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How I Plan to Make Hundreds, Even Thousands of Percent Gains in the Stock MarketBy
Saturday, July 16, 2011
Just how valuable is a "trophy"?
According to the world's biggest public resource company BHP Billiton, around $12 billion.
This week, BHP agreed to buy Petrohawk Energy... a U.S. based oil & gas producer. Petrohawk owns a huge amount of acreage in the Eagle Ford shale field in Texas... an area I've written about several times in DailyWealth. It's by far the most exciting oil "play" in America right now. It's one of the country's great resource trophies.
S&A Resource Report readers are familiar with the idea of owning resource "trophies"... the biggest and most valuable deposits of crude oil, natural gas, gold, copper, agricultural land, and uranium. As the value of paper currencies continues to decline, the value of massive, world-class resource deposits will rise... in some cases by hundreds and thousands of percent.
BHP's buyout of Petrohawk shows how countries and companies are busy securing these assets... and paying up for the privilege. Early this week, Petrohawk shares changed hands for $24 per share. BHP offered $40 per share... a $12 billion offer and a 63% premium above its previous value. See this massive "premium jump" below...
 This deal is all about BHP securing unconventional natural gas assets for the long term (read my essay here for more on this trend). It's a huge deal that follows the 2009 acquisition of natural gas giant XTO Resources by ExxonMobil for $41 billion. That deal was a 25% premium to XTO's shareholders.
This trend is going to last for a long, long time. Europe's paper currency – the euro – is a disaster waiting to happen... And I'm sure you're familiar with the U.S. dollar's long, grinding bear market. Also, the huge populations of China and India (collectively around 10 times the population of the U.S.) are getting richer every year. They're consuming more and more fuel, food, and building materials. They'll continue to provide a tailwind behind trophy prices. China could buy more than 100 Petrohawks with a portion of its massive currency reserves.
Given all this, it's only sensible to diversify your wealth into valuable resource deposits like Canada's oil sands, proven undeveloped natural gas reserves (PUDs), and quality gold and silver companies.
Own the right ones and you can make big overnight gains, like Petrohawk shareholders did... or long-term, hundreds of percent gains as the trend plays out.
Good investing,
Matt Badiali
Market NotesCHART OF THE WEEK: GOLD BREAKS OUT OF ITS BOX Our chart of the week shows how the biggest story in the market played out this week... how gold "broke out of the box."
Regular readers know we've been steady bulls on the ultimate "anti-paper" form of money – gold – for over eight years (since even before we published our "$500 Gold is a Bargain" essay in 2005).
We don't try to dissect every $20 or $30 move in the price of gold like the folks on CNBC do. There's no need. We know gold is rising, because Europe and the U.S. have racked up massive obligations that can't be paid back with sound, honest money. The only way out of these obligations is to pay them off with devalued, debased paper currency. The winner in the whole wretched system is "real money": gold.
Early this year, we highlighted how gold moved out of a sideways trading pattern in the $1,300 to $1,400 range. Some traders refer to a pattern like this as a "box." After this move, gold advanced into the $1,500 range and moved sideways again.
But as this week's chart shows, gold just broke out of its box to reach a new high. The trend of sound, honest money rising against IOUs from bankrupt governments continues...
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Stat of the week
31%
Gain in the price of gold over the past 12 months.
In The Daily Crux
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