In terms of time spent to money returned, it's right up there with being a supermodel or a rock star. 

And it all boils down to one simple plan: Buy low and sell high.

The funny thing is that, by definition, most people don’t buy low.

If they did, it wouldn’t be low.

Let me give you a couple of examples...

BP’s Back

Remember that oil company that used to be known as British Petroleum, but that is now known as BP?

They had a problem with a leaky well in the Gulf of Mexico.

Obama said he was going to stomp on their neck, or some such schoolyard nonsense.

Every hack at the New York Times wrote long, disparaging essays on the evil of hydrocarbons.

Analysts said the company was facing bankruptcy...

Well, that company just raised its dividend. 

According to the BBC:

BP has raised its dividend to shareholders by 14%, the first increase since the 2010 Gulf of Mexico spill, following sharply higher profits.

Replacement cost profit, which is profit stripping out the effect of oil and other price movements, for the three months to the end of December 2011 was $7.6bn (£4.8bn).

This compares with $4.6bn for the same period in 2010. For all of 2011 BP's profit was $23.9bn compared with a $4.9bn loss in 2010.

If you had bought the fear at its highest — when the stock was trading at its low of $27 last year — you would have made 72% gains (plus div).

The stock has bounced back and is now at $46.50. Not bad for one of the global majors...

Whatever Happened to Netflix?

Just a few months ago, the CEO said he was raising prices by more than 50%!

The Internet went crazy.

Basement dwellers, grad students, and bloggers everywhere said Netflix blew it.

But I did the math and realized that if Netflix lost 10% of their subscribers, they would more than make up for it in increased revenue. 

In fact, it's a gold mine:

There was plenty of time to buy as the stock flattened out at $70, or even on the breakout at $80 in January. 

The stock is now at $133 and headed back to $300, all the while gaining new subscribers and pulling in record revenue.

~~wd_china~~

Or Intel?

Or how about Intel, which I started telling you about back when it was trading at $17 and paying an 8% dividend.

Now it’s paying a 3% dividend — not because the payout went down, but because the share price went up to $27.

You can’t buy low and sell high unless you buy low.

So, what is low?

Think about what stock or sector most people don’t want to own right now: Housing? Solar? Copper? 

Yes, you’d be on the right track with most of those ideas. But the trick is to catch the stocks after they’ve bottomed and are starting back up. 

You don’t want to grab a falling knife or step in front of a freight train.

And it’s always a bad idea to buy a product that has to be subsidized.

That said, let someone else find the absolute bottom. A good investor will wait until there is new uptrend or a breakout.

What's Low 

Right now, the one place most people won’t invest is Africa.

Saying you like Africa is like saying you're buying Haitian penny stocks for dot-com companies. Most people wouldn’t even think about investing there.

And this despite the fact that the Economist said sub-Saharan Africa will be the fastest growing region in the world next year. 

China isn't so squeamish. They're going after resource-rich Africa whole hog.

You see, the United States is enforcing tough sanctions on Iran, a place where China gets its oil...

Don’t get me wrong; China doesn’t care about U.S.-Israeli relations. No, Iran has some problems with paying off debts and supplying the oil it had promised.

You add in the possibility of a war, and China thinks it's better to buy oil from Africa.

According to the Guardian:

Asian imports of West African crude oil will hit an all-time high in the first quarter as purchases of Iranian oil decline and as Chinese and Indian refiners build stocks from alternative sources, trade and shipping sources said.

The region is a natural alternative source of oil for Asian buyers who wish to avoid sanctions imposed by the West over Iran's nuclear program that the United States and its allies say aims to produce Iranian nuclear weapons.

Africa is cheap.

African oil companies are doing very well. I know one mid-major that said they will double production within five years.

A smart man might want to buy while it’s low.

~~chris_signoff~~

You see, since the financial crisis of 2008, three of the best investments have been-dividend paying stocks like McDonald's (NYSE: MCD), Pfizer (NYSE: PFE), and AT&T (NYSE: T), closed-end funds, trusts and Master Limited Partnerships.

Today I want to tell you about Master Limited Partnerships because, in general, MLPs are heavy in the energy space. Specifically, oil and gas storage and pipelines.

From a current economic perspective, most MLPs provide infrastructure services that are more important than ever before. With oil and gas shale fracking growing by the day, natural gas and oil is flooding the U.S. market.

With so much supply being produced, more and more infrastructure needs to be constructed to handle it. So while America is experiencing a natural gas and oil renaissance, we're also witnessing an oil and gas pipeline boom.

And I'm going to show you how to get a piece of it.

But before I do that, let me explain what a MLP is.

A Master Limited Partnership (MLPs) is exactly that: a partnership. It is a very unique investment that combines the tax benefits of a limited partnership (LP) with the liquidity of common stock.

An MLP has a partnership structure, but issues investment units that trade on an exchange like common stock.

So remember this: an MLP isn't a corporation, but its stock (called units) trades on major exchanges just like a publicly-traded corporation.

In order to qualify as an MLP, a firm must earn 90% of its income through activities or interest and dividend payments relating to natural resources, commodities or real estate. (Hence, why many are oil- and natural gas-based.)

MLPs usually provide their investors, the limited partners, with distributions that are similar to dividends, but taxed differently. And that’s another benefit of an MLP.

MLPs offer potential tax advantages because most of their distributions are classified as a return on investment instead of income. You don't pay taxes on that portion until you sell. However, when you do sell, you'll be taxed at the ordinary income rate, not as capital gains.

In addition to the tax benefits, it is expected that the distribution growth of MLPs can grow at a rate at or ahead of inflation, based upon energy demand and price growth.

Certain MLPs that are more exploratory are more sensitive to the price of oil, while the traditional pipeline MLPs aren't sensitive to commodity prices, but can see increased demand at lower prices.

Additionally, the exploratory MLPs can be super-sensitive to oil spikes in either direction.

Many derive their revenue based on the amount of product transported and are not sensitive to price fluctuations except where they affect demand. Some MLPs involve other natural resources and certain other industries, but oil and gas are the most common.

Because their business isn't tied to the price of the underlying commodity they transport, pipeline MLPs are typically stable and reliable investments for the most part.

Let's take a look at natural gas, for instance.

The price of natural gas has dropped almost 82% since 2008. However, natural gas pipeline MLPs have not only held up, but have made their investors money.

~~wd_nat_gas~~

Take Boardwalk Pipeline Partners (NYSE: BWP), for example. In the last 3 years, BWP has risen nearly 20% while also maintaining a near 8% dividend.

In fact, Boardwalk Pipeline increased its distribution from $1.89 per unit to over $2.05 in 2011.

This increase occurred while the price of natural gas plummeted to a decade low.

Now, Boardwalk pays its distributions on a quarterly basis. Many, however, pay it monthly, especially their trust cousins.

And we're going to be focusing on monthly income in the future.

Income expert Briton Ryle and I have created a portfolio of dividend payers, closed-end funds, and MLPs and trusts that'll pay you dividends and distributions almost every 3 days. It’ll be released very soon.

The original bull on America,

~~WD_brians_signoff~~

The Dow closed at 12,862, a 3-year high. In fact, it was the highest in the Dow since May 2008.

Take a look:

It’s sloppy, but the Dow has also formed the same double bottom pattern (“W”) that we’ve seen in gold and silver.

Here’s a monthly chart of the Dow:

You can see the same pattern formed back at the end of 2003, beginning of 2004.

So what does this mean?

It could be a blockbuster breakout this year for stocks.

Yesterday, the Labor Department released its January unemployment report, showing that the U.S. added 243,000 jobs last month, pushing the unemployment rate down to 8.3%, its lowest level in three years.

The report was greeted with cheers, as well it should. And Obama was quick to pat himself on the back, as well he should.

However, hidden deep in the report was a shocking development that most would rather not talk about. You see, most of the employment gains came from the hiring of pimps, prostitutes and drug dealers.

That’s right: Pimps, prostitutes and drug dealers.

I’m being sarcastic of course.

But that’s how liberals and progressives greeted yesterday’s unemployment report.

I watched in amusement as they begrudgingly expressed happiness that jobs were on the rise.

It just wasn’t the jobs they wanted.

That’s because, dear reader, the oil and gas industry was the shining star in the employment picture.

The Labor Department makes this fact clear. While the total U.S. workforce has shrunk by over 4 percent since the recession hit in 2007, employment in the oil and gas sector has grown nearly 22 percent.

Take a look at how dramatic the disparity is:

The oil and gas industry employs about 2.1 million people in the U.S. directly and about another 7 million indirectly by purchasing their goods and services. And that figure is growing by the day.

And it’s not just the U.S. that’s experiencing an employment boom in natural resources.

Yesterday Canada announced its employment report too. Canada announced an increase of 2,900 jobs for January... 1,900 of which came from the oil and resource rich province of Alberta.

This coming Monday, CNBC is doing a big segment on North Dakota and the Bakken boom. It’s a must-watch-show for any investor in Bakken stocks.

The boom in the Bakken is accelerating. And along with it, social problems.

Oil production in the Bakken in North Dakota grew by an average 15,000 barrels per day each month between January and November 2011. North Dakota's shale wells produced more than 443,000 bpd in November, a record.

December’s production numbers will be released this month.  But it’s shaping up that 2011 will be a record year for North Dakota by huge margin. And 2012 looks even bigger.

According to the CNBC show that’ll air:

"It's actually become more intense," said Williston Mayor Ward Koeser. "There's been more people coming. There are more companies coming. There's more building going on. And there are more issues coming up."

In addition, even with a job, there's probably nowhere to sleep one night, let alone live.

Builders are feverishly trying to increase capacity, but right now, there is almost no vacancy. And prices reflect this.

In 2005, the average rent for a one-bedroom apartment in Willison, North Dakota? Less than $500. Today? More than $2,000 ... if you can even find one.

With a national unemployment rate still at 8.3%, some problems are good to have.

The original bull on America,

Brian Hicks
Publisher, Wealth Daily

Beryllium Alloy: One of Lightest, Strongest, Most Profitable Metals Known to Man
This alloy was used in the construction of the Hubble Telescope. The Pentagon wants to use this same metal in drones to make them lighter, stronger, and more economical. Learn about the company developing a beryllium alloy at a fraction of the cost — and how you can profit.

Gold Going Up, Up, Up: Position Yourself in Precious Metals Now
Thirteen-year gold investor and bullion dealer Greg McCoach explains why you should be buying gold... and more importantly, where you can get in on the groundfloor with the biggest gold discovery in decades.

Who Is Henry Hub?: Natural Gas Prices Explained
Editor Nick Hodge explains Henry Hub, and how it's used in natural gas pricing.

Natural Gas Infrastructure: The Mother of All Arbitrage Plays
Around 1400 BC, a goat herder saw a burning flame coming out of a spring. He also noticed his animals acted strangely after wandering near a particular chasm on Mount Parnassus. After investigating, he found himself "agitated like one frantic."

Warren Buffett Renewable Energy Investment: Where He Just Invested $9 Billion
Editor Jeff Siegel reveals Warren Buffett's growth strategy for energy investing.

Gold and Silver Are Headed for Record Highs: This Gold Chart Says It All
Gold and silver are on fire... and the charts for both are insanely bullish. When the masses jump into gold, even a tiny portion, it'll send the price of gold up dramatically. You'll want to position yourself accordingly for this perfect storm.

The Keystone XL and the Northern Gateway: A Tale of Two Pipelines
Editor Nick Hodge gives his take on two proposed Canadian oil pipelines, and tells readers to ignore the politics if they want to make money.

Burying Peak Oil: The Secret Behind Report 117
Keith Kohl reveals the Peak Oil report that has been buried by the Australian government for over two years.

Utica and Marcellus Shale Natural Gas: The Golden Road from Wheeling to Cove Point
Wheeling, West Virginia, now has an unemployment rate lower than the national average... and it's all thanks to the production of natural gas liquids from the Marcellus formation in the Mountain State.

Chinese Record Gold Rush: China Buys Record Amounts of Gold
The people are looking at inflation moving above 4%, a stock market that has fallen 20%, and a housing market that is about to go tits up. The average Chinese person has the world's highest savings rates but few investment options. So they are buying physical gold.

Our insanely overbought market now runs on a bogus, unsustainable jobs number that left out the millions that gave up looking for work.  It also leaves out the thousands of college students that can't even find a job after graduation.  Interestingly, it's been brought to my attention that many college graduates are now living off food stamps.

That's not a recovery.  President Obama can tell us we're in a full-blown recovery all he wants to in an election year.  But the cold hard truth is -- as our own Fed has told us -- there is no recovery.  

Our debt is at record, unsustainable highs.  And the average American does not see this "recovery" the Administration thinks it sees.

I’m not the only one that sees this.

I just read that, “If size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office — 65.7 percent then vs. 63.7 percent today – the U-3 unemployment rate would be 11.0 percent. Most of the shift of the past year is due not to the improvement in the labor market, but the continued drop in participation in the labor force. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate is still a sky-high 15.1 percent.”

And according to Zero Hedge:

“We have examined the nuance of the euphoric jobs data this morning from every angle and by now there should be plenty of 'information' for investors to make their own minds up on its credibility.

However, the avuncular CEO of TrimTabs, who despite channeling Lewis Black lately, likely knows this data a little better than the average Jim on the street having collected tax witholdings data for the past 14 years, is modestly apoplectic at the adjustments.

In one of his more colorful episodes, and rightfully so, Charles Biderman notes that "Either there is something massively changed in the income tax collection world, or there is something very, very suspicious about today’s BLS hugely positive number," adding, "Actual jobs, not seasonally adjusted, are down 2.9 million over the past two months. It is only after seasonal adjustments – made at the sole discretion of the Bureau of Labor Statistics economists – that 2.9 million fewer jobs gets translated into 446,000 new seasonally adjusted jobs." 

A 3.3 million "adjustment" solely at the discretion of the BLS? And this from the agency that just admitted it was underestimating the so very critical labor participation rate over the past year? Finally, Biderman wonders whether the BLS is being pressured during an election year to paint an overly optimistic picture by President Obama’s administration in light of these 'real unadjusted job change' facts. Frankly, in light of recent discoveries about the other "impartial" organization, the CBO, we don't think there is any need to wonder at all.”

We've been lied to... again.  And "we, the foolish people" keep eating it up.

Gold sold off a bit this morning, but has been strong all week.

The price of gold is climbing because the Federal Reserve said it will keep interest rates at almost zero until late in 2014. Ben Bernanke, the head of the Fed, also said he was thinking about devaluing the dollar again by buying more debt. This is after he already bought $2.3 trillion in bonds.

You know, because two-point-three-trillion-dollars isn't quite enough.

Gold has climbed from below $1,600 an ounce to $1,750 an ounce in the last month. And this move came despite the fact that stocks have had their best-performing January since 1997.

It is obvious that the gold market thinks the Fed is out to destroy the dollar in order to prop up the big banks, which are still carrying massive amounts of housing debt.

Buying Gold Coins

In recent history the buying of gold coins has been restricted to nut-balls like me who have stocked food and planned a way to get out of Dodge. The truth is, most retail investors have never bought a gold coin or bar in their lives. But this is starting to change.

According to Business Insider:

A small minority of retail investors are beginning to diversify into gold in order to protect against systemic risk in the banking and financial sector (MF Global) and from the monetary risk of currency debasement. In Australia, the Perth Mint has reported very strong demand for gold and silver coins in recent weeks. The mint is a major supplier of coins to the UK and Europe.

Sales are up around 80% compared with the same months a year earlier, while silver coin sales have doubled. The mint’s largest markets for coin demand include Germany and the U.S.

Gold sales aren't restricted to Europe and North America. If you count the guesstimates on smuggling, the Chinese are by far the worlds largest buyers of gold.

~~gold_signup~~

According to Forbes:

This month, the Hong Kong Census and Statistics Department reported that China imported 102,779 kilograms of gold from Hong Kong in November, an increase from October’s 86,299 kilograms. Analysts believe China bought as much as 490 tons of gold in 2011, double the estimated 245 tons in 2010.

Four-hundred-and-ninety tons is the official estimate. My sources tell me that you could add 50% to that figure and you would still be undervaluing the real number.

The Chinese are great savers. They are buying gold because they see inflation moving up, the stock market falling down, and a housing bubble that has met a pin. With limited investment options, many Chinese are buying gold in the form of gold panda coins minted by the Peoples Republic of China.

And because of a special partnership, you can buy those coins, too. More information on that here.

Have a great weekend,

~~chris_signoff~~

It was so bad that MTV filmed a "reality documentary" in 2009 called The Wild and Wonderful Whites of West Virginia.

Today those jokes stop.

And as you read this, a conga line of Wall Street bankers, lawyers, and oil and gas executives wearing Armani suits and each carrying three Blackberry 9930s are flying into an obscure airport in West Virginia called the Wheeling-Ohio County Airport.

Luckily, I don’t have to take a bumpy ride in a puddle jumper over the Appalachians to get to Wheeling, West Virginia.

I can take a direct shot from my home on I-70.

A lot of people don’t know this, but Interstate 70 — which starts in Baltimore, Maryland, and ends in Utah — really started out as the “Old National Road.”

I’ve driven on I-70 hundreds of times without knowing its historic significance in the growth of the United States.

You see, the Old National Road was the very first major highway built by the federal government. Construction started in 1811 in Cumberland, Maryland.

By 1818, it had reached Wheeling, West Virginia, which sits on the banks of the Ohio River, a major shipping port.

By 1824, the “Bank Road” was constructed, connecting Baltimore’s large shipping port on the Chesapeake Bay to the National Road in Cumberland. Eventually, the B&O Railroad built a rail line to Wheeling to handle the growing commerce.

For the next century, Wheeling was a thriving shipping and manufacturing hub. The city saw its population grow from 7,885 in 1840 to 38,878 in 1900... and peak in the 1940s and 1950s at around 61,000, the height of the steel market in that region.

Now, the steel market in America has been dead for decades.

In 2010, the census reported Wheeling’s population had sunk to 29,000. Worse yet, the city had started off the year with a gut-wrenching 11% unemployment rate.

But a lot has changed — even in just two years...

Wheeling is experiencing a bona fide employment boom.

Take a look at this chart of Wheeling’s unemployment rate:

Wheeling, West Virginia, now has an unemployment rate lower than the national average.

The reason?

~~wd_nat_gas~~

You guessed it: A natural gas drilling bonanza, thanks to the Marcellus.

According to yesterday's edition of the Wheeling News-Register:

With local wells producing enough Marcellus and Utica shale natural gas to support an ethane cracker, industry leaders believe the city lies in the "dead center" of an economic boom.

"Right here in Wheeling, you are at the dead center of all the activity," said Rayola Dougher, senior economic advisor for the Washington, D.C.-based American Petroleum Institute.

"Wheeling is becoming a very important hub in the oil and gas industry because of the nearby 'wet' gas," added Gastar Exploration (GST – AMEX) Rotruck Vice President-Northeast Michael McCown.

McCown continued: "In West Virginia, we have been drilling through the Marcellus for 80 years, but we didn't have the technology to get much gas out of it," he said. "The new (horizontal) drilling technology allows us to drill into it to retrieve the gas."

A small company with a market cap of $192 million, Gastar holds approximately 79,700 net acres in northern West Virginia and southwestern Pennsylvania.

For 2012, the company is planning to drill 24 to 29 operated horizontal Marcellus wells — and expects 20 to 23 additional wells to be brought online by year-end.

The natural gas drilling boom is in its beginning stages. In the years to come, there will be hundreds upon hundreds of producing wells in and around Wheeling.

"This region [Wheeling] should be able to rock and roll," said Scott Rotruck, vice president of corporate development and state government relations for Chesapeake Energy.

West Virginia has a unique and important part of the Marcellus Shale because it has the wet gas slice of the pie.

Wet gas (or natural gas liquids) consists of ethane, propane, butane, and pentanes, in addition to the dry methane natural gas. This is also known as NGL, which you commonly see it referred to.

In fact, you come in contact with these liquids almost every day. They’re used in:

• Vehicle fuels
• Commercial and residential heating
• Camping stoves and grills
• Lighter fluid
• Refrigerants
• Aerosol cosmetics, aerosol paints
• Agents for developing foam insulation

And that’s not all. The other major use for NGLs — and perhaps the most significant — is as a feedstock for petrochemical cracking.

Petrochemical cracking furnaces, which operate at 2000°F/1150°C, turn complex hydrocarbons into less complex materials like ethylene and propylene. 

This method is used at oil refineries to produce the raw material to make various solvents, detergents, adhesives, plastics, resins, fibers, lubricants, and gels.

So it’s significant. And it’s why a cracking facility in Wheeling would be a game-changer.

But there’s more.

Dominion Resources wants to ship the dry gas from this region to its LNG terminal in Cove Point, Maryland, which sits on the shores of the Chesapeake Bay. From there, it’ll export LNG overseas to gas-hungry markets... 

Dear reader, the Old National Road is open for business again. 

The original bull on America,

~~WD_brians_signoff~~

After investigating, he found himself "agitated like one frantic."

The ancient Greeks named it Delphi.

As you know, the Oracle of Delphi was one of the most powerful beings in the ancient world. Because of her prophetic ramblings, the 300 Spartans fought at Thermopylae, Alexander the Great conquered the known world, and the inventor of gold coinage, Croesus, lost a kingdom.

Recent studies by a team of scientists from Wesleyan University discovered that the source of these brain-altering vapors was a mixture of ethylene and methane.

Ethylene is a natural gas that can be used as a anesthetic. It produces euphoria, excites the nervous system, and has a sweet smell. This matches the descriptions of the historian Plutarch.

Obviously, these effects were attributed to divinity. A temple was built and a young female virgin was placed in charge.

The Oracles grew fabulously rich on their predictions. At one point, the temple was the largest storehouse of gold in the world, and was not surpassed until the rise of the Byzantine Empire a thousand years later.

Thus the earliest known source of natural gas changed the course of empires and created tremendous wealth...

Natural Gas

Right now, the United States is the leader in a world-changing technology called fracking. This technology has allowed the production of natural gas in the U.S. to reach historic levels.

This has driven the price of this clean energy source from $12 to $2.50 Mmbtu.

Underground storage is at record highs, and companies like Chesapeake (CHK) have shut down production. That's because you can't make money from production; no one wants any more natural gas. There is nowhere left to put it.

As you can see by the following chart, the number of drilling rigs in use is dropping to crisis-era lows. And this is happening at a time when unleaded gasoline is selling at $3.50 a gallon.

But this is the best news in the world if you are an American.

The spot price in Japan for Liquefied Natural Gas (LNG) is $18. In Europe, it's $13.60.

For those of you who don't know, LNG is NG that is condensed for easy transport on ships. Obviously, this sets up the mother of all arbitrage plays...

There is a scramble to build new LNG terminals, pipelines, and vehicles. The rental price for LNG shipping has tripled in the past year. Shipping companies are in a mad dash to upgrade ships from the 1970s and build new ones.

Heated competition is leading to fights between industry and NIMBYs in places like Oregon and Maryland to build new export terminals.

Companies like Dow and DuPont are resisting exports because they want to ensure low costs in the U.S.

Government leaders have even called for a ban on exports — that's how you know it's real!

But it won't stop cheap energy...

~~rare-earth-box~~

Of the nation’s 11 LNG receiving facilities, nine have asked for permission to be converted to export terminals.

Regulators have conditionally approved at least two requests. More will come.

This is real.

Share prices are already gaining momentum...

I told you about Chicago Bridge and Iron (CBI), a company that makes LNG infrastructure, back when it was a $8 stock. It is now trading at $44.23 — and hitting new highs.

Forget About Production

This isn't a production play. Producers won't make any money until NG prices become a globally fungible commodity.

But the people who produce the infrastructure will make lots of money.

These “pick-and-shovel” makers can't keep up with demand, and their share prices will end up looking like moon shots.

Those who see what is coming and act can and will make money.

You may not end up as rich as Croesus, but it's hard to ignore a good bet.

I am currently writing a report on natural gas infrastructure plays. I hope to have it to you shortly. Stay tuned.

~~chris_signoff~~

The yellow metal is finishing up the month of January with a gain of more than 10%.

But silver is the star... It’s going to double the performance of gold for the month.

In fact, silver is up 21.5% in January!

To put that into perspective, silver’s January gain has outperformed the Dow’s 2011 performance. It also outperformed last year’s gains in the NASDAQ and S&P 500.

You might think that since these metals are up so much for the first month of the year, they’re ripe for a pullback. And that may be correct.

However, the charts of both gold and silver — but especially gold — are insanely bullish...

This is a weekly chart of gold going back nearly three years:

As you can see clear as day, gold is forming an ominous double bottom technical formation, represented by the large “W” pattern that began forming last September.

This “W” pattern is so huge and so clearly obvious that I think we’re going to witness an explosive breakout to the upside in gold.

The top of the “W” is about $1,800 with the bottom being about $1,500. The difference is $300. Add that to the $1,800 if we get a breakout, and the target level is $2,100. And that’s the minimum price target for gold.

Who knows where it goes from there...

If gold breaks out from its “W” pattern and reaches $2,100 an ounce, then that would be a 21% gain from current levels.

The same chart pattern is forming in silver, too.

~~gold_signup~~

The Chinese Love Gold

The fundamentals of the precious metals market support the technical picture.

You see, regardless of charts, it’s still about supply and demand.

Last week, I told you that the Chinese New Year (the Year of the Dragon) is bullish for gold and silver.

Recent reports from China reveal they imported 85.7 tons of gold in October, a 40-fold increase from October of the previous year.

That’s a massive increase.

In fact, China may have imported as much as 500 tons of gold in 2011, double the estimated 245 tons purchased in 2010. The buying spree is continuing in the first month of 2012 — and not just by the Chinese.

According to Bloomberg and reported by Chris DeHaemer in yesterday’s Wealth Daily:

Gold traders are bullish for a fourth consecutive week, betting that the Federal Reserve’s pledge to keep interest rates low until late 2014 will extend the metal’s best start to a year in more than three decades.

Nine of 15 surveyed by Bloomberg expect prices to gain next week. The value of gold held in exchange-traded products jumped $3.9 billion on Jan. 25, the most since October, as the central bank laid the groundwork for a possible third round of asset purchases, data compiled by Bloomberg show. Lower interest rates increase the appeal of bullion because it generally earns investors returns only through price gains.

A third, fourth and fifth round of easing “lie ahead,” Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., wrote in a Jan. 25 Twitter post. The European Central Bank kept interest rates at a record low this month as the region contends with a spreading debt crisis.

The U.S. Mint sold 114,500 ounces of American Eagle gold coins so far this month, its website shows. Full-month sales would reach 143,125 ounces at that pace, the most since July 2010.

The 2,359.638 metric tons of gold held in ETPs backed by the metal is within 1.5 percent of the all-time high set last month and exceeds the reserves of all but four central banks.

One of Greg McCoach’s favorite phrases is that they call silver and gold "precious metals" for a reason — because it’s such a tiny market.

If you melted down all the physical gold that exists above ground into a cube, it would measure 20 yards by 20 yards by 20 yards.

And when the masses jump into gold — even a tiny portion — it’ll send the price of gold up dramatically.

That event may be coming soon. It’s a perfect storm for gold and silver.

The original bull on America,

Brian Hicks
Publisher, Wealth Daily

P.S. You'll want to be in a position to profit from gold's perfect storm, and that means getting up to speed on the nuts and bolts of the precious metals market. Our seminar at 6 o'clock tonight (EST) is designed to help you do just that. But you have to sign up to view it right now, because it begins in a few hours.

Well, the day is almost here... The seminar begins tomorrow at 6 p.m. (EST). So if you want answers to any gold or silver questions you may have, take a moment to sign up today.

Gold is getting some love.

Last week, the noble metal jumped more than 4% in price as Ben Bernanke fired up his printing press.

If you missed the news, our benevolent Fed head said that he would keep money loose until late 2014.

Everyone likes more money.

Taking him at his word, the market bought gold.

Gold Pops to $1,740

Money is now practicably free.

For example, you could loan money to the government for five years and get a miserly yield of 0.73% in return. That's less than inflation, which means that you are actually losing money.

TIPS — those financial instruments that protect you from inflation — are actually returning a negative yield.

You Need to Buy Gold

It is more than obvious that the way to make a ton of money is to borrow as much as you possibly can at super-low rates, buy gold, and wait for your debt to become worthless.

After all, it is the job of the Federal Reserve to debase the currency.

They are good at it. It's what they do.

The U.S. dollar has lost 97% of its value since the Fed was created in 1913. But mighty Ben and his printing press thinks his predecessors were slackers, ne'er-do-wells, and incompetent noobs. They didn't do their jobs well enough...

Benjamin wants to destroy more dollars, faster.

But alas, the global financial system is a giant web. You pull a thread here, and something happens over there. It is all connected.

And the U.S. printing press is making a mess in China.

~~wd_china~~

Ghost Town Real Estate

According to UWin Real Estate Information Services, prices for new homes in Shanghai fell 40.96% last week. Not only did the floor drop out of the housing market, but nothing is moving. Only 4,400 square meters of transactions closed — that's a fall of almost 90% in a week.

True, it was the Chinese New Year — the Year of the Dragon — but the drop in volume was twice the historical drop of 37%.

One week isn't a long-term trend. Maybe it was just an anomaly, or perhaps investors have run out of greater fools. They may have even seen pictures of the Chinese ghost towns that litter the Internet.

Chinese Gold Rush

What we do know is that the Chinese are buying record amounts of gold.

According to Forbes:

This month, the Hong Kong Census and Statistics Department reported that China imported 102,779 kilograms of gold from Hong Kong in November, an increase from October’s 86,299 kilograms. Analysts believe China bought as much as 490 tons of gold in 2011, double the estimated 245 tons in 2010.

That's a lot of gold. And it will continue.

Chinese gold buying is expected to increase by 25% to 30% in 2012.

It's not the government that's buying this gold; the Chinese central bank is busy buying up foreign currencies to keep the RMB low...

It's the people.

The people are looking at inflation moving above 4%, a stock market that has fallen 20%, and a housing market that is about to go tits up.

The average Chinese person has the world's highest savings rates, but few investment options. So they are buying physical gold.

There are plans set up with banks that allow purchases of as little as a gram of gold a month, worth $55.60.

China is already the world's largest producer of gold, and the Middle Kingdom may have surpassed India as the world's largest buyer of gold.

Right now, the country accounts for 23% of buyers, up from 19% in 2010.

Good luck and good hunting,

~~chris_signoff~~

P.S. In this space on December 31st, I told you to buy CZZ, the Brazilian Sugarcane Ethanol producer. The stock is up about 28% in a month. Time to lock in those gains... Sell it.

It boils down to hard assets and hydrocarbons — or to be more precise, gold and fracking.

Along the lines of precious metals, I wrote an article a few weeks ago detailing the gold/platinum ratio, and I pointed out that platinum was selling less than gold. See below.

 If you'd bought when I told you to at $1,400 an ounce, you'd be sitting pretty.

Platinum is still undervalued, but you might want to wait for a pullback. I'm betting it will bounce south after it hits that green line (200-day moving average) before moving up again.

Investors.com ran a nice chart showing the real state of the Union.

We are a food stamp nation.

From the article:

According to the Census Bureau, 49% now live in homes where at least one person gets a federal benefit — Social Security, workers comp, unemployment, subsidized housing, and the like. That's up from 44% the year before Obama took office, and way up from 1983, when fewer than a third were government beneficiaries.

Remember when people used to say stuff like “There's no way I'm accepting handouts from the government or anyone else!”

Does anyone think like that anymore?

This is exactly what happened in Venezuela, a place where 60% or more receive government subsidizes and 20% of all employees work for the government...

Needless to say, they vote for their boss.

Enjoy your weekend,

Chris DeHaemer
Editor, Wealth Daily

Gold Investing 101: How, When, and Where to Invest
Don't miss Angel Publishing's special online seminar, hosted by a man with 34 years of gold investment experience. It's free and space is limited, so sign up now.

12 Shocking Facts about the Bakken: Why the American Oil Boom is Here to Stay
Today I want to tell you about the law of unintended consequences regarding the hyper-speed growth in economic output in the Bakken.

Solar Competes with Natural Gas: The Hard Truth about Solar
Editor Jeff Siegel discusses a new solar technology that could allow solar to become cheaper than natural gas.

Oil Exploration Companies: The Last Time This Happened, It Jumped 162%
The easiest way to make money, in terms of time spent versus cash returned, is to research and buy oil exploration and development stocks.

Proof Obama Loves Gas and Oil Shale: We Told Him, He Listened
The 2012 State of the Union address sounded unusually similar to what I've been writing in Wealth Daily and Energy and Capital: Create millions of jobs by opening up our vast gas and oil shale formations.

The Future of Nuclear: Uranium Shortages Loom
We all know oil's back over $100 as the economy starts to rebound. And natural gas prices are at decade lows because of abundant new supply. But what's up with uranium?

Natural Gas Rebound: Obama's Most Profitable Slipup Yet
Energy and Capital editor Keith Kohl discusses why Obama's slipup during the State of the Union Address will have very profitable consequences for investors.

The Only Logical Solution: Buy Gold  
Please don't send me hatemail for what you are about to read in this article... What I am going to tell you is true. Your disdain for the facts won't change them; shooting the messenger won't change what's going on.

U.S. to Be Natural Gas Exporter: $30-Billion-per-Year Industry Already Established
Editor Nick Hodge takes a bird's-eye look at America's new natural gas industry and ways investors can profit.

Gold and Silver are Breaking Out: It's Time to Buy Gold and Silver Again
2012 is the Year of the Dragon. According to this year's Dragon prediction, investments will do well "with a steady income throughout the year." Gold and silver will do well, too.

Montana's Second Oil Boom Begins: Why Montana Oil Profits Won't Leave Investors Out in the Cold
Montana's oil industry won't stay in North Dakota's shadow for much longer...

But I thought I’d change it up today and tell you about the law of unintended consequences regarding the hyper-speed growth in economic output in the Bakken.

Earlier this week, one of my sources sent me an article from Fargo, North Dakota radio station KFGO.

The article lists a number of new developments (some good, some bad) in Western North Dakota, where the economy is booming, the jobless rate is less than 1%, and there are bound to be some growing pains.

Here's the Top 12:

1. Traffic accidents, especially fatal traffic accidents, are of very high concern. At one location on Highway 85 south of Williston, a traffic count was conducted in October 2011. In one 24-hour period, there were 29,000 vehicles through the intersection — with 60% of the traffic being semi-trailer trucks.

2. Traffic is typically backed up for half to three-quarters of a mile. One person said he recently sat at an intersection on Highway 85 for 30 minutes waiting for an opening in the traffic to cross over.

3. Rent in Williston currently ranges from $2,000 for a one-bedroom apartment to $3,400 for a three-bedroom apartment.

4. Williams County allows three campers per farmstead; almost all of the farmers have three campers on their property — and are charging $800 per camper, per month for rent.

5. The Wal-Mart in Williston no longer stocks shelves; they bring out pallets of merchandise at night and set them in the aisles, and customers shop from the pallets.

6. On January 1, the Williston Wal-Mart had 148 campers parked overnight in the store's lot.

7. The Williston McDonald's just announced it will pay new workers $15 an hour — as well as a $500 immediate signing bonus and full medical benefits. 

8. The local restaurants are full, and with limited staffing, they usually just have the drive-through open. The restaurants that have inside seating are now experiencing an hour-long wait at all times.

9. The local Motel 6 in Williston now rents rooms for $130 per night.

10. Trinity Hospital in Minot has just hired 115 nurses from the Philippines because they cannot get enough local nurses to apply.

11. The Williston General Motors dealership has now become the No. 1 seller of Corvettes in the upper Midwest.

12. The Williams County Jail has increased bookings by 150%, with a 100% increase in the inmate population. Bonds of $5,000 to $10,000 are typically paid with cash out of pocket. The Williams County Sheriff stated that a couple weeks ago, he received a $63,000 bond in cash, carried into the jail in a plastic Wal-Mart bag.

The dramatic growth in this region is only going to accelerate...

And the infrastructure needed to support this growth will be a boon, too.

~~wd_nat_gas~~

Last month, Canadian Pacific Railway and pipeline company Enbridge announced they will be investing heavily in rail shipping capacity for crude oil in the Bakken area of North Dakota and Saskatchewan.

Enbridge Energy Partners, Enbridge’s U.S. subsidiary, plans to move 10,000 barrels of oil per day by July 2012 through the planned railcar facility. A second phase would add an additional 70,000 bpd of transportation capacity by early 2013.

The development would increase Enbridge’s existing railway system, which began in 2010. The total increase in capacity will be about 145,000 barrels per day, which will be essential in allowing the increasing production of Bakken oil to get to market.

Canadian Pacific plans to spend $89 million to increase railway transportation of crude oil by five times the amount moved last year.

The company recently opened a rail-loading facility 25 miles from the U.S. border. This facility allows railcars to be loaded directly from trucks coming from the Bakken oil fields.

Once constructed, the pipeline will connect existing Enbridge facilities to the Enbridge main pipeline system, which transports the products to the U.S. Midwest, Eastern Canada, and Midcontinent.

This development is pushing Bakken stocks to new highs.

As you read this, the largest Bakken producer, Continental Resources, is sitting at a multi-year high:

In the wake of the Keystone XL Pipeline delay, North Dakota once again confirms why its unemployment rate is the lowest in the nation.

~~wd_options2~~

The original bull on America,

~~WD_brians_signoff~~

I realize that this type of information is upsetting.

Back in 2005 and 2006 when I wrote that the housing bubble was untenable, and that you should sell, I was ridiculed.

As if it was my fault that the Fed — in a conspiracy with Congress and the banks — created an enormous and untenable housing bubble...

But please, don't send me hatemail for what you are about to read in this article. What I am going to tell you is true. Your disdain for the facts won't change them.

Shooting the messenger won't change what's going on.

Look, I'm a positive person. I don't want to wallow in the negative.

I am a veteran, a businessman, and someone who believes in America.

And there is still a chance, if the politicians, businessmen, and cultural elite of this country act soon in the best interest of America, it can be saved. We've made it through hard times before...

But judging by the current political season, acting on hard choices will have to wait until there's a crisis.

As I write this, the United States is $15.2 billion in debt. Our Gross Domestic Product (GDP), the total sum of everything produced by every American every year, is $15.1 billion. For every dollar the government takes in the form of taxes, it pays 43 cents for interest on debt.

You will owe more than $11,000 dollars this year in interest alone.

If you include unfunded liabilities like Social Security, military pensions, and Obamacare, the total debt is $117 trillion.

That equals more than $1,038,983 per taxpayer.

This is shocking because for almost two centuries, the U.S. was a creditor nation. We were frugal, hardworking, and pious.

But that all started to change in the 1960s as the lessons of the Great Depression were forgotten and generations of wealth were consumed.

By the 1980s, we borrowed more than we lent. The U.S. is now, by far, the largest debtor in the world.

Obviously, taxpayers won't be able to pay more than a million dollars to fund these debts — even if you stretch it out over their lifetimes. The average taxpayer won't even be able to pay the interest on this debt.

And it is obvious that the current crop of dufus-Americanus won't even think about increasing their tax burden, nor accepting some form of cutback in their pensions, military spending, or other entitlements...

They got theirs, and you can bugger off.

~~gold_signup~~

It's Coming

But it is coming. The numbers are what they are.

There are only three solutions to debt you can't pay off: debase the currency, default, or create inflation.

The solution for the great Ben Bernanke and the House of Fed is to inflate the debt away by printing money...

Only they don't print money anymore; they just increase debt by using the translucent and obfuscating wizardry of Wall Street created by 100 years of Harvard-MBA jibberjabber.

From the Fed press release, released yesterday at 12:30 p.m.:

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy.

In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions — including low rates of resource utilization and a subdued outlook for inflation over the medium run — are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

Money for Nothing

When the news hit, the price of gold jumped from $1,650 an ounce to $1,712.

Today, gold hit $1,730. This was the biggest jump in more than three months.

Last week I told you the number one sell signal for gold is real interest rates (yield minus inflation). When real interest rates are negative — as they are now — gold goes up.

The Fed just told us all that real interest rates will remain negative for two more years...

Add to that the constant debasement of the dollar, and the only logical solution is buy gold, silver, and platinum.

That's why on January 31st, we will be offering a FREE tutorial on precious metals investing. Join us to learn how to enjoy tax-free gold and silver profits, profit from gold's upside, and protect yourself from the downside.

Only five days remain for you to secure your spot for this free online seminar. Space is limited, so sign up now.

~~chris_signoff~~

It sounded unusually similar to what I’ve been writing in Wealth Daily and Energy and Capital...

Create millions of jobs by opening up our vast oil and gas shale formations.

On November 18, 2011, I outlined my plan to get Americans back to work.

In my "Roadmap to Prosperity" article, I wrote:

It’s very simple: Open up our resource-rich oil and gas shale regions to exploration and production.

In the Bakken, 18,000 jobs are unfilled. This figure is only going to grow.

You see, right now there are more than 3,000 wells that have been or are being drilled in North Dakota.

By the end of the decade, 50,000 wells will be drilled.

I’ve owned and visited oil and gas drills in the past. Typically, 10 to 12 men are needed to run the drill.

Do the math...

North Dakota will be an employment bonanza.

Drill, Baby, Drill

But the Bakken is just one of many shale formations we can tap into.

A recent report by Bloomberg quotes New York Commissioner of Environmental Conservation Joe Martens that the Marcellus could add more than 13,000 jobs — direct and indirect to his state.

“That’s our most conservative estimate. The higher estimate is nearly 54,000 jobs,” Martens said.

And it’s not only right-leaning media outlets that are promoting the benefits of our shale resource. Last Friday, the liberal New York Times had this to say:

The U.S. now seems to possess a 100-year supply of natural gas, which is the cleanest of the fossil fuels. This cleaner, cheaper energy source is already replacing dirtier coal-fired plants. It could serve as the ideal bridge, Amy Jaffe of Rice University says, until renewable sources like wind and solar mature.

Already shale gas has produced more than half a million new jobs, not only in traditional areas like Texas but also in economically wounded places like western Pennsylvania and, soon, Ohio. If current trends continue, there are hundreds of thousands of new jobs to come.

~~wd_nat_gas~~

During his State of the Union, Obama directly addressed natural gas shale drilling, stating that his administration “will take every possible action” to safely expand shale gas drilling efforts.

Obama went on, “The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy.”

In his speech, the president emphasized the economic impacts of drilling: “We have a supply of natural gas that can last America nearly one hundred years. Experts believe this will support more than 600,000 jobs by the end of the decade.”

And remember, this is just natural gas development...

Oil shale production in the United States is also booming and creating jobs.

Two days ago, the U.S. Energy Information Administration said it expects oil shale production to increase 20% in ten years.

To put that into perspective, America produces 5.5 million barrels per day. By 2020, the EIA expects that number to jump to 6.7 million barrels a day — an increase of 1.2 million barrels.

That 1.2-million-barrel increase alone is nearly more than the combined oil production of Australia and India.

That’s how significant this is.

I’ve said it before, I’ll say it again: This is greatest investment event of the century.

The original bull on America,

~~WD_brians_signoff~~

Tectonic plates shift and a new paradigm is born.

In the process, many people get rich.

During the 1970s, BP found oil in the North Sea off the coast of Scotland. The stock jumped from $3.43 to $30.

When the Soviet Union collapsed, companies like Rosneft, Lukoil, and Gazprom went from being traded for scraps of government paper to over $200 a share, in the case of Rosneft.

PetroKazakhstan (PKZ), which has since been bought out by the Chinese, went from $0.25 in 2001 to $55.00 in 2005 — a massive return by anyone’s standards. 

Petrobras (PBR) went from $2 to $65 after it found massive oil in the offshore Tupi fields:

The easiest way to make money — in terms of time spent versus cash returned — is to research and buy oil exploration and development stocks.

When a company finds oil, the share price absolutely explodes to the upside.

Iran Wants a Bomb

There are a number of geopolitical time bombs that could triple the price of oil.

One of these is the EU oil embargo.

According to the Wall Street Journal:

European Union foreign ministers agreed Monday to impose an oil-import embargo on Iran and an asset freeze on the country’s central bank, escalating the confrontation over Tehran’s nuclear program.

The embargo bans the importation of petroleum and crude oil products from Iran, as well as insurance on such products. It goes into effect as of July 1 on existing contracts.

When Iran seized the hostages and Carter put on an oil embargo in November of 1979, the price of oil went from $14.50 a barrel to $38.

A similar jump today would equate to an oil price of $262/barrel.

In response to this embargo, a senior Iranian official said Iran would “definitely” close the Strait of Hormuz if an EU oil embargo disrupted the export of crude oil.

As I write this, the United States, UK, and France are all sending warships through the Straits.

~~vix-box~~

Economy

Iran is experiencing severe currency devaluation as well as inflation and basic material shortages. If the country can’t export oil, it will likely trip over into chaos.

There is a reasonable chance that the theocratic leaders will go to war in a nationalist bid to solidify their grip on power. They have a long history of such actions.

With this backdrop, China has distanced itself from Iran, a traditional supplier of oil, to seek supplies elsewhere; India — which gets 12% of its oil from Iran — has stepped in and is now trading gold for Iranian oil. This avoids the U.S. sanctions and undercuts the global dollar/oil price relationship.

India and China have an unquenchable thirst for energy.

India’s oil demand will increase by 25% over the next four years — all of which and more will be imported, as India’s own production is shrinking.

China is now the largest consumer of hydrocarbons in the world and its oil appetite it accelerating. Oil imports are expected to be up 5.6% this year, up from a 3.8% increase in 2011.

All of this big-picture stuff leads us back to the small picture and making money.

Over the past year, I put my Crisis & Opportunity readers into a series of oil exploration companies...

These companies all had three things in common: They were cheap, no one would touch them, and they were sitting on massive-potential oil finds.

Who's Laughing Now?

I’ve been buying up small microcap oil exploration companies for about 10 months now.

I’m not going to give away all of my picks, but all the charts look basically like this one:

Cove Energy (COV.L) is sitting on a record find of hydrocarbons.

It is close enough to sell this energy to Asia. There is currently a bidding war between Oil India (OINL) and a Thai petroleum company (PTTTEP) for Cove’s assets. Those are the two that have been made public. It would not surprise me to see a company like Sinopec (SHI) or China Petroleum (SNP) win out.

As I said, I’m sitting on about five of these stocks.

Their share prices are moving up rapidly and won’t be undervalued much longer...

~~wd_dividend2~~

All the best,

~~chris_signoff~~

A day later, the stock bounced $1.40. And we walked away with 34% gains.

And today, it's up another 34 cents... even as the markets show signs of breaking down.

But that's not the only opportunity we've had our sights on.

Notice that every single time the VIX closes below its lower Bollinger Band – which it just did again – it has a tendency to pop. I'd love to see a bottom for the VIX here and a decline in the overbought, over-extended market on this latest move.

(Chart from ZorTrades.com)

My wife is Chinese, so I’m obliged to participate in the celebration and customs… even the ones that go against my hygiene, like not bathing the first day of the New Year (bathing washes away the good luck for the coming year).

2012 is the Year of the Dragon.

According to this year’s Dragon prediction, investments will do well “with a steady income throughout the year.”

Gold and silver will do well, too.

According to the Wall Street Journal:

The year of the dragon is breathing new life into gold prices.

The Chinese have been loading up like never before on gold ahead of the Lunar New Year, which falls on Jan. 23 this year. It is a time of gift-giving that takes place during family dinners, with the older generation giving money to younger members. And as the Chinese have gotten richer, gold—in the form of jewelry, coins and even bars—is becoming the gift of choice.

In preparation for the festivities, China imported a record amount of gold in November…

In fact, recent reports suggest the Chinese have become gold bugs.

According to a January 19th Reuters article:

The explosive growth in the number of investors that have signed up is a symptom of the wider demand for the precious metal.

For Chinese shipping executive Ping buying gold is the best way to protect his family's wealth and give his 10-year-old son a head start into adulthood.

"For my son, the idea is that he will get a nice stash of gold that he can cash out when he turns 21 or when he gets married," said Ping, one of over 2 million people that have opened accounts in the past two years to accumulate gold at the Industrial and Commercial Bank of China (ICBC).

As a sign of surging demand for bullion, China's gold imports from Hong Kong in the first 11 months of 2011 more than tripled on the year.

China has one of the world's highest saving rates, and the public faces few investment options. A volatile stock market and a property market under government crackdown are driving investors to seek alternative investment choices.

"Chinese investors are looking for ways to protect their savings from negative real interest rates," said Nick Trevethan, Senior Commodity Strategist at ANZ in Singapore.

But here at Wealth Daily, we don’t rely on superstition to make investment decisions — we have charts!

On January 13th, I laid out my investment thesis for gold going to $1,950 this year. Here’s what I said...

Take a look:

Gold is setting up a double-bottom formation after selling off late last year.

You see, this pattern formed before — in 2008-2009.

In fact, it’s almost the exact same formation:

Gold broke out perfectly from the “W” formation… and hit the precise price target is was supposed to hit.

The current chart suggests a breakout to $1,950 — almost exactly what Goldman is predicting.

~~silver_signup~~

As I write this, gold is breaking out — reaching $1,681 an ounce. And silver is already having a monster year, hitting levels of $32.77 an ounce. Silver, in fact, is up 17% since the start of the year.

But the best is yet to come… and my optimistic prediction for gold and silver prices might be too low.

Despite the September 5, 2011 historic-high gold price of $1,895 an ounce, and despite the multi-decade-high silver price of $48.70 an ounce, gold and silver prices have yet to take out their 1980 historic levels, adjusted for inflation. 

The earlier all-time high of $850.00 would be $2,466 an ounce, based on December 2011 CPI-U-adjusted dollars.

In like manner, the all-time high price for silver in January 1980 of $49.45 an ounce still has not been hit since 1980, including in terms of inflation-adjusted dollars.

Based on December 2011 CPI-U inflation, the 1980 silver price peak would be $144 an ounce.

With demand still high for gold and silver — particularly in Asia — these two precious metals could hit those highs in the next 12 to 24 months.

Gong heefotchoy!

~~WD_brians_signoff~~

P.S. On January 31st (next Tuesday) at 6 p.m., we will be hosting a webinar on silver and gold. I recommend tuning in. It's free — and will include a 2012 gold forecast, the best ways to buy, and how to avoid taxes. But don't wait until next week to sign up... spots are filling up quickly.

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.

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.

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

Politics Killed the Pipeline, Not the Profits: When Elections Outweigh Energy Security
Why Obama's rejection of the Keystone XL pipeline will have bigger consequences for us in the future...

The Secret to Gold Prices: Real Interest Rates: TIPS Sellout at Negative Yield
Why would a record number of investors pay to lose money? Could it be they think inflation is coming?

Oil and Gas Service Stocks: A Different Way to Profit During this Shale Boom
Energy and Capital's Keith Kohl offers investors a new way to find profits during North America's shale boom.

Gold Buffalo Tribute Proof is a SCAM: Beware of This Gold Coin Scam
Editor Nick Hodge sheds some light on a gold coin scam that's been going around, and shows readers how to educate themselves about buying precious metal coins.

Obama's Hydraulic Fracturing Pledge: The Biggest Promise Obama Didn't Break
For all of Obama's flipping and flopping, it looks like he got one right...

Energy, Agriculture, Metals All Drifting Higher: The Commodity Supercycle
We've all seen what the commodity supercycle has done to copper, gold, and many other resources. Copper, nickel, gold, wheat, corn and, of course, oil will never again see the prices of the nineties and early oughts.

Yap Has No Gold: Limestone Blocks, the Ultimate Storehouse of Wealth
Yap, as you well know, is a coral island in Micronesia. According to the their Tourist Bureau: "Yap is so remote it takes a two day journey by plane, but the moment you step off the airplane, a topless woman will great (sic) you with a fresh flower lei."

Natural Gas Export Stocks: Will This EIA Report Push Natural Gas Stocks Higher?
Editor Jeff Siegel discusses what the coming EIA report means for natural gas stocks.

The Shale Boom is Giving Birth to Other Bull Markets: Bigger than OPEC
Those of you who remember the introduction of the drug Viagra to the in 1998 will agree it was a game-changer for the pharmaceutical markets. The same thing is happening in the American oil and gas shale boom.

Gold Coins and Freedom: 32 Miles from Purgatory
If you don't own physical gold, you should get some.

They are financial instruments that are guaranteed to keep up with inflation.

Right now, they are selling at a negative yield.

According to Bloomberg:

“The U.S. sold a record $15 billion in 10-year Treasury Inflation Protected Securities at a negative yield for the first time with investors willing to pay a premium to guard against the threat of rising consumer prices.

The TIPS were auctioned at a so-called high yield of negative 0.046 percent. The last four sales of five- year TIPS were at negative yields.”

Why would a record number of investors pay to lose money?

Could it be they think inflation is coming?

Real Interest Rates

Real interest rates are interest rates minus inflation. Real rates tell you what your return is in terms of buying power. And for U.S. Treasuries, real rates are negative.

The yield you get from a one-year U.S. Treasury bond is 0.00%; a two-year is 0.525%; a three-year is 0.25%; and a ten-year is 2%.

According to the Fed, the rates are going to stay low for a long, long time.

Who here thinks inflation won't go up more than 2% in ten years? Raise your hand.

Bueller. Bueller...

Right, so we can't make money on Treasuries.

Winter is Coming: Inflation

Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase.

As inflation rises, every dollar you own buys a smaller percentage of a good or service. (See my piece on the Fed destroying the dollar.)

As of yesterday, the Bureau of Labor Statistics reported that inflation as measured by the Consumer Price Index for 2011 was 3.0%.

One might think that 3% wasn't so bad — and it's not.

That said, the way the government measures inflation has changed over time.

They would tell you that the new method now reflects the fact that the iPhone 4S costs the same as the iPhone 4, but is more valuable.

But the real reason is that politicians don't have enough money for entitlements, and the electorate won't vote for candidates who tell them the truth: The lower the official inflation rate of inflation, the lower the cost of living increases that are built into programs like Social Security.

~~wd_junior_gold~~

Old-School Realities

If you go by shadowstats.com and use the pre-1990 official methodology for computing the CPI, inflation is running just over 6%.

If you use the pre-1980 methodology that was in fashion when Paul Volcker was Chairman of the Fed, inflation is now over 10%.

Gold Goes Up on Negative Rates

There is only one historically empirical reason to invest in gold and expect a return.

History tells us that gold is inversely correlated to real interest rates: Gold goes up when real interest rates are negative.

Take a look at this chart (the blue is real interest rates, the gold is gold):

And according to the smart money buying TIPS at a negative yield, real interest rates should continue to remain in a downtrend.

Pay Me, Baby: TIPS YieldGold is now down to $1,651 an ounce because the dollar bounced.

If you want a TIPS ETF, Pimco's one- to five- year U.S. TIPS (STPZ) returned 7.70% last year, though you might be late to the party.

All the best,

~~chris_signoff~~

P.S. Want to learn more about buying and holding gold? Take moment to sign up for our educational presentation on silver and gold. It will be held on January 31st and includes a 2012 gold forecast, the best ways to buy, and how to avoid taxes. It's free to all who sign up.

Last week, the White House released a report entitled, “Investing in America: Building an Economy that Lasts.”

Amidst tensions between state governments, energy companies, the EPA, and a self-appointed panel of scientists and college professors, the White House sent a clear message when it credited hydraulic fracturing and the Marcellus Shale formation with fueling an economic boom in the United States.

This represents a major deviation in policy by an administration which just yesterday denied approval of the Keystone Pipeline, a transcontinental delivery system designed to carry 500,000 barrels daily from Canada to consumers in the U.S. — creating 20,000 jobs in the process.

More significant, however, is that the White House is making this policy shift at a time when hydraulic fracturing is under more scrutiny than ever...

And this is the reason why:

Despite the fact that the EPA — as well as numerous private environmental groups, activists, and scientists — has been trying to demonize the process as inherently dangerous to the environment, specifically citing threats to groundwater, the Obama administration is left with no choice but to accept that this relatively new industrial process is largely behind the recent resurgence in domestic oil and gas production.

Efforts to block (or at least discourage) federally-mandated regulations are finding broad support as U.S. natural gas production hits an all-time high and prices touch 10-year lows.

However, what's good news for the job market and for the economy is still seen as a negative development for special interest groups:

"The Environmental Protection Agency announced Thursday for the first time that fracking — a controversial method of improving the productivity of oil and gas wells — may be to blame for causing groundwater pollution." — USA Today, December 2011

With isolated reports of groundwater contamination reported in several areas around the country, environment groups spent much of last year calling for increased regulations and transparency in drilling and fracturing practices...

Specifically, chemical residue from the hydraulic fracturing process has spurred groups to call for full disclosure of industry secrets that energy companies have spent decades perfecting.

But even with this pressure, the power of economic development has finally proven to be too much...

In an article published on Wednesday, January 18th, analysts at BP stated fracturing will transform the global fossil fuel industry as we know it in as little as 20 years.

Natural gas drilling rig in the Barnett Shale field in Fort Worth

Already the world's top ranked natural gas producer, the U.S. could become a net exporter of all major fossil fuels by the year 2030.

“Growth in shale oil and gas supplies will make the US virtually self-sufficient in energy by 2030, according to a BP report published on Wednesday. In a development with enormous geopolitical implications, the country's dependence on oil imports from potentially volatile countries in the Middle East and elsewhere will disappear.” — The Guardian, January 2012

Obama's apparent change of heart in the matter of clean energy has, predictably, not found much support from special interest groups.

~~wd_nat_gas~~

In August of last year, an independent panel of scientists from 22 universities and institutions sent Secretary of Energy David Chu an open letter urging him to modify the membership of the U.S. Energy Advisory Board committee

Dubbed the 'fracturing panel', the Energy Advisory Board — which was appointed to study the effects of fracturing on the environment — was openly criticized by environmental groups for consisting only of biased, pro-fossil fuel members who suppressed scientific testimony in an effort to block further scrutiny and potential regulation.

Critics claimed the fracturing panel failed to invite any external reviewers or independent experts, and was openly accused of having strong financial and political ties to the gas industry.

Of course, one man's controversy is another man's opportunity...

And as far as opportunities go, few have ever been as big — or as fast-moving — as this one.

Clearly, D.C.'s mainstream political machine is now waking up to the realities of the American fossil fuel renaissance...

And it's about time.

In 2010 alone, total U.S. proved natural gas reserves increased by an all-time annual record of 11%, with crude reserves surging by 9%.

All of this, though, is just the tip of the iceberg.

Hydraulic fracturing represents such a paradigm-shifting change in the way we mine for fossil fuel that even the famously indecisive Obama administration has no choice but to accept the realities unconditionally.

According to geological projections, an estimated 4.36 trillion cubic feet of natural gas — worth over $10 trillion, even at today's deflated prices — resides in the Marcellus Shale formation alone...

And as much as 24 billion barrels of total crude resource lies in wait in the Bakken.

To understand just how big a deal this is, think of it this way:

By 2018, Williston, North Dakota — a town of less than 15,000 and the heart of the Bakken formation industrial complex — will produce as much crude oil as the entire nation of India.

Before recent progress in the implementation of fracturing technology, however, the bulk of these reserves were inaccessible.

As the potential wealth is finally unlocked, and as traditional oil wells across the world peak out and go into decline, even the most green-leaning administration will have trouble ignoring reality.

Put simply, it's here to stay... and eventually, to dominate the world energy industry.

In the coming years, fracturing will become as commonplace as "strip mining" and "off-shore drilling" were in the 20th century.

In fact, thanks in large part to the widespread acceptance of this process, Obama's 2008 campaign commitment to cutting U.S. fossil fuel imports by one-third by the end of the decade could very likely prove to be the biggest promise he doesn't break.

None of this is news to industry insiders, of course. Professional investors have been tracking and profiting off this burgeoning sub-industry since the end of the last decade.

And at least for the next 20 to 30 years, things will only be ramping up as Uncle Sam heads toward energy independence for the first time since the 1960s.

Make no mistake about it; decades from now, American economic history will be separated into the pre-fracturing and post-fracturing periods...

Everything that comes after will rewrite everything that came before.

Stay ahead of the curve.

~~WD_brians_signoff~~

Good Investing,

Brian Hicks

They say you can wander the Smithsonian Institution in Washington, D.C., for all of your days and never see every exhibit.

On Saturday, I took my girls to the Natural History Museum to see the dinosaur fossils and the insect zoo. Much to my surprise, I found in the basement on the way to the cafeteria a large example of the fabled stone money of Yap.

Yap, as you well know, is a coral island in Micronesia.

According to their Tourist Bureau: “Yap is so remote it takes a two day journey by plane, but the moment you step off the airplane a topless woman will great (sic) you with a fresh flower lei.”

You can't beat that.

But it's not the topless women that make Yap interesting. It's their money.

What Is Money?

There's no gold or silver on Yap, and all the basics of living — food, clothing, and shelter — are readily available and free for the taking.

This situation leads to an interesting tale...

Centuries ago, explorers found limestone deposits on another island 250 miles away. They carved this limestone into huge stone discs, which they brought back across the sea with canoes towing bamboo rafts.

Those explorers must have been great salesmen, because they convinced the others that these stones were items of wealth.

The people of Yap, being people, took the rare (to them) limestone blocks not just as money, but as a storehouse of wealth.

The small pieces they traded for everyday things like pigs and fish.

But the larger pieces would be used for a large purchase, such as a dowry. Or perhaps if someone found themselves down on their luck, and had a bad crop, they might trade.

One man was towing back an extremely large stone when he was hit by a storm. In order to save himself, he cut the raft free and the stone sank.

This stone — which no one alive has ever seen — still has tremendous value.

It has been traded many times, and is now owned by the richest family of Yap.

Teutonic Terror

When the Germans took over the island around 1900, they wanted to build roads.

But the islanders wouldn't work, and nothing could convince them to leave their idyllic life for the backbreaking work of crushing coral.

The Germans finally put a tax in the form of a black cross on the stones. They claimed ownership as a fine against the roads being built.

This did the trick, and the roads were built. Acknowledging the debt paid, the Germans gave back the money by removing the black crosses.

Most times, the stones remain in the family and don't change hands at all.

Imagine there's this great big stone disc leaning against a tree...

One person gives it to another person. But the stone doesn't move; it's just that everyone in the village knows the stone now has a new owner.

~~gold_signup~~

Federal Reserve Bank of New York

As we all know from that Bruce Willis movie, the largest gold stash in the world is stored under the Federal Reserve Bank of New York.

There are 550,000 bars of gold buried deep in the bedrock of Manhattan.

But the vast majority of this gold doesn't belong to the United States. It belongs to the various countries of the world.

When France, say, owes China a billion dollars, a guard puts some bars on a dolly, an accountant makes a note, and the gold goes from the French closet to the Chinese one and is earmarked, or stamped, for the new owner.

No one from China or France ever sees the gold. The gold does not move from the depths of the earth.

And yet the fortunes of millions of people change in some way by this single action.

When you pay your phone bill online, nothing really moves except for some zeros and ones in a server somewhere. But everyone agrees that the transfer of wealth has taken place.

Today, the stone money of Yap still has value — and the wealth of the village is determined by it.

The rest of the world has vested gold with the sacred property of value.

Gold is the king of metals. It has been since before Hatshepsut of Egypt built two hundred-foot columns capped with gold that could be seen for miles.

If I was a betting man — and I am — I'd say that gold has been and always will be the last storehouse of value for mankind.

Buy gold,

~~chris_signoff~~

P.S. On Monday, I proposed to you that gold was freedom. Today I offered up gold as a storehouse of wealth. On Friday, I will give to you the most valuable gold secret of all... Stay tuned.