267 R TREE ARCHIVE (74.105.214.2) papaFi ( 2012-11-14 20:52:16 )
FOUR WAYS OF MAKING A KILLING IN THIS BOOM – WITHOUT TAKING BIG RISKS
There's a very stupid way to invest in the oil and natural gas boom.
This is probably how your neighbors and friends will do it. They will hear about a big new oilfield (maybe like the secret one we'll tell you about below), and they'll buy shares of the company that's exploring it.
Think about how this worked out for shareholders of Chesapeake during the natural gas boom. Remember, the natural gas boom is like our playbook for what's about to happen with oil. What you can see is, even though Chesapeake came from nothing to be the second-largest producer of natural gas in the U.S. (behind ExxonMobil), its share price got killed when the price of natural gas fell in 2012 and the company's finances were revealed to be weak.
And that's what you've got to watch out for with the oil boom. Production rates at small oil companies in the U.S. are going to soar. There will be lots of buyouts and takeovers. But… as production ramps up… the price of oil is going to fall. That's great for America's consumers (and the president)… but terrible for oil investors. You have to be very careful.
We believe there are four proven, incredibly safe ways to make huge gains on the oil boom. They all involve either buying the “tools and shovels” of the boom – things that aren't directly related to the price of oil – or even better, finding a way to buy the energy assets themselves at very discounted prices.
Let me show you exactly what to do.
First, the very best way, I believe, to make a fortune in the ongoing energy boom is to invest in the infrastructure that must be built to move U.S. energy into global markets. This might sound boring at first. But believe me, some of the biggest gains in the history of the oil business came from the men who were smart enough to own the infrastructure required to get the oil and the gas to market.
To really understand what's going to happen, we have to go back in time again. Just once more…
It's now 1890.
Huge new oil fields have just been discovered in the Dutch East Indies (today's Indonesia and Papua New Guinea). These new resources offer a chance to challenge Standard Oil's grip on Europe's energy market. A British shell merchant, Marcus Samuel, has an idea. If he can find a way to get the oil from the Dutch East Indies into the European markets cheaply enough, he could take over the energy business in Europe.
All Samuel needs is access to the Suez Canal. Access would cutoff 4,000 miles of travel around Africa's Cape of Good Hope – and greatly reduce the cost of shipping the oil. Samuel partners with the powerful Rothschild family. They lobby the British government to allow specially designed oil tankers to transit the canal. Samuel commissions eight new tankers…
By the end of 1895, sixty-nine tanker passages had been through the Suez Canal. All but four ships were owned or chartered by Samuel. He was able to flood the market in Europe with cheap Dutch Indies oil. By 1902, Samuel still controlled 90% of the oil to pass through the Suez Canal.
Marcus Samuel and his small group of investors created one of the world's largest fortunes – a company now called Royal Dutch Shell. It's valued today at over $200 billion. Their wealth didn't come from discovering oil… it came from understanding the importance of transporting energy around the world to the markets offering the highest prices.
The exact same thing is happening today with a new form of energy called LNG.
To ship natural gas around the world, it has to be converted into a liquid form, something called liquefied natural gas, or “LNG.” Once converted into a liquid, natural gas can be shipped via tanker, much like oil. But… the big difference is LNG requires specialized, very expensive tanker ships. And it requires huge import and export terminals.
Building out these new ships and these new terminals will take at least a decade. And during that time, investors in the right assets will build huge fortunes…. Like the investors who are smart enough to buy LNG tankers today. The world's shipyards currently have more than 140 LNG vessels on order...
Luckily for regular, individual investors, a well-run company already owns one of the largest fleets of these highly specialized, expensive ships. It owns 27 ships, in fact, some of the largest in the world. It's engaged constantly in deals to acquire more ships, and it has dozens more on order. I'm certain this stock is going to soar over the next few years. And here's the best part: The company boasts a current yield of 7.1%.
Just imagine earning 7% in income… while you're building the most valuable collection of ships on Earth… all in a financial environment where you essentially earn nothing on your money in the bank.
Global demand for LNG is expected to increase by more than 50% over the next two decades. I think we'll see capital gains of 20%-30% per year in this company, in addition to the big annual dividend. It will be hard to make more money in any other safe investment.
In fact… I believe this shipping stock is one of the only “sure things” you can invest in today and make a bona fide fortune. What are the other s