Energy & Commodities

The Hottest Place to Live Rich in Canada

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Posted by Dr. Michael Berry Ph.D. - Morning Notes

on Friday, 25 January 2013 11:56

The global Convergence of lifestyle – the addition of 6 billion people will ultimately impact the food chain. Saskatchewan has a unique place in this social dynamic. 

Add in the impact of a global population of 8 or 9 billion in the rest of the world by 2030 – 18 short years away.

This will be the longest commodity super cycle once the current credit cycle is fixed. The increase in QOL is unstoppable. Prices have risen only modestly relative to other super cycles.

Saskatchewan Has It All

Saskatchewan with 1 million people has it all. Get ready “Riders” the world is coming. 

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.....read the whole document HERE



Energy & Commodities

Here's What 14 Major Commodities Will Do For The Next Two Years

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on Thursday, 24 January 2013 08:05

soybean-farming-brazilDespite recent hiccups in gold prices, if you're investing in commodities, it is still the best, safest bet, according to Morgan Stanley's commodities team led by Hussein Allidina.

Silver offers a little more risk and reward than gold; Allidina expects it to outperform gold in 2013.

The report also favors soybeans and corn as demand for them is accelerating faster than supply.

However, the report warns commodities investors away from aluminum and sugar, two commodities that are acutely oversupplied at the moment.

We pulled the price targets and paraphrased the investment theses for 14 major commodities from Morgan Stanley's latest Commodity Manual.


.....read more HERE 



Energy & Commodities

Hi Yo Silver, Away! Catalysts That Will Drive Silver Higher

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Posted by Jeff Uscher via Peter Grandich

on Wednesday, 23 January 2013 08:05

 American-Silver-Eagle-and-Silver-Bullion-BarSilver prices are up nearly 8% in the past couple weeks as investors increasingly load up on the white metal.

In fact, the U.S. Mint has temporarily suspended sales of its 2013 American Eagle silver coins because it has none left.

Reuters reported today (Friday) that the Mint plans to restart sales in the last week of January after it has had a chance to restock.

The U.S. Mint generally sees a big influx of demand when it releases new coins at the beginning of the year. This year, however, investors seeking a safe haven for their money added to the usual collector demand leaving the Mint’s vaults bare.

“It is easy to infer that some element of the fear trade may be at play,” Joni Teves, an analyst at UBS AG in London, wrote today in an e-mailed report cited by Bloomberg News. “We view the chunky sales of American Eagle coins more a function of seasonality than anything else. It is important to keep an eye on U.S. coin sales in the coming months to see if volumes remain elevated as the debt ceiling showdown plays out.”

Coins Not the Only Silver Play to Soar

.....read more of the article HERE


Energy & Commodities

Silver Jumps 5% Oil Rallies NatGas Surges

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Posted by Hard Assets Investor

on Friday, 18 January 2013 14:05

Week in Review: We examine the latest developments in commodity markets.

Commodities rose across the board this week amid strong economic data and new highs in the stock market. The S&P 500 advanced less than 1 percent to reach its highest level since December 2007. The index is now up 3.8 percent year-to-date. 

Macroeconomic Highlights

This week’s big macro news came from China, where the economy grew by 7.9 percent year-over-year in the fourth quarter, up from 7.4 percent in the third quarter and above the 7.8 percent that analysts were expecting.

Other China data were also positive. Industrial production in the country grew by 10.3 percent year-over-year in December, up from 10.1 percent in November, while retail sales rose by 15.2 percent in December, up from 14.9 percent in the prior month.

Meanwhile, data in the U.S. continued to be encouraging. The Department of Labor said the number of people filing for unemployment benefits plunged from 372K to 335K last week, the lowest level since January 2008.

Housing starts in December jumped 12.1 percent to 954K, the highest level since June 2008. Building permits edged up by 0.3 percent to 903K, the best level since July 2008.

Finally, according to the Census Bureau, retail sales in the month of December rose by 0.5 percent, above the 0.2 percent gain that was expected. Additionally, November's sales growth was revised higher to 0.4 percent.

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.....read more HERE


Energy & Commodities

How To Profit From America’s Arctic Riches

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Posted by Byron King - The Daily Reckoning

on Friday, 18 January 2013 08:40

Less than a month ago, Shell Oil suffered a major setback to its Arctic drilling program.

Shell’s 28,000-ton drill ship Kulluck ran aground off of Kodiak Island, Alaska, after breaking tow lines during stormy weather. Prior to that, the U.S. Coast Guard evacuated the 18-member crew from the rig.

According to a Coast Guard spokesperson, winds were gusting to 70 miles an hour, and the sea state in the Gulf of Alaska is hurling 40-foot waves at Kulluck, as well as towing and rescue vessels.

Prior to the setback, in September and October 2012, Shell used Kulluck to drill a prospect in the Beaufort Sea, on the north side of Alaska. Shell was in the process of towing Kulluck to Seattle for off-season maintenance. However, a series of weather and mechanical problems began, when a tow line parted and, coincidentally, one of the tow ships lost engine power due to contaminated fuel. After that, the cascade of problems just worsened.

011713 drhHere’s a shot of the grounded rig:

A Shell spokesperson noted that the Kulluck grounding is a maritime accident. That is, it does not involve actual drilling operations. And on a positive note, the Kulluck has a unique, “Arctic-hardened” design, in which the fuel tanks are isolated in the center in the vessel, encased in heavy steel plating.

To date, Shell has spent nearly $4.5 billion on its offshore program in Alaska (including $292 million to upgrade the Kulluck.) The arctic region reportedly holds tens of billions of barrels of potential oil resource, in a major new oil frontier that is virtually unexplored. If you missed the dialog in 2012, this is a big deal for U.S. offshore industry.

Subsequently, Shell personnel pulled the rig off the rocks, and took it back under tow. There were no apparent leaks from the vessel. Shell and its contractors will give the rig a good inspection and survey, in a nearby Alaska port, with federal and state agents peering over their shoulders. Then, it’s off to the shipyard for a full overhaul.

And despite the Kulluck grounding, Shell shares are trading slightly up on the year, over $71. The dividend yield is still a husky 5.3%.

In response to the grounded Shell rig, the U.S. Department of the Interior announced that it will perform another “review” of proposed offshore drilling operations in the Arctic region. The review will cover Shell operations, as well as proposed offshore activities by other companies that want to work in the far north.

Along with catching the eye of the Department of the Interior, the setback also fired up another group of folks.

Opponents of drilling note that the waters in the Arctic region are home to a vast expanse of fragile ecosystems. Frigid water temperatures, year-round, make biodegradation of spilled oil all but impossible. Indeed, according to Lois Epstein, Alaska program director for The Wilderness Society, “Shell and its contractors are no match for Alaska’s weather and sea conditions either during drilling operations or during transit.” Let’s discuss…

Early Innings for Arctic Tech

As I was gathering information about the Shell incident, I noticed a snarky comment from someone — who could be anybody, anywhere — to the effect that, “this is what you get for using Gulf of Mexico (GOM) technology in the Arctic, unlike the Russians who are developing purpose-built Arctic tech.”

I’m not sure who this know-it-all is, but let’s address the point. First, I give the Russians great credit for having excellent naval technology, across many sectors. In fact, back in my Navy days, I used to chase Soviet submarines as part of my duties flying Lockheed S-3 “Viking” aircraft. So I know a few things about Russian competence in terms of building good ships to meet particular needs.

Submarines and drill ships are two different things, however. Yes, the Russians can build good submarines. But we have yet to see that Russian “purpose-built Arctic tech” actually hit the water, let alone work and perform well — and that means safely.

I also happen to know a few things about modern, Western offshore energy development technology. It’s not fair — and certainly not accurate — to say that Shell is using “GOM technology” to drill offshore Alaska. There’s plenty of superb, “purpose-built” tech out there, already developed, to drill offshore in extreme environments.

Consider, for example, energy development in the North Sea, and up off the coast of Norway. It’s much the same cold water, stormy seas, winter darkness and ice-problems as offshore Alaska. Look at the success of, say, Norway’s Statoil working in these kinds of extreme environments.

Just this week, in fact, Exxon-Mobil announced a major, $15 billion program to drill offshore eastern Canada, in cold, dark, iceberg-infested waters. It’s a major energy development program, with cooperation and support from the government of Canada, as well as provincial governments — all of whom know a few things about working in extreme climate conditions.

Over the past couple of years, I’ve attended technical sessions on Arctic development, via my annual treks to the Offshore Technology Conference and the American Association of Petroleum Geologists (AAPG) convention. At the industry-level, there’s a sense of “can-do” confidence towards extreme environments, but it’s tempered by a certain humility in the face of actual conditions.

When it comes to Arctic development, offshore Alaska, we’re in the early innings. Heck, we’re scarcely past warm-up pitching and batting practice. There’s much yet to be learned and much new technology yet to be developed. But the capability and potential is out there.

There’s plenty of money to be made, too.

Underwater Payout

One company I’ve tipped to my readers is Oceaneering International (OII.) The company holds an array of remote-operated vehicle (ROV) and related diving and field services. (The company also designs space suits for NASA, which is pretty cool.)

I first recommended Oceaneering back in May 2010, right in the wake of the BP blowout in the GOM. My reasoning was that the Oceaneering share price was down, due to the U.S. offshore drilling moratorium. But my prediction was that the services and products supplied by Oceaneering would be more important than ever, going forward, in the heightened culture of offshore safety.

Well, Oceaneering shares are currently trading at $58, which is a 5-year high. Better yet, it represents an 80% rise from 2010. The Oceaneering dividend yield is 1.2%, which is more than short term government bonds. All in all, Oceaneering has been a great play.

And do you know what? I foresee better days ahead for this underwater maverick. The company will continue to do well. There’s a large, and growing global market for its services, despite whatever happens with the U.S. economy.

As the arctic market evolves in the U.S. and the offshore industry continues to boom, keep riding this pony.

That’s all for now. Thanks for reading.

Byron King

About Byron King

Byron King is the managing editor of Outstanding Investments and Energy & Scarcity Investor. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial TimesThe GuardianThe Washington PostMSN MoneyMarketWatchFox Business News, and PBS Newshour.




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