Energy Crisis Update

It’s been a tough week for
America
so I hope you’re enjoying the holiday weekend. If you have been directly affected by Katrina, my heart goes out to you. I know you will get through it.

Martin’s busy researching a whole other area of the energy sector which he’s anxious to tell you about later this week. Today I’m filling in for him, and I’m happy to do so.

I want to update you on the energy crisis in the Gulf of Mexico, including some urgent issues I feel you need to know about before the markets open Tuesday morning.

First, 79% of daily Gulf oil production remains shut down.

That equates to a loss of about 1.19 million barrels of oil per day. It’s bound to improve with time, but due to the continuing chaos in New Orleans and surrounding areas, the recovery efforts have been slower than generally anticipated.

Second, the natural gas production is still 58% shut down.

This implies greater progress with gas recovery efforts than with crude oil production. But it’s still lagging behind the expectations of most industry experts.

Third, the long-term damage from Katrina is about four times Ivan’s.

This is still a preliminary estimate, but it’s probably not too far off. Hurricane Katrina struck with greater force than Ivan. It was a more direct hit to the Gulf’s oil facilities. It affected a much broader area. And sadly, it arrived at a time when operations in the Gulf were STILL not even fully recovered from Ivan.

Hurricane Katrina has wiped out most of the post-Ivan repairs … damaged new, previously untouched oil platforms … and even raised serious questions about the long-term viability of Gulf oil facilities as a whole.

Bottom line: It could take up to three years to get the Gulf completely back on its feet.

Fourth, oil and gas prices are bound to swing WILDLY.

You’ll see some of the most dramatic single-day advances in history, followed by sharp, but lesser, declines.

You’ll hear extreme, often unfounded, rumors on both sides of the market – both bullish and bearish.

My recommendation: Look beyond the day-to-day fluctuations, largely ignore the rumors, and stay focused on the fundamental facts that I’ve been reporting to you here, all pointing to substantially higher prices in oil and gas.

The bull market in energy is far from over.

Your best strategies right now? As I pointed out in Saturday’s issue, the best defense is a good offense …

First, keep the bulk of your funds safe. We recommend a liquid money market fund that owns strictly the highest quality instruments, such as short-term Treasury securities.

Or you can bypass money market funds and invest through the Treasury Direct program. I recommend the 13-week (3-month) Treasury bills. You set up your own personal account with the U.S. Treasury Department. The minimum investment is only $1,000. And you can opt for automatic roll-over each time the bills come due.

The main disadvantages: Unlike a money fund, if you need your money before the T-bills mature, you will have to transfer them to a broker, a process that can take a couple of weeks. And, you get no check-writing privileges.

The main advantage: No fees. So 100% of the interest income goes to you. For a guided tour, visit their site.

Second, steer clear of long-term bonds.

The last time inflation and the economy were in a situation like today’s, in April-May of last year, 30-year Treasury bonds plunged by 12% in value, effectively wiping out over two years of interest income in just a few weeks.

And back in late 1999, the shock to bond investors was even greater – more than a 20% loss in less than a month.

Today, with energy and other commodity prices surging and inflation heating up, we believe bonds are now vulnerable to an equivalent decline.

The one exception is TIPS, Treasury Inflation-Protected Securities, which are also available through the Treasury Direct website I just referred you to. They can still fluctuate in price, but not nearly as much as the 30-year Treasury bonds that offer no inflation protection.

Third, get rid of the most vulnerable stocks. In my view, that includes virtually every stock market sector except gold, energy and other natural resource companies.

To help determine which stocks in your portfolio are the most vulnerable, check their Weiss stock ratings. Given the urgency of this situation, Martin will jump in tomorrow to introduce you to his brand new Weiss Ratings website that gives you the Weiss ratings instantly, helps you track your stocks and even sends you an e-mail alert whenever their ratings change.

Fourth, for your speculative funds, today is the last day 2-for-1 Charter Memberships are available in my Energy Options Alert.

After midnight today, the price of the membership reverts back to the normal rate, effectively double the rate of the Charter Membership offer.

The profit potential is extraordinary: In less than five weeks, for instance, subscribers acting on my recommendations have seen their positions surge 44% … 48% … 52% … 128% and 161%.

Not every trade can be a winner of course. But open positions are also up – by as much as 72.7%.

And early this week, I’m anticipating another buying opportunity: As various countries release more oil from their strategic reserves, it will cause a momentary dip in both oil prices and oil stocks.

That will give us the window. But it won’t last very long. Savvy traders realize that these announcements do NOTHING to ameliorate the severe and chronic supply-and-demand imbalances in the world today.

Energy Services Companies
Are About to Reap Their Biggest
Earnings Windfalls Ever

In the Gulf, multibillion-dollar rigs and platforms destroyed by Katrina will need to be replaced. Others, seriously damaged but recoverable, will need multimillion-dollar repairs.

New oil and gas wells need to be drilled. Old wells need to be rebored. Massive amounts of debris have to be removed. Shattered pipelines at the bottom of the Gulf, the most difficult challenge of all, will take months to restore.

And in many cases, merely rebuilding the previous structures may not suffice. New, time-consuming risk-assessment studies will be needed before a lot of the work can even begin.

Companies specialized in this field will see a surge in their volume of business.

For instance, one of the companies I just recommended to subscribers to my Energy Options Alert is a producer of welded tubular steel products and line pipe for oil and natural gas wells.

Despite everything that’s happened in recent days, this company is still dirt cheap, trading at just 8.3 times earnings compared to an industry average of about 30.8 times. Sales are already soaring, and I expect its earnings to follow suit.

Last week, the stock enjoyed a major break-out to the upside, followed by a minor dip, opening up a new buy window in this stock.

But the stock has strong support on the charts and should be blasting off to new highs shortly.

Five hundred shares would cost you about $16,240 if you bought them outright. But the options I recommended cost only $1,100 (plus your broker commissions) and represent the same 500 shares. That’s nearly 15-to-1 leverage.

If I’m right on where the share price is headed, the call options would spin off a gain of 354%, or $3,900.

Another energy services firm is getting ready to be one of the NEXT stocks to blast off.

Last week, its share price jumped over 5% in a single day. That was its first major blast-off. Now, it’s building a base for a second, probably similar, blast-off.

Based on this company’s dominant position in nearly all facets of energy engineering services, I expect to see its share price leap when the multi-million dollar contracts start pouring in from oil producers.

In this case, five hundred shares would cost you about $30,775 if you were to buy the shares outright. If I’m right on where the share price is heading, you’d stand to make about $6,650.

But why shell out nearly $31,000 when you can effectively control the same 500 shares for a modest investment of just $1,350 using call options?

These options give you virtually the same profit potential, but at one-23rd what it would cost you if you were to buy the shares. That gives you the potential for as much as a 492% windfall.

A third company I’m eying is perfectly situated to reap large earnings windfalls from its underwater operations in the Gulf.

The shares have already surged over 18% in the last few days, but I think they have much more potential. I’m looking for a brief pull-back in the shares early next week. If I get it, it will open up a nice buying window.

In this company, 500 shares would cost about $24,850. But with options you get a position representing the same 500 shares for about 5 cents on the dollar, or about $1,175.

If the shares jump as I expect them to, you’d see a gain of up to 453%, or $5,325.

That Gives You The Opportunity to Control $71,86
of Oil Services Company Shares for Just $3,625

As you can see, buying the shares outright is very capital intensive. But with the options, you get the chance to control nearly the same $72,000 worth of shares for just $3,625. That’s an overall leverage of 19-to-1.

And with the purchase of options, even in the worst-case scenario, the most you can lose is the $3,625 plus your broker’s commissions. Not a penny more.

But on the profit side, if I’m right and these shares hit my targets, I figure that $3,625 could be worth as much as $19,500.

Energy Options Alert:
Designed to Feast on The Profits
Now Available in The Energy Sector

I am a fairly conservative speculator. I don’t like investing on margin, or speculating on situations that involve shelling out hefty amounts of capital – let alone investments that expose me to unlimited risk.

That’s why I like options. You can lose money. But you can buy the options with small grubstakes, and your risk of loss is ALWAYS strictly limited to the amount you invest.

So your keep-safe funds, which should be the bulk of your assets, are never affected, even in the worst-case scenario. Meanwhile your upside potential is virtually unlimited.

When you join Energy Options Alert …

First, you get the Energy Options Alert Trading Manual. The manual gives you the A-B-Cs on the various types of energy options and how they work: How they provide you with incredibly powerful leverage on the upside. How they limit your risk. How you can maximize profits … and much, much more.

Second, you get my special report – “TAKEOVER FRENZY” – which gives you all the ins and outs of how to identify a takeover candidate in the energy markets. Especially from China’s point of view, where a host of factors are critical to the country securing oil supplies for its future.

Third, whenever I see a hot opportunity with short-term leveraged profit potential and limited risk, I’ll rush you an email detailing exactly how you should trade it.

Sometimes the trades will be very short-term oriented, risking very small amounts of money to go after very large pay-offs. Other times the trades will be longer-term, aiming to ride the next major rise in oil prices. And in some special situations, I may recommend the shares rather than the options.

Naturally, because these markets move so fast, the initial recommendations you receive will depend on when you come on board and what’s happening in the markets at that time.

Fourth, on each trading recommendation, I will tell you exactly what to buy, when to buy it, how much to buy, what to pay for it, and precisely what instructions to give your broker. Then, it’s up to you to pull the trigger, or not.

My goal: To make you money by making it easy for you to trade options.

Fifth, you’ll get follow-up instructions on when to roll over positions, take profits, add new positions, or get out of a position to cut a loss.

The reports aren’t fancy, but they’re very readable and easy to understand. Besides, the idea isn’t to win a beauty contest; it’s to make you money.

If you have questions, you’ll have a special email address where you can send us your questions and we can get back to you as fast as possible with answers.

The price of the service is $5,000. If you can’t afford the subscription fee without jeopardizing your liquidity, then this service isn’t for you. But if you have some speculative funds available, I believe the profit potential is many times the cost of the subscription.

2-for-1 Charter Membership Offer Ends Tonight

Join Energy Options Alert now for one full year at the normal price of $5,000 … and take the second year free! That’s two full years for the price of one. But this offer ends at midnight tonight.

Naturally, if you wish to cancel at any time in the first year, for whatever reason, you will receive a full, pro- rated refund on the balance of your subscription.

To take advantage of the profit potential in the energy markets and to get your first set of high-profit potential trades with the ability to turn $3,625 into as much as $19,500, the time to act is now.

You can reach us this weekend at 877-719-3477, between 9am and 5pm.

Yours truly,

Larry Edelson
Editor, Energy Options Alert

P.S. Warning: After the remaining Charter Membership slots are filled, the subscription rate reverts back to $5,000 annually. So don’t miss the chance.

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.

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