March 18, 2014
- After the Bakken and Eagle Ford, America’s next energy boom region… and how to profit
- Could the experts be right for once? Handicapping Yellen’s first Fed session
- The feds’ record tax take… and 97 ways you can cut it down to size
- The recovery after a 72% crash: Chris Mayer reports from Ireland
- The Palladium credit card, made with real palladium… hacker retaliation for U.S. sanctions in Russia?… reader invents a new word to describe gold owners… and more!
“I watch after the timber and I feed the deer and the turkeys, and that’s what I do for a living now,” says Rhett Anderson.
Mr. Anderson is a beneficiary of America’s 21st-century oil boom. But he doesn’t live where you might expect.
As we mentioned yesterday, U.S. oil production registered its biggest annual increase ever in 2013. And 83% of that growth came from the North Dakota’s Bakken shale and Texas’ Eagle Ford shale.
The new boom area where Anderson benefits? The Tuscaloosa Marine shale, in central Louisiana and southwest Mississippi…
Scientists at Louisiana State suggest the formation might hold 7 billion barrels of oil — a staggering figure when you consider the Energy Department’s total of proven oil reserves nationwide is 40 billion barrels.
Anderson decided to lease some of his 500-acre property to Encana Corp. and collect royalties. He’s building a 7,500-square-foot dream house. “Now I don’t think about having to go back to work,” he tells The Associated Press. “This is my work” — watching the timber and feeding the deer and turkeys, that is. Not a bad life…
Meanwhile, the region just south of the Tuscaloosa Marine shale is set for its own boom.
“Dozens of facilities are set to sprout up along the Louisiana and Texas coasts to liquefy natural gas from shale formations as far away as Pennsylvania and Ohio for export around the world,” says a recent Fox News report.
Market research firm Industrial Info Resources projects $64 billion in spending to build at least seven natural gas export terminals on the Gulf Coast. The number of pipe fitters, welders, electricians and such is projected to grow 66% in only two years.
Back in October, several U.S. firms were in line to win export licenses from the feds. Many analysts projected who the winners might be. Only our Byron King projected correctly — even nailing the order in which the licenses were awarded. He recommended three plays to his premium subscribers based on his projections. Average gain? Twenty-two percent in only three months.
Byron’s next big call has far bigger potential — enough that you too might be able to watch the timber and feed the deer and turkeys, if that’s your thing. (If a tropical beach and a Mai Tai are more your speed, that’s also completely possible.) He’s still keeping the details under wraps, but he promises you can get the full scoop less than 48 hours from now.
That’s when he holds an exclusive online briefing we’ve ambitiously dubbed “Texas-Rich in 60 Days.” You can look in on this event absolutely free of charge this Thursday at 1 p.m. EDT. Sign up in advance and we’ll guarantee you a spot.
Stocks are drifting up as the Federal Reserve’s Open Market Committee begins two days of meetings — the first under Janet Yellen’s chairmanship.
Every major index is up, and the small caps are up stronger than the blue chips. At 1,869, the S&P 500 is only 10 points below its all-time record close earlier this month.
When the white smoke emerges from the Marriner Eccles Building tomorrow afternoon, the so-called expert consensus is for another $10 billion in “tapering” — that is, a reduction in Fed bond purchases from $65 billion a month to $55 billion.
For once, the expert consensus might be right. We find confirmation in the final batch of economic numbers going into the meeting this morning…
- Consumer prices: up 0.1% in February, with a year-over-year increase of 1.1%. The “core” figure excluding food and energy is actually higher, 1.6%, and that’s more or less where it’s hovered since tapering began in December
- Housing starts: Down 0.2% in February, which can be chalked up to bad weather. Permits, a better gauge of future activity, jumped 7.7%.
Where there’s more uncertainty is the yardstick the Fed will use to determine how long interest rates will remain “exceptionally low” — or, in other words, how much longer savers will be relentlessly punished.
Uncle Sam took in a record amount of revenue during the first five months of fiscal 2014 — $1.105 trillion.
That’s everything — income tax, Social Security and Medicare taxes, unemployment insurance “premiums,” the excise tax on your new set of tires and so on.
Even after you adjust for inflation, it surpasses the previous record set in fiscal 2007…
And still the feds ran up a deficit of $377.8 billion.
The “recovery,” however lame, gets some credit for the record haul. So do the new higher rates on couples’ incomes above $450,000 and the lower phaseouts for itemized deductions and the personal exemption on couples’ incomes over $300,000. Oh, and the 3.8% Medicare tax on investment income.
[Ed. note: Have you checked out the Laissez Faire Club’s exclusive income tax guide, featuring 97 ways to slash your bill by thousands of dollars? Even if you’ve already filed this year, you’ll benefit from these tips and tricks next year and for many years to come.
Every suggestion is legal and above board, gleaned from two generations of income tax know-how — including one generation’s stint as an IRS “hit man” before he abandoned the dark side. Give it a look right now.]
Gold has been climbing back down from its recent heights the last 24 hours. The selling began around lunchtime yesterday, just below $1,380. At last check, the bid was $1,356.
“Ireland’s commercial property market is coming back,” says our Chris Mayer — who just arrived in the Emerald Isle to scout out opportunities.
“In Dublin, property prices are up 20% from a year ago. It’s justified when you look at how fast rents are going up. Rental growth in the Dublin office market, for example, was 27% last year. Besides, the increases come after a long and nasty fall.”
For sure: From the peak in late 2007, Irish retail properties crashed an average 72%… and rents on those properties cratered 60%. The numbers were almost as bad for office and factory space.
“Ireland is on continental Europe’s doorstep,” says Chris. “Perhaps that is why corporate buyers, intent on occupying the property as home for European operations, were among the first buyers after the crash. Google acquired its 208,000-square-foot headquarters in February 2011. For some, that marked the beginning of a new investment cycle in Ireland.”
Last year, as you can see below, foreign buyers made up 52% of Ireland’s commercial real estate market.
[Click map to enlarge]
Chris’ readers have already pulled in 117% gains in a little over two years from a U.S.-traded property firm with a big Irish presence. Stay tuned as he zeroes in on a new opportunity…
Surely, you’ve heard of “platinum” credit cards. But what about a palladium card — as in the real thing?
According to CPI Card Group, the biggest credit card maker in the U.S., 10 million metal credit cards are now in circulation — up from a mere 15,000 in 2005. “Credit card issuers want to provide their high-end customers with something that’s different and unique,” CEO Steve Montross tells MarketWatch. “It’s a status symbol.”
JPMorgan Chase’s Palladium Card carries a $595 annual fee, but there are no fees for foreign transactions or cash advances. Or late payments, for that matter.
The Palladium Card: Hey, if palladium prices are rising, what’s the melt value?
Other pricey cards are made of titanium or stainless steel. But it’s “just a marketing scheme and offers no enhanced functionality,” says Ben Woolsey of CreditCardForum.com, a review site for card users.
“It’s just a gimmick,” adds Ellen Cannon at CardRatings.com, “to make the cardholder who’s paying a very high annual fee feel like they’re getting something no one else has. They call it the plunk factor” — making your dinnermates notice when the bill comes ’round.
Not that plunking it down always has the desired effect. One user of American Express’ titanium Centurion card ($7,500 initiation fee, $2,500 annual fee) tells MarketWatch he was turned away at a burger joint because the cashier didn’t think the card was real.
“The latest move by Obama (poking a bear, Russia, with a pencil and waiting for him to react) is very concerning to us,” a reader writes.
“We recently heard a commentary on the radio by a gentleman whose name I can’t recall, talking about our financial situation in the U.S. One of the points he brought out was that according to the FDIC rules and regulations, the FDIC DOESN’T have to pay out if funds are stolen through hacking…
“Well, call me crazy, but isn’t hacking just what Russia would do to our banking systems? Call me crazy twice, but wouldn’t that be a win-win for the feds, not to have to make good on money hacked by Russia?
“I worked in nine banks over the last 40 years, but in all honesty, I couldn’t say the rules and regulations that I knew and understood then apply anymore. I’ve seen and heard about all the new regulations put out by our present administration, and if they were piled into one area and set on fire, it would be equivalent to a five-alarm fire.
“If there is any truth to this regulation buried deep in the bowels of one of those books of new regulations, you can see where this is heading. I try very hard to stay current on the news and what’s happening both at home and abroad, and this scenario could play out badly for the folks of America if there is any truth to that man’s words.”
The 5: It’s a valid concern… but we’re not ready to withdraw everything and deposit it in the First National Bank of Serta.
It comes back to that financial balance of terror author Jim Rickards mentioned in yesterday’s episode. “The United States has no interest in intervening in Ukraine militarily, and even its economic response will be muted because of new fears of mutually assured financial destruction emanating from Russia and elsewhere. Putin has thought all of this through and has taken Crimea as his prize.”
“Did someone forget,” writes another reader, “that Crimea was once Russia’s and that this was its only ice-free port?
“This area was and is predominantly Russian-speaking. Russia [under the Soviet leader Khrushchev] ‘gave’ this area to Ukraine. You should know by now that Russia never ‘gives’ anything away — especially an ice-free port.”
“Technical analysis,” a reader writes of Greg Guenthner’s calls on gold, “only works when whatever you are analyzing is not rigged and follows the normal day-to-day fundamental and psychological circumstances around us.
“This current stock market and precious metals market is rigged by the Fed and Wall Street bankers, mainly Goldman Sachs and J.P. Morgan. Looking at Greg’s analysis on the gold price, he did not take into consideration why the gold price fell over $300 per ounce in such a short time. The naked short sale of some 500 tons of gold in April 2013 is what started this drop, along with all the negative remarks by the bankers.
“This deliberate, well-orchestrated move to suppress the gold price should not have been allowed, simply because no one had 500 tons of gold to sell. The U.S. government can’t even find 300 tons to return to Germany. This action in itself set off all the chartists to call for the gold price to further decline, creating a snowball effect. In other words, this price reaction was definitely not normal. Now, I ask, if this illegal sale had not been allowed, where would the gold price be today?”
Greg couldn’t have cared less why gold plunged on April 12. All that mattered was that $1,550 had broken and a bear market was underway. “Traders/people will respond to prices emotionally no matter what,” he tells me. “It’s the reaction I care about, not what caused the action.”
On the subject of manipulation, we recently heard an interview with Marc Faber: He sounds less dismissive of such talk than he was four years ago. Maybe he’s had a few more chats with his friend Eric Sprott.
But Faber’s conclusion is the same: If manipulation is going on, it can’t go on forever, and you’d do well to accumulate at low prices. If Greg’s technicals are more or less confirming this outlook, so much the better, right?
“I came up with a new word,” a reader adds. “Your comment attributing the lack of hate mail directed at Greg’s calls on the direction of gold to people being exhausted doesn’t go far enough. I think we’re ‘exhaustipated’ — too tired to give a s***.”
The 5: Hmmm… Kinda like the track “Disgustipated” from Tool’s debut album. We like it…
The 5 Min. Forecast
P.S. “We are not a nation that accepts nearly 46 million uninsured men, women and children,” the president said last June.
Today? Five million have signed up for Obamacare. “At this point, enough people are signing up that the Affordable Care Act is going to work.”
So 41 million uninsured is acceptable, Mr. President?
We say this not to take a cheap shot… but to remind you that no matter what the enrollment numbers, and no matter what kind of plan you have, Obamacare means big changes. Are you ready?
If you can’t answer that question with a firm “yes,” we urge you to click here.