Bird Flu Spreading Rapidly

The avian flu pandemic is spreading rapidly.

In the last few months, the epicenter of the disease, previously limited to China and Southeast Asia, shifted to Turkey and Iraq.

Last week, it was reported in Greece, Italy and Slovenia.

And just this week, Germany and Austria reported infected birds, bringing the number of European Union countries that are affected up to five.

This is a major threat to humanity. At the same time, it is also an unusual opportunity for investors to do well by doing good investing in the companies that will be helping to protect society from the worst-case scenario.

Unfortunately, however, one piece of that scenario has already fallen into place with …

The Avian Flus Sudden and Recent
Appearance on the African Continent

This is the event that world health care officials have been dreading praying it could be prevented or at least put off. Now, unfortunately, it has happened. The Washington Post puts it this way:

In the worst possible case scenario the H5N1 virus was detected this month in Nigeria, Africas most populous country and one of its poorest.

If there was a country least equipped to deal with avian flu, Nigeria is at the top of the World Health Organization list. It has weak veterinary and public health infrastructures and a very large and poor population that depends on poultry for food.

The same can be said for most of sub-Saharan Africa.

There are few health care facilities on the continent, fewer trained health care workers and, except perhaps for countries like Egypt and South Africa, no labs that can facilitate early detection.

That means that vast, densely-populated regions stretching from the Sahara desert in the north to the Kalahari in the south are fertile breeding grounds for the disease.

The Biggest Fear of All

The ordinary, seasonal influenza virus is also widespread in Africa … also poorly detected … and also poorly reported. Therefore …

Now, as thousands of Africans become infected, the H5N1 virus will have dramatically increased opportunities to exchange genetic material with ordinary flu viruses, gaining the ability to transmit itself among humans.

Thats when the danger of a human pandemic will be the greatest. And thats when the fear-reactions around the world will suddenly intensify.

4 Urgent Questions
For All Investors

How can investors avoid losses in the wake of a pandemic?
How can they make money, and do so in a way that benefits humanity?
Will investment capital be directed to worthy companies that are truly going to make a difference and help prevent a real disaster?
Or will it be diverted to companies that rise and fall like dot-coms, leaving society vulnerable to a worst-case scenario?

This morning, Ill take a first crack at giving you some answers.

How to Invest in the Companies
That Will Help Protect Us from
The Worst of Worst-Case Scenarios

Thanks to Martins foresight, we were among the first to warn our readers of this crisis. And thanks to his leadership, we are staying on top of it daily through a research partnership with one of the leading think tanks in the field, Bio-Era.

Well share more information from our research partners in future issues. For now, let me tell you about the opportunities as I see them.

The most immediate one: Governments and companies all over the world are spending money hand over fist in a desperate, but valiant, drive to prepare for the bird flu pandemic. This is your chance to help … and your opportunity to make a fortune for yourself and your family.

No, the world is not going to come to an end. The global economy will not fall into a century of dark ages. We can get through this. But, anyone who tells you its going to be a non-event has their head stuck in the sand. Let me share the facts I learned, first hand, starting with my last trip to Asia:

Fact #1
Despite Herculean Efforts by
Health Officials, the Avian Flu
Cannot Be Contained.

Asia and now Africa are giant incubators for this deadly virus exploding population growth … poor hygiene … poverty … overcrowding … lack of proper sanitation … spotty communication networks … lack of health care facilities.

In Thailand, I saw for myself how poor farmers hide their own chickens inside their homes even while health officials roam the streets, seeking to kill millions of infected birds. In Africa, its going to be even worse.

Fact #2
It Will Be Devastating, with Temporary but
Massive Shutdowns in the Global Economy.

Fortunately, it will not be the end of the world.

The reason: The greater the fear factor of the bird flu peril, the more successful the efforts will be to prevent the bird flu peril.

And, I can assure you: There will be no lack of fear. There will be a worldwide panic in financial markets, at ports of entry, and in virtually every city across the globe. The result: Devastating shutdowns in the global economy.

Fact #3
World Leaders Have No Choice but to
Throw Tons of Money at the Threat!

Politicians, health officials and central bankers around the world are acutely aware that there could be an ultimate disaster, including the massive, global economic shutdown. So are top CEOs at the worlds largest companies.

They have no choice but to prepare for the worst, just like they did for the much-publicized Y2K scare. They will spend whatever money is necessary to make sure the world survives the bird flu peril.

Fact #4
About $10 Billion Has Already Been
Set Aside for Avian Flu Defense.
And Thats Just the FIRST Phase!

The bulk of this cash will find its way into the coffers of just a small number of select companies that stand to make a fortune.

The threat of a full blown, catastrophic pandemic is so real and so terrifying, that world leaders cannot afford to get caught with their pants down. They must do anything and everything possible to slash the risk of the pandemics consequences. They have no choice, because

If They Dont Do Enough to Stop
A Pandemic, Then Heres the
Worst Case Scenario We Face:

First, avian flu could be almost everywhere in days.

World health leaders fear that the bird flu peril could pop up in hundreds of cities around the world with astonishing speed. Advanced countries, including the U.S., would not be spared. In fact, the more affluent and mobile a population, the more likely it is to be hit early. Big cities with international airports would be among the first.

Back in 1918, the Spanish flu pandemic killed 50 million at a time when the world population was much smaller and it took days and even weeks to travel between continents.

Now, millions of globe-trotting travelers are jetting around the world in less than 24 hours. Moreover, the avian flu is currently 25 times more lethal than the Spanish flu, killing about half of those infected with the virus. Even if it weakens, its likely to be far deadlier than the Spanish flu which killed 2 people out of every 100 that were infected.

Second, as many as 150 million could die.

In a worst-case scenario, the first few hundred cases would explode quickly to a few thousand. And then, almost overnight, there would be a full-blown pandemic with hundreds of thousands dying daily … hospitals and health care facilities overwhelmed and forced to turn away the sick … the dead left unburied by workers who refuse to touch the infected bodies.

Third, life and commerce as we know it would grind to a halt.

Panicked governments around the world would close border crossings and sea ports … impose draconian travel restrictions … shut down airports, bus depots and train stations. Subways would cease running … commuter trains would be cancelled … truck terminals would be shut down … delivery of food, gasoline and heating oil would cease. Even for the healthy, life as we know it would grind to a halt.

Fortune 500 corporations would be forced to suspend work or shut down entirely. Meanwhile, their sales would plunge: The more consumers that are home sick or dying, the less money they could spend. The housing bubble would burst as millions of Americans would miss mortgage payments. Banks would freeze nearly all new lending.

Conservative estimates of the economic consequences of a pandemic range from $500 billion to over $800 billion in the U.S. alone. Senate Majority Leader Bill Frist says it will be $675 billion. But these figures include just the direct impacts hospitalizations, vaccines, and health care costs. They dont factor in the chain reaction of disruptions to critical supplies and services.

Meanwhile, the White House has warned that it could kill up to 1.9 million Americans and infect one in three. That means roughly 90 million Americans too sick to function.

Lets pray theyre wrong. And lets hope these dire prophecies galvanize world leaders into doing what it takes to prevent the worst of the prophecies from coming true.

My view: World leaders have no choice but to spend, spend, spend, to keep the sky from falling.

Five Companies to Get The
Lions Share of the Money

This month, I am completing a special report for investors. My topic: Five companies that I think will get the lions share of the first $10 billion, at least doubling the money of their shareholders.

Currently, Tamiflu, made by Roche, is the only effective treatment for influenza. But Roche has already said it cant possibly manufacture the billions of doses that will be needed. So its negotiating with others to license the drug. In my upcoming report, I will provide the latest on which companies have got their fingers in that pie.

The dilemma for pharmaceutical companies is that its impossible to create a vaccine for a virus strain that does not yet exist. Until the virus mutates into one thats contagious through person-to-person contact, the focus has to be on setting up the machinery for the future manufacture of vaccine.

One of the big pharmaceutical companies youll read about in my report has already signed a $100 million contract with the U.S. government to develop a bird flu vaccine as soon as a contagious strain appears. And thats just to develop it not to manufacture or distribute it. If they come up with an effective vaccine, the worldwide demand will be huge, and the rights will be worth staggering amounts of money.

In my report, entitled Follow the Money 5 Companies That Will Get the Lions Share of the $10 Billion Avian Flu Defense Budget, youll also learn about another big drug company thats an even bigger opportunity.

Its stock has been beaten up because its new flu drug failed phase III testing. But now, subsequent tests are showing that a single injection of this new drug may be comparable to five days of Tamiflu treatments, greatly lowering the risk of death from bird flu.

A New Method For
Making Vaccines

The traditional method of manufacturing viral vaccines involves injecting fertilized chicken eggs with the virus. These eggs then serve as incubators. But to use this old technology, billions of chicken eggs would be needed.

Where are the eggs going to come from? Health workers in Asia and China have already destroyed more than 140 million chickens. If the disease takes hold, the worldwide slaughter will make chicken eggs scarce. How are the drug companies going to come up with the billions of needed eggs?

No chickens … no eggs … no vaccine!

To overcome this dilemma, a company named in my report is working on a new cell-based technology to grow viruses using a line of immortal cells. Its a fascinating story.

The U.S. government and the FDA are already helping this company set up shop with a multi-million dollar contract. We estimate that when theres a contagious-among-humans form of the virus, a contract to supply the vaccine could be worth $120 million in the U.S. alone.

A few of the big drug companies (as well as one or two you probably never heard of) are likely going to rake in some major money in the rush to develop billions of doses of vaccine not to mention huge quantities of drugs.

But Thats Just the
Tip of the Iceberg!

In addition to vaccines and drugs, theres also a whole second tier of flu-related products that will be desperately needed: Disposable face masks and latex gloves … hospital-strength disinfectants … and much more will have to be stockpiled immediately. And experts estimate that some supplies will need to be 10,000 times greater than the inventories that hospitals maintain in normal times.

Moreover, these preparations must begin now whether the pandemic strikes soon or not.

One company in particular dominates this sector. Its the major supplier to hospitals, clinics, nursing homes and emergency triage centers that local governments will be forced to establish in a pandemic.

Youll find all the details in my soon-to-be-published report, Follow the Money: 5 Companies That Will Get the Lions Share of the $10 Billion Avian Flu Defense Budget.

Another Way to Get Richer:
Look Who Made a Fortune
in the Last Pandemic!

The Y2K scare tells us governments and industry will spend whatever it takes to head off disaster. And to a great extent, theyll succeed at lessening the impact. But, although I expect they will prevent the worst-case scenario, they cannot prevent a worldwide pandemic from occurring. And they certainly cannot prevent the fear of a pandemic.

So lets look at what happened to the U.S. economy and the stock market in 1918 the last time we had a pandemic of this magnitude.

It was the Spanish flu, and it killed an estimated 50 million people worldwide. Thats widely known. Whats not so well understood is its impact on financial markets.

Starting almost immediately, when the Spanish flu first hit in Asia and Europe, the price of commodities went through the roof. Copper rose 50% … silver was up 30% … and hot-rolled strip steel rose by 67% in the two years following the outbreak.

The Spanish flu was not the only factor, of course. But look at how prices of everyday products went crazy when the Spanish flu invaded America in 1918:

The price of cotton was up 61% within 15 months … bacon went through the roof, more than doubling by 1919 … butter surged from 46 cents a pound to 74 cents in a matter of months … oranges jumped from $4.87 a box in January 1918 to $8.12 by August of the same year … coffee was selling for only 26.7 cents per pound in April 1918 but for a whopping 45.1 cents per pound by the end of 1920.

What can happen next time around? Simple: When hundreds of thousands of anxious Americans are either too sick or too afraid to report for work, it could cause a chain reaction of acute shortages … and these shortages are certain to drive prices of critical commodities through the roof.

Without workers to replenish the supply lines, nearly everything people need in their daily life will quickly become scarce. And as supplies dwindle, inflation will escalate, just as it did in 1918.

Gasoline Could Hit $7
A Gallon at the Pump!

When the Spanish flu struck in 1918, the price of coal, the major source of energy at that time, was $2.57 per ton. By the time the world was beginning to recover, the price had risen 179% to $7.18 a ton all in just 2 years!

Thats like $2.50-per-gallon gasoline going to $7!

Youve already seen what Hurricane Katrina did last year to the price of crude oil and gasoline: Days before the storm hit, there were long lines at gas stations as worried drivers began filling up their tanks and gallon jugs. Similarly, the mere rumor of a bird flu pandemic will likely lead to hoarding which could drive gas prices through the roof.

Think about it what will happen to the price of oil if international borders are temporarily closed and oil tankers cant enter our ports? What will happen when workers at refineries and on oil rigs get too sick to work?

If oil imports were cut off even for a few weeks, wed see its price double virtually overnight! Even the mere suggestion of port closings would send the price soaring. And those kinds of events will begin in earnest just as soon as the first few cases of contagious person-to-person flu are reported.

Even at todays level of $60-$70 a barrel, oil is spreading worldwide inflation and helping to drive other commodity prices higher. Next, with oil surpassing $100 per barrel, the consequences are both inevitable and indisputable.

What to Do

First, dont let the latest correction sway you. Stick with the energy and other natural resource investments Ive been recommending. They are being driven higher by chronic and powerful supply-and-demand imbalances. And they will be boosted far further before, during and after a pandemic.

That includes my favorite mutual funds, such as: Scudder Gold and Precious Metals Fund (SGLDX) and US Global Resources (PSPFX).

Second, stay safe. That means keeping a big chunk of your money in Treasury bills or Treasury-only money funds.

Third, reserve your copy of my report, Follow The Money 5 Companies That Will Get the Lions Share of The $10 Billion Avian Flu Defense Budget.

Right now, I am mailing an offer for the report to hundreds of thousands of investors. When its released at the end of this month, the report will sell for $145.

But for just $99, the full report is yours absolutely free simply by starting or renewing your subscription to my Real Wealth Report for one year. Call 800-604-3649.

Best wishes,

Larry

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, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.

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