Opportunity Abounds

Addison Wiggin – January 25, 2012

  • Far beneath Wall Street’s radar: Patrick Cox identifies new biotech breakthrough
  • Far beneath Washington’s radar: The oil-production story the president didn’t tell last night
  • What’s this? A government report calling the IRS on “bait and switch” tactics
  • The Buffett tax and why you’re more likely to fall victim than the “billionaires”
  • The State of the Union, as seen through a word cloud
  • Readers weigh in: Can Byron King’s rebirth scenario overcome crushing debt and political deadwood?

   “This may be the most-significant breakthrough in regenerative medicine to date,” declared Patrick Cox in a note to his readers yesterday.

Hmmmn… it’s a sunny day here on South Beach. We’re breaking from our editorial retreat for a quick bite. And we have to admit… we’re overwhelmed by the bullishness of the editors cultivated over the last decade.



Yesterday, we came clean about Byron King’s vision of Re-made in America Today, we’re equally impressed by Patrick Cox’s invitation to deliver keynote ideas regarding transformational stem cell technologies… it’s an unlikely outcome for an enterprise that has sounded warnings, well, going back to the original edition of Financial Reckoning Day.

We’re still in the process of trying to reconcile these competing phenomena. But we press on…

   “This announcement is definitely one of the most significant in the history of stem cell medicine,” Patrick underscores.

Recall that one of the companies Patrick has his eye on is a pioneer in induced pluripotent stem (iPS) cells. These are cells that have all the advantages of embryonic stem cells, with none of the ethical or practical downsides: These are cells from your own body that are transformed into cells as youthful as the day you were born… and can be turned into cells for nearly any part of your body, even your heart.

This is already demonstrated to work in mice. Now comes the next breakthrough in making this work for you and me.

   This week, the company licensed technology related to a one-of-a-kind gene.

“There are two types of cells that do not age,” Patrick says by way of background. “These cells are, for practical purposes, immortal. In appropriate conditions, they do not age and they do not die. These two cell types are germline or embryonic stem cells and cancers.”

The scientists who’d been working on this up till now were focused on cancer. But the company Patrick’s following will take this technology and apply it to iPS cells. When this one-of-a-kind gene is rendered inactive, it reverts to a near-embryonic state.

In other words, it will become far easier to take cells from your body and turn them into new, healthy organ — a heart, for instance — to replace your old diseased one.

“I have no expectation that the media, even the scientific publications, will grasp the historic significance of this discovery,” says Patrick. But that’s how big money is made — getting in on a trend long before the mainstream catches on. Let Patrick show you how you can claim a piece of this $64 billion market.

   We find even more unlikely cause for optimism this morning in one of the most unlikely sources — the annual ritual of presidential palaver that knows no partisan boundaries, otherwise known as the State of the Union address.

“Right now,” said the president last night, “American oil production is the highest that it’s been in eight years. That’s right — eight years. Not only that — last year, we relied less on foreign oil than in any of the past 16 years.”

We know this is true because Byron King has cited the same facts in his new presentation. But the president is oblivious to the broader implications — one Byron is convinced could create new waves of prosperity despite government bungling.

It’s not the discovery of shale oil in the Bakken Trend of North Dakota. “This is something far, far bigger than any single new resource discovery,” says Byron — convinced he’s on to a revolution at least as significant as the one that has Patrick so excited.

It’s already creating new fortunes in far-flung places like Dimmit County, Texas, and Youngstown, Ohio. It’s allowing an ordinary sheriff’s deputy in Louisiana to collect a $320,000 payday… and not from the taxpayers.

To learn how you can collect a piece of these new fortunes, please give Byron your attention here.

   U.S. stocks are broadly, but not deeply, down this morning. The major indexes are in the red, but less than 1%.

Markets are in suspended animation until the release of the Federal Reserve statement around lunchtime. We’re still at our editorial retreat in Miami, talking about the issues that are top of mind with you right now, issues that will have a more-lasting impact than whatever the committee does today.

In our stead, we’ve assigned Strategic Short Report’s Dan Amoss to watch Ben Bernanke’s news conference; his email accepting the task said something about combat pay. Look for his analysis here tomorrow.

   A little-known report to Congress is finally highlighting something that’s been on our minds for years: Americans giving up their citizenship to get out from under the thumb of the IRS.

The report from National Taxpayer Advocate Nina Olson points out nearly 4,000 people have surrendered U.S. citizenship between fiscal years 2005-10. More than one-third of that figure came during fiscal 2010 alone.

We’ve cited these figures in Apogee Advisory… but the Taxpayer Advocate report puts the numbers in a bit of context: It says many taxpayers abroad are confused “by the complex legal and reporting requirements they face and are overwhelmed by the prospect of having to comply with them.”

In addition, others accuse the IRS of “bait and swtich,” telling Americans they can clear up their unpaid taxes under “older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.”

This is relevant even if you never want to expatriate: Every new subscriber to Apogee Advisory gets a special report spelling out how to legally and safely park your money overseas. Access here.

   Like stocks, precious metals are in a minor sell-off mode this morning. Gold has settled back to $1,656. The bid on silver is $31.99.

   We see the president used his State of the Union address to pump for the “Buffett tax” — to the point that he put Warren Buffett’s secretary in the audience last night. There’s much chatter today about the “fairness” of imposing a surtax on incomes above $1 million.

There’s been much less talk about how the “billionaires” can still escape the income tax burden… while less well-to-do but still comfortable people cannot.

Buffett knows “full well the burden [for higher progressive taxation],” writes our friend Bill Baker in Endless Money, “would fall primarily on members of the upper middle class, who have not yet achieved the threshold that would permit them to shift income to tax-minimizing structures.”

“Once a certain threshold of wealth is achieved,” Bill explains, having the experience of managing money for many such folk, “taxpayers have some latitude in structuring when and where income originates.” This is how, for instance, Google executives Larry Page and Sergey Brin “pay themselves just $1 in W-2 income, but each year, they may accrue millions or even billions in unrealized capital gain.”

The Buffett tax does nothing to address this… while the upper middle class remain screwed.

And the beat goes on…

   Speaking of the story that’s not being told in the State of the Union address, we turn to that favorite tool our monitor of market sentiment Abe Cofnas applies.

Ordinarily, Abe Cofnas applies “word clouds” to things like Federal Reserve statements to suss out what might be coming next.

Last night, he plugged the State of the Union address into a word cloud generator and came up with the following…

And the Republican response…

“What’s interesting,” says Abe, “is not what is in the clouds, but what is not. Where is the word liberty? What attention has been paid to the U.S. dollar?”

   “How nice to see such an optimistic picture of the potential for shale energy to remake America!” a reader writes of Byron King’s new presentation.

“It has been very difficult for a realistic person to find something positive to think about given the current economic and political condition of our country.”

“Thank you for providing an alternative future for me to contemplate.”

“I found Byron’s presentation on the development of multiple energy resources here in the USA absolutely uplifting,” adds another. “I have been very concerned, and some days downright down, about the state of the U.S. and world economies. I was impressed with Byron’s overview — convergence makes a lot of sense to me. “Let’s hope he is right!”

The 5: It’s hard to express Byron’s enthusiasm in words. We first got a sense of it in our Safety & Survival Summit in Baltimore back in October. It’s tinged with patriotic fervor, but hey, the guy flew jets for the Navy, so you might expect it. He’s got 127 carrier landings under his belt.

However…

“I have one major concern,” the reader veers toward a refrain common among reader emails this morning: “the EPA. Will they stand in the way? Can you please keep us informed on this? The media is so slanted it is hard to know how to find the truth.”

   “While some people may see America as on the cusp of a new economic boom,” writes another, “I don’t think that it’s going to happen.”

“America will continue on for a while until such time as other countries such as China no longer continue to purchase our debt, leaving only the American people to involuntarily do it through currency inflation.”

“Because of the Bakken, we may have a few more years than what I originally thought… but the long-term prognosis for America is terminal.”

   “I read your cross comments of Soros,” offers another reader trying to have his cake and eat it too. “He’s a one world government stooge who blinked and now sees the possibility that the coming chaos may overwhelm even the government’s preparations to take on its own people.”

“I also read Byron King, whom I admire and am attuned to (perhaps too much). I’m a former U.S. Navy submarine officer, an attorney, and I grew up scouring the Southwest for minerals with an engineer dad who also was a keen amateur, but schooled, geologist. It is not that we cannot achieve; it is that, subtly, we are hindered from success except in ‘approved’ channels.”

“Both views are right in their own spheres: Soros wants to have a world ruled by the financial elite — sees the independent, entrepreneurial spirit of Americans as an obstacle, to be blocked and prevented because such a culture would hinder total rule of the elite and now fears the disruption is too much.”

“Byron sees that American spirit and available resources that together can enable the country to a better place, and we can because of the innovative spirit to find solutions — if we’re not prevented by political power.”

“Political power is the problem. Those with political power act with malice to prevent solutions, because solutions by private persons disperse centralized power… and that is a no-no.”

   “I have personally seen and heard about several positive solutions,” the reader concludes, “and read of many more, all buried deep by government policies: Algae oil is productive here and now, but everyone is running away. A kid invented a 3-D solar cell 500 times more powerful than is current on the market, received a national science award and then silence the last two years.”

The 5: Oy. You too?

Cheers,

Addison Wiggin

The 5 Min. Forecast

P.S. If you’re interested in the Empire Unplugged debate a week from Friday between Laissez-Faire Books executive editor Jeffrey Tucker and progressive economist Dean Baker… please be advised the event is nearly full as of this writing.

Thanks for your interest… the venue is a small nightclub in “the belly of the beast.” It may be completely full by the time you read this.

“I just heard yesterday,” a reader writes, “that one of the major shale gas drillers had decided to stop two-thirds of their drilling due to the oversupply of natural gas and subsequent lower prices. How’s this fit into Byron’s scenario?”

Indeed, Chesapeake Energy announced it will cut overall natural gas production 8%… and might double that, depending on prices.

But that’s not the whole story… not by a long shot. Byron, take it away…

“Actually, several major shale gas drilliers have recently announced that they’re refocusing their drilling priorities.”

“They won’t drill less so much as drill differently.”

“Chesapeake, Range Resources, EQT and several others are de-emphasizing drilling for ‘dry’ natural gas. They’ll focus more on drilling for ‘wet’ gas — meaning gas with high fractions of natural gas liquid (NGL) and oil.”

“It’s pure economics… instead of producing only natural gas and selling it (actually, giving it away!) for $3 per mcf, the idea is to produce gas plus NGL plus oil…. and sell the NGL and oil for $100 per barrel. It vastly improves the economics of the business.”

“It’ll strengthen the cash flow of the operators. It’ll reduce the numbers of low-margin wells. It’ll lead to strength within the gas pricing arena (higher bills for users, but stronger bottom lines for producers).”

“The wells to be drilled will still require all the infrastructure — roads, pumps, rigs, pipe, bits, labor… And the leasing will still occur, but the land-men will want the ‘sweet’ spots with the oil and NGL in the shale.”

“My view of a new U.S. industrial revolution is NOT founded on super-cheap gas… such that it’ll work only as long as we have a reverse bubble of money-losing drilling and extraction operations.”

“No, the American revival has to work with all parts of the system in economic balance… the hydrocarbon producers get a good price for their output, and the price and availability is such that other industries can establish themselves.”

As Byron explains in his new presentation, this isn’t some far-off-in-the-future scenario. It’s taking shape right now… and it’ll take off as early as this May. Why then? Let Byron lay out his case right here.

rspertzel

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