January 22, 2014
- How the California drought and the Korean War point the way toward a unique investment play
- “Better than being there”: Byron King spots an opportunity 99 miles high
- Guenthner spies a sector crushing the S&P — with Antichrist bonus points!
- Oil sheiks seeking solar? Stephen Petranek reports on the scene from Abu Dhabi
- How the U.S. Mint is set to make you a small fortune on pocket change… why one reader won’t give up his gold… divided opinions on the “disparity” rant… and more!
While many of us on the East Coast shiver under a blanket of considerable snow this morning, California is positively parched. The governor has declared a drought emergency.
Check out these side-by-side satellite photos from the National Oceanic and Atmospheric Administration. The one on the left is from a year ago. The one on the right, now…
“The historic lack of rain has translated into a stark lack of snow in the Sierra Mountains,” reports San Francisco’s NBC affiliate. “This month’s extremely dry conditions come after parts of California experienced their driest year on record in 2013.”
We can’t do much about the snowpack in the Sierra Nevadas… but we can spotlight an investment opportunity by way of high-quality satellite imagery.
The best way to illustrate today’s state of the art is by going back more than 60 years to the Korean War.
The Hwachon Dam “almost destroyed an American army,” says our military-tech guru Byron King. In April 1951, the North Koreans and Chinese opened the dam’s sluice gates, flooding a stretch of land downriver — “right where the U.S. troops were building positions.”
U.S. commanders ordered aircraft to bomb the sluice gates… but to little effect. Then someone got an idea — drop torpedoes on the “wet” side of the dam, aiming for the massive concrete structure. But would it work?
“The photo above was taken by a Navy pilot during the attack,” Byron explains. “The image shows smoke from explosions, as well as a semicircular blast wave in the water behind the dam.
“After reviewing the photographs, analysts concluded that the torpedoes did the trick and wrecked the sluice gates. Mission accomplished. The troops were saved and U.N. forces could now proceed through the flood plains below Hwachon Dam.”
Look closely and you can see the left wingtip of the Vought F4U Corsair. “It’s hard to be exact,” says Byron, “but in my opinion, the altitude of this aircraft was probably no more than 3,000 feet above the target. It was well within range of enemy anti-aircraft guns. Still, that’s what it took to obtain a good photo back then — good meaning a photo in which you can see what you need to see.”
“Now let’s take a look at another photo of another dam,” says Byron.
“This is the massive Three Gorges Dam in China, on the Yangtze River,” he says. “Built from 1994-2012, it’s 594 feet tall and 7,661 feet long, making it one of the world’s largest man-made structures.” The image is a satellite shot taken by equipment owned and operated by a company Byron recommended to his readers only days ago.
“Just look at the resolution!” Byron marvels. “You can see all manner of details of the dam, and even small ripples on the water surface. But it gets better, because with the right equipment, you can increase the resolution of this image even more. In fact, based on what’s in the original digital image, you could practically read the name tags of the engineers on the catwalks.
“It’s almost like you’re right there, directly overhead. Actually, it’s better than being there, in the sense that the image captures everything in the broad field of view at one instant. It’s actually better than your eyeballs, despite having been taken from at least 99 miles above the ground in what’s called low Earth orbit.”
“Think about that,” says Byron. “In 1951, to obtain close-up imagery, the technology of the era forced observers to fly low over the target, announcing their presence to one and all.
“Today, however, we can get far better imagery from a camera that’s nowhere near this planet.”
Contrary to what you might think, governments do not control all the satellites and dominate this field of overhead imagery. But the U.S. government does pay premium prices for this imagery. So do other governments, nongovernment organizations and businesses around the world. In recent years, images just like these “have uncovered hidden nuclear programs… secret political prisons… the latest aerospace developments.”
Byron has identified the premier player in the field — one he thinks is good for 60% gains in 2014. For access to all of Byron’s recommendations gleaned from the Pentagon’s top-secret “black budget,” check out his latest presentation.
For the second day running, small caps are holding their own… and blue chips are stumbling.
At last check, the Dow is down 66 points, to 16,347. But the small-cap Russell 2000 is up fractionally, to 1,178.
Gold has moved little the last 24 hours; at last check, the bid is $1,239.
“My attention is firmly on the miners,” writes Greg “Antichrist” Guenthner this morning. “I see some potentially lucrative comeback trades shaping up.”
Greg, who called gold’s big drop last year, sees nothing of interest in the metal’s recent price action… but the miners are a whole other story. After getting crushed 60-70% since late 2011, the sector has come to life during the first three weeks of the year. “The Market Vectors Gold Miners ETF is up more than 12% in 2014,” says Greg, “while the broad market remains stuck on pause…
“Most miners are massively oversold. And for the first time in months, we’re finally seeing some bullish volume appearing.
“I don’t know if this move higher will stick,” he cautions. “We could be dealing with a change in trend or just a dead cat bounce.” Either way, Greg has spotted an attractive setup in one of the sector’s big names: “It looks like a solid buy for a short-term trade.”
We’re reserving the name and ticker symbol for the benefit of Greg’s paying subscribers. If you’d like to join their ranks and receive his daily trading guidance, here’s where to start building your own “profit chain.”
“I have watched oil sheik after oil sheik — hundreds, if not thousands, of them — arrive in an endless line of exotic Mercedes cars burning gasoline in V-12 engines.”
Our new tech/biotech maven Stephen Petranek is in Abu Dhabi this week for the World Future Energy Summit. “The irony of the context here is obvious. As I walk through a conference center virtually floating on a sea of Middle East oil, more than 10,000 people, including a surprising number of heads of state, have gathered to try to figure out how to use less of it and to increase the world’s use of solar, wind, geothermal and other energy sources…
“The current market system does not measure the real cost of energy,” he explains. “If it did, putting a price on the pollution that keeps people indoors in major Chinese cities because they literally cannot breathe outside would make solar and wind energy look amazingly inexpensive and obvious.”
Last week, Beijing residents had to settle for
watching the sunrise on a giant screen…
The scene is dizzying: “Hundreds of exhibits that stretch so far it is impossible to visit them all in one day shout out solution after solution to sustainability — from an innovative spray invented in the United States that can wash a car without water to massive solar arrays being built that rival the world’s largest coal, oil and gas power plants.”
The vast majority may turn out to be pipe dreams, but one or two could make early investors phenomenally wealthy. Breakthrough Technology Alert readers can expect to see a renewable energy recommendation in the coming weeks…
“It’s foolish. It’s going to hurt so many people,” warns John Schultz of the American Amusement Machine Association.
His outfit stands up for the operators of jukeboxes, pool tables, video games — anything coin-operated. Those folks are alarmed because, according to The Wall Street Journal, “The U.S. Mint is considering a change to the mix of metals it uses to make quarters, dimes and nickels, [suggested] a study Congress mandated in 2010 to examine ways to save money.”
As it is, the Mint now spends 1.8 cents to make a penny and 9.4 cents to make a nickel. Total bleed on the U.S. Treasury: $104.5 million last year. Nothing like a dollar of ever-diminishing value to foul up small change, eh?
One thing the Mint’s already settled on: The size of the coins will remain the same. But different weights and colors could throw many coin-operated devices for a loop.
The Mint will make its final recommendations to Congress by year-end. But we can safely say no matter what it decides, you’d do well by saving and hanging onto one coin in particular, starting now: “I’ve already begun saving my own,” says Chris Schaefer of our research team. “And if you’re looking for a laughably easy way to grow your wealth, I recommend you do the same.” You can examine the fruits of Chris’ research for yourself at this link.
“I will relinquish my investments in that barbaric relic gold precisely when people stop acting so barbarously,” a reader writes after yesterday’s gold-themed episode.
“This includes not only the Hitlers and Stalins of the world, or even just the Bernie Madoffs and Ken Lays, but also — perhaps more importantly — the Jon Corzines, the Solyndra cronies, the Eric Holders, the TurboTax Timmy Geithners, ad nauseam.”
The 5: And the beat goes on: Word this morning is that Madoff is back in federal prison after recovering from a heart attack last month.
Meanwhile, we now know that when Geithner was Treasury secretary, he warned of retaliation against S&P for its August 2011 downgrade of U.S. Treasuries. From court papers filed yesterday by S&P parent firm McGraw-Hill: “S&P’s conduct would be ‘looked at very carefully,'” chairman Harold McGraw recalled Geithner telling him. “Such behavior could not occur, he said, without a response from the government.”
“In regard to your item about German gold repatriation,” a reader writes, “my understanding is that the 300 tons they want returned represents less than 20% of actual German gold held by the Fed. If I recall, previous articles have stated that the Fed holds about 1,725 tons of German gold.”
Adds another reader citing different figures, “If I were a German national, I’d be really pissed.”
The 5: The numbers are murky. Germany’s declared gold stash is 3,390.6 metric tons. Many news accounts have a pro forma sentence indicating two-thirds of this total is held abroad. But other accounts cite different figures, and still others remind us there’s no official breakdown. Transparency.
“At 4:05, you guys must have run out of things to say,” a reader writes in response to the “disparity” email from a fellow reader in yesterday’s episode. “That was the most tiresome, rambling bit of writing you guys have ever published.”
“One of the stupidest essays I have ever read,” chimed in another. “Do you take your readers for fools? I would have ignored it, but you insulted my intelligence, and I am wondering if that might actually be the basic conviction of The 5. Might this be the right time to sharpen the guillotine?”
“That was well worth the extra minute!” writes a reader who clearly disagrees. We dare say the admirers were a decided majority.
“Loved the reader rant on disparity,” says another. “How come our selected in Washington get to practice disparity AND hold the gun???”
“What?” asks one of our regulars who concedes he has too much time on his hands.
“Here are the words that were followed by the word ‘disparity’ in yesterday’s 5 by a reader: income, effort, ability, desire, dedication, persistence, values, love, success, wealth, income (repeated, I assume for fervor), personal, happiness, ultimate, combined (bolded for exclamation), jealousy, fairness, fairness (repeated), envy, political (now were getting to the meat of this tirade), entire, victim, character, political (repeated again), actual.
“Whew, what a sermon. And sadly, I not only read this, but then compiled the adjectives (24, including repeats) that were in front of the word ‘disparity.’ Now, sadly, if my totals are not correct or I missed one or two adjectives and you receive a correction to my recap, then sadly, like me, they have way too much time on their hands. But this extra time I use to read The 5 and review and reread my Agora subscriptions!”
“Yesterday was my first 5 Min. Forecast, as I just joined the group this week,” writes a reader who came to us by way of our entry-level tech newsletter, Technology Profits Confidential. “This commentary is spot on.
“I truly enjoyed reading the reader mail about ‘income disparity.’ This is exactly what we believe (my friends and our business associates). About the gold announcement by China, I heard it would be in April at a meeting.
“Thank you, and keep up the good words, as it feels good not to be alone.”
The 5: And thank you. As a reminder to newer readers, The 5 is a free bonus emailed only to paying Agora Financial subscribers. You’re in limited, but good, company!
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. Options Hotline readers are on a roll. Quickly reviewing a spreadsheet of Steve Sarnoff’s recent recommendations, updated through midafternoon yesterday …
- Bullish play on a gold miner: up 14% in less than a day
- Bullish play on a tech giant: up 20% in less than a month
- Bearish play on a retailer: up 55% in a little over a month
- Bullish precious metals streaming play: up 59% in two weeks.
Steve’s next recommendation is due this weekend. If you’d like to be on board, you can join up here.