Wednesday, February 2, 2011

A Unique Insurance Policy That Soars During Chaotic Times

A Unique Insurance Policy That Soars During Chaotic Times

By Matt Badiali, editor, S&A Junior Resource Trader
Wednesday, February 2, 2011
In early 2010, I introduced DailyWealth readers to the idea of "oil insurance."

You see, a majority of the world's largest oil deposits are located in the unstable Middle East. Any major disturbance there – like a shooting war in Iran – will cause the price of oil to skyrocket.

Since oil is a major cost for many different kinds of businesses, big price spikes can damage earnings and drag down an investment portfolio. Of course, they also cause the value of safe crude oil assets to skyrocket in value… assets like the Canadian oil sands.

That's how oil insurance works.

As I wrote in March, the Canadian tar sands are one of the world's greatest, safest oil deposits… second only to Saudi Arabia's reserves.

The latest estimates put the recoverable reserves here at 170 billion barrels. This huge store of oil is located in a safe, stable country… just a pipeline ride away from the world's most voracious consumer of oil. And while most Americans believe we are addicted to Middle Eastern oil, we actually import more oil from Canada than we do from Saudi Arabia.

So how has the "buy Canadian" oil insurance idea done? Take a look…

This is a chart of Suncor Energy, a $65 billion world leader in tar-sand oil. When large investors want to make a pure play investment in the oil sands, they usually turn to Suncor. S&A Resource Report readers are up 43% on the stock in less than a year.

And while most of our gains are due to the uptrend in crude oil, our Suncor oil insurance policy jumped 7% in response to the uprising in Egypt. In other words, it behaved just as I expected.

As you can see, with the threat of political upheavals in Africa and the Middle East… and with the constant threat of the U.S. government debt leading to debasement of the U.S. dollar… it's essential to own assets that can actually thrive during periods of instability. That means owning plenty of gold and silver bullion, and stakes in vital oil and gas fields located in safe, stable countries.

Daniel Yergin got the name for his definitive history of the oil industry, The Prize, from a geologist's claim many years ago that Middle Eastern oil is "the single greatest prize in all history."

The Canadian tar sand deposit is the single greatest prize in North America. As you can see with Suncor's Egypt bounce, buying stocks operating in this area at the right price is – and will continue to be – one of the greatest forms of wealth insurance in the world.

Good investing,

Matt Badiali

P.S. Suncor has enjoyed a huge run in the past few months, so it's a little expensive for new buyers. There's a much, much better deal in the oil sands right now… A quirk in the Canadian tax law system has created an incredible way to cheaply buy a stake in a massive tar-sand deposit.

While most Americans have no idea this stock exists, it's by far the safest and best way to own a share of the Canadian oil sands… and to start collecting a solid dividend.


ObamaCare Faces Supreme Court Defeat

ObamaCare Faces Supreme Court Defeat
by Michael A. Robinson

Dear American Wealth Underground Reader,

I can honestly say you heard it here first. Of course I am writing about the thrilling – and common sense – decision by a Florida federal judge to strike down ObamaCare as unconstitutional.

Clearly this is a momentous decision in favor of American liberties that protect us from an overzealous federal government. And why is this important for investors?

Because without constitutional restraints, a federal government drunk on its own power can do virtually whatever it wants to with your wealth.

After all, it took a total rout of the Democratic party last November to get Congress to extend the Bush tax cuts and temporarily fix the alternative minimum tax that threatened to pose a financial strain on millions of American families.

This ruling should serve as a wake-up call to all fiscal liberals and to President Obama in particular. Oh yeah, and their media lapdogs.

Unfortunately, I seriously doubt that will occur. Indeed, when I predicted last March that ObamaCare would be declared unconstitutional fiscal liberals snickered.

Of course they did. They've shown total disrespect for the bedrock of our freedoms – the U.S. Constitution.

If that weren't true, then why did former House Speaker Nancy Pelosi and her cadre of limousine liberals shove healthcare reform down our throats along strictly partisan lines?

I have said from the beginning this ill-considered, poorly written, bureaucracy-building law cannot stand.

Consider that no law of this scope or magnitude has ever passed without bipartisan support. As financial failures go it's hard to top Lyndon Johnson's Great Society program. But at least it had strong Republican support.

Do Americans really want to be governed by a federal phalanx created through legislation no member of Congress actually read? Trust me on this folks, any law that's 2,500 pages long and that was adopted unread has lots of hidden booby traps.

If you support ObamaCare stop and ask yourself this question: If Republicans gain a supermajority of Congress next year should they be allowed to force all adults to buy and carry a Smith & Wesson revolver?

Why not? They certainly could argue that self-protection enhances interstate commerce by cutting down on crime.

Now we find Mr. Obama laying 5-4 odds his signature "achievement" will survive scrutiny by the U.S. Supreme Court, which will almost certainly take up the matter.

Mr. Obama is betting he can convince Justice Anthony Kennedy, who is often the high court's swing vote, to side with the president's poor legal reasoning.

We know this is true because the Obama administration immediately said it would continue to implement the healthcare reforms despite the fact the federal judge struck down the entire program.

The time has come for Mr. Obama to shed his arrogance and abandon his liberal idealism so the nation can move forward. Will America really be well served for two more years of political wrangling over a deeply unpopular law?

The U.S. House has voted to repeal ObamaCare. More than two-dozen states sued and beat the pants off the president in court.

Senate Republicans show no signs of backing down from their attempts at repeal, the first round of which was scheduled to occur around deadline today.

They seem like a pretty determined bunch to me. I predict they will continue slipping repeal amendments into as many bills as possible for at least the next two years.

Meantime, the Obama administration is quietly letting dozens of employers opt out of the healthcare program. And why, you might ask?

Because, ironically, the president's opponents are correct: ObamaCare is simply too expensive and has too much red tape.

Let me close by with another prediction. The Supreme Court will eventually take up ObamaCare and will strike it down by a 5-4 vote. And for a very simple reason: It really is unconstitutional.

Good luck and happy investing,

Michael A. Robinson
Editor, American Wealth Underground