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Im leaving for an urgent business trip early tomorrow, but with the gold market going berserk to the upside, this is not exactly a good weekend to miss sending you an update. Plus, in a moment, Ill tell you about a couple of natural resource sectors that have even better potential than gold. The Gold Phenomenon Ive been intensely watching gold ever since I started working with Martin and Larry several years ago. And to me, the gold phenomenon youre seeing right now is typical of a once-in-a-decade price explosion. One moment you see the yellow metal meandering in what appears to be a drawn-out correction. The next moment its blasting off. One moment, the talking heads on TV can be seen pooh-poohing gold … the next moment theyve got egg all over their faces. Larry, Martin and I dont always agree on everything. But right now, were in agreement that this kind of gold market is a sign. Its a giant marquee carrying three urgent messages for investors … The first urgent message is about gold itself.
Indeed, gold has now cleared all significant hurdles on the charts … has gained strong forward momentum … and has embarked on a virtually nonstop surge. All along, Larrys target has been $500 or so … then $540 … and on to higher levels. I admire the fact that he has stuck stubbornly to those targets through thick and thin. And I think most people who might have disagreed with him in the past now acknowledge his foresight. Corrections in between? There will be more of those. Larry is not a die-hard gold bug that promotes the metal despite all contrary indicators, and nor am I. When we see a correction coming, we do our best to warn you. But thats not now. Now, the correction is over, and gold is on the move. So if youre not yet on board with our gold recommendations, its not too late to get started. A staple for your portfolio: GLD, the exchange traded fund that tracks gold bullion. The second urgent message is about whats driving gold higher. Its tight supplies. Its surging demand. Its the growth of China and other Asian countries. In short, The forces driving gold through the roof are exactly the same forces that are driving copper, silver and other metals … oil, natural gas, and other energy sources. So if your focus is strictly on gold, its time to diversify. Or if youre worried about the correction in crude oil, rest assured that gold is pointing the way: Up. The third urgent message: Other natural resources offer even higher profit potential! Right now, for example, Im looking at a red hot Canadian coal producer valued at less than 10 cents on the dollar. It could become one of Chinas next takeover targets. And it has the potential to deliver profits of up to 900%. This company has grown into one of the best small-cap coal miners in North America. Its exploiting high-quality, low-cost assets covering over 100,000 acres in western Canada. It doesnt have to spend much on infrastructure because it can take advantage of existing facilities in the region, including rail lines, ports, and a nearby town. Plus, it has little debt. Meanwhile, the company is sitting on more than 40 million tons of proven and probable reserves in the higher-priced metallurgical coal. Assuming an average of about $90 per ton, youre talking about $3.5 billion. And yet it has a market cap of less than $300 million, or less than 10 cents on the dollar. If the companys market cap goes to a still-cheap 20 cents on the dollar, you could already be looking at a nice 100% gain. Thats my minimum target level for this stock. But for reasons Ill explain in just a moment, I think it could move up to 50 cents on the dollar, giving investors a 5-fold gain. And if China or any other energy-hungry buyer swoops down and grabs up this juicy morsel, all bets are off. The company could go for a premium that could generate up to 9-for-1 profits to early investors. I cant guarantee a takeover. Nor should you count on one. But even if Im wrong, this company could still be in the forefront of one of the hottest commodity booms in the world today. Behind the Scenes, Coal Prices Are Gold is a market that most investors can follow easily. You can watch it on the New York or London gold bullion exchanges. Or you can track GLD, the exchange-traded fund I recommended a moment ago. Much of the coal market, however, is traded behind the scenes on a direct, contractual basis. So few average investors know whats going on. For them, thats too bad. Theyre missing a once-in-a-century move in coal that has already begun.
Right now for example, while gold has been surging in full view, coal has also been surging but its off most investors radar screens. Metallurgical coal, not traded on any exchange, has just erased 20 years of price declines and more.
And theyre now on their way to new, multi-decade highs! With this kind of a price surge … Investors in Large-Cap Fording Canadian Coal Trust has surged from just $5.47 per share to as much as $45 in less than three years. Massey Energy has jumped from about $7 to as high as $57, also in three years. Peabody Energy catapulted from about $12 to $86 in the same period. Looking ahead, there are still good opportunities in major coal companies. But at $40 – $90 per share, much of the easy money is already made in these large-caps. Thats why investors aiming for bigger growth are starting to look at the smaller companies that could be in the forefront of the next wave. And thats also one reason I have my sights on Canada, which most investors have so far failed to explore. But this coal-mining company is just one of the natural resource small caps that could be a takeover target for energy-hungry giants like China. Heres another … Red-Hot Canadian Tungsten Producer I am also looking at a small Canadian mining company in another sector. The companys shares have a total value of about $87 million. At the same time, the company has as much as $276 million in reserves of a rare metal which is currently in scarce supply and great demand worldwide tungsten. Do the math: The companys proven tungsten reserves, when mined, could be worth at least three times more than the companys current market value. In that sense, the company is selling for only pennies on the dollar. Of course, minerals in the ground and minerals ready for market are two different things. But the price of tungsten keeps soaring. Even if this company is valued at the current price of its reserves, its share price could easily triple. Thats the Kind of Huge Potential Profits You As I see it, these small cap stocks have all the advantages of options but without the disadvantages. Like options, theres no obligation beyond your initial small investment in these shares, plus any minor commissions you pay your broker. And like most options, theyre very cheap, as little as $1 per share. But unlike options, this is an investment with no expiration date. You can hold it as long as you want. And provided the company remains solvent, no one can place a time limit on your opportunity. So unlike options, you have time. If it takes some time for this company to build up its revenues and for the stock to take off, thats OK. Or, if the stock goes ballistic very soon, and you can cash out with a big, quick profit, thats even better. And right now, I have every reason to believe that this could be one of the quick ones, either with a takeover or based on its own operating results. Why Im Focusing Canada is easily the strongest, most stable, natural resource nation in the world today. In Alberta, Saskatchewan, British Columbia, and beyond the Arctic Circle, Canada has massive deposits of coal, uranium, oil, and other vital resources, with more waiting to be discovered. And Canada is already cashing in. In September, while the U.S. recorded its worst trade deficit in history, Canada has just reported its fifth best surplus in history. Canadas biggest trading partner is the United States. But China is coming up fast. Last year alone, Canadas trade with China jumped 50%. And at $15.5 billion, trade with China is just beginning to take off, fueled by the rising Chinese demand for Canadas natural resources. Youve Already Seen Canadas success should not be news to you. In fact, if youve been following us for a while, you may have already invested in Canadian companies with results that far exceeded our expectations. Example: You may have bought Enerplus (ERF), a Canadian natural resource company designed mostly for income. Our main goal was to earn about 10% yield, and we would have been quite satisfied with that result. As it turned out, in addition to getting nearly all the yield we hoped for, the price of the stock also surged 2.7 times: On October 3 of this year, the stock closed at $48.05. Exactly three years earlier, it sold for only $18.11. Our subscribers didnt get in at the bottom nor sell at the top. But if they were following our instructions, they had the opportunity to pick up a good chunk of that gain. Now, if you like the gains you saw in Enerplus, consider the results you could achieve in Canadian companies explicitly designed for rapid growth. Consider, for example, Innova Exploration. Its share price is up 558% in the last three years. And its not alone in this type of performance! Two other Canadian companies, Paramount Resources and Real Resources, rose 406% and 444%, respectively. Nor are these the most extreme examples! Transglobe Energy, for example, a stock that sold for less than $1 per share in November 2002, rose 1,192% through last week. Even if you can only achieve a fraction of that performance, you could still double or triple your money. Many of these 3-year super performers are in the energy sector, where new opportunities can still be found. But what we find especially intriguing is the fact that there are now several other natural resource sectors that could duplicate this growth in the next three years. Prime examples: Coal and tungsten, two of the sectors where Ive picked out some red-hot small caps to visit on my trip to Canada early next week. The Risks of Investing I rarely recommend penny stocks theyre usually too small. But even stocks such as the ones Ive told you about now, selling for less than $10 per share, harbor some risks you should be aware of. Risk #1: Theyre not as liquid as big caps. You have to take care getting in and out. Risk #2: It can be risky to invest in these companies strictly based on information you can get from your broker or on the Internet. Unlike most larger, long-established companies, you cant blindly assume that they have sound management. Before you can confidently pull the trigger and spend real money, you need to know more. How to Buy Red-Hot There are many brokers, including Ameritrade, E*Trade, Fidelity and InterActive Brokers, that can handle these shares seamlessly. Others, like Merrill Lynch and Schwab, will also buy them for you. Theyll just ask you to go through their international desk. No special accounts need to be set up, and no special arrangements need to be made. So theyre easy to buy. But buying them right takes a lot more care and attention. First, avoid companies that are essentially one-engineer, big-debt operations. I recommend companies with experienced management, a solid, stable balance sheet and relatively diverse resources. Second, you need to watch the market activity each and every day, including the volume of trading and the pattern of the price movement. Third, you need to avoid scooping up a very large number of shares all at once. I recommend buying them in an orderly, step-by-step fashion over a period of several weeks or even months, observing a disciplined set of rules. You can do this on your own, following these general guidelines. Or I can do it for you with my new Red-Hot Canadian Small-Caps service. I head up the team as editor. Plus I have Larry Edelson on board, for his broad knowledge of natural resources, and Martin Weiss as my publisher. When you join, I will immediately send you my Guide to Canadian Natural Resources, a handbook designed to give you a broad understanding of the big picture plus all the specific details you need to help maximize your chances for success. And as soon as I get back from the Thanksgiving holiday, I will start sending you explicit, easy-to-follow instructions on exactly when to place your orders, how much to pay, and how many shares to buy. All my instructions go out instantly via e-mail. And I send them to all members at exactly the same time. This is a high-powered service, using investments that require continual, intensive monitoring to maximize the chances of achieving those goals. Needless to say, profits are not guaranteed. You CAN lose money. But the risk is strictly limited to the small amounts you invest in these companies. Moreover, unlike options, there is no time limit. And the potential profits are unlimited. The profits are not limited to the 406% or 444% appreciation I told you about, on Paramount Resources and Real Resources. Theyre not even limited to the 1,192% gain you saw on Transglobe Energy. The skys the limit, and the most you can lose is the small amount you invest in these shares plus any commissions you pay your broker. Two Essential Limitations If youre interested in joining me and my team, please be aware that there are two essential limitations to this service: Limitation #1. The service is capped at 500 members. Theres no room for a crowd of investors piling in all at once. Limitation #2. The membership term is essentially three years. By the end of the three-year period, our intent is to help you cash out and then close the service. With some stocks, we could cash out a lot sooner. Plus, we will be continuing to issue new recommendations as we move along. But as we see it now, the time horizon for our core recommendations is about three years as this commodity boom unfolds. Our goal is to make this work for you in a big way, and we cant let the calendar make the timing decisions for us. So if we have to extend the service, we will charge you no additional fee. The one-time cost of the membership is $5,000, and thats all youll ever have to pay for the service. However, if you decide to cancel at any time, thats OK. In the 33 years since this company was founded, no request for our standard pro-rated refund has ever been rejected. Or, if you prefer to do this on your own, thats also OK. I recommend you stick with the big-cap stocks like the ones I discussed earlier. The downside: With most of those big cap stocks selling for close to $50 or more, by the time youve bought just a couple hundred shares, the additional investment will already be far more than the entire cost of the service for the three years … and with greatly reduced growth potential. First Recommendations to Be Martin has asked me to fly up to Canada to visit these and other companies immediately to make sure everything is in order before recommending their shares to investors right after Thanksgiving. I take off for western Canada Sunday morning. I visit the companies Monday and Tuesday. Wednesday, I fly back and my wife will pick me up at the Tampa airport so we can drive down to Sarasota to spend Thanksgiving with my parents. But while theyre finishing up the turkey, Ill be busy putting the finishing touches on my recommendations. And assuming market conditions are right, as soon as I get back to work Monday morning, November 28, out goes the alert with my final picks. So if you want to guarantee your membership and be on board before I issue my alert, be sure to contact us by Sunday, November 27. And if you want to make sure youre among the 500 who sign up, it may be a good idea to call us right now. To get on board, call Rachel right away at 800-871-2374. Or, you can order online at our secure website. Yours truly, Sean Brodrick About MONEY AND MARKETS MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Michael Burnick, Beth Cain, Amber Dakar, Scot Galvin, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others. 2005 by Weiss Research, Inc. All rights reserved. |
Better than Gold!
Larrys off today, and he asked me to jump in to write to you this morning. 
Its very simple: Gold is going much higher. Period. 
But you can use it to your advantage. If you know what coal prices are doing, you can invest in coal-based companies before most investors get wind of the rise.
Meanwhile, ordinary coal prices, which just suffered a minor correction, have already erased their correction in a pattern similar to golds, but in a somewhat different time horizon from gold.Previous post: Gold at 18-year high! GM bankruptcy ahead!
Next post: Housing Bust Spreading!
