soon.

In fact, I expect Uncle Sam to emerge from the current crisis of confidence leaner and meaner than we have ever been before.

Consider the current environment a window of opportunity for you to invest in the resurgence of America while stock valuations are relatively low.

More ideas for investing and profiting in America's "ailing" economy below.

Until next time,

Briton Ryle
Analyst, Wealth Daily

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