There was the time in the jungle of Colombia where I turned around from examining a rock outcrop only to find a squadron of men in camouflage emerged from the trees, pointing machine guns at my team. There were two possibilities. They could have been army soldiers on regular patrol, checking to see what we were doing in this out-of-the-way area, in which case, things would be fine. But in this particular spot it was equally possible these were rebel troops of the FARC or ELN guerrilla movements — both of… Read More

      There was the time in the jungle of Colombia where I turned around from examining a rock outcrop only to find a squadron of men in camouflage emerged from the trees, pointing machine guns at my team. There were two possibilities. They could have been army soldiers on regular patrol, checking to see what we were doing in this out-of-the-way area, in which case, things would be fine. But in this particular spot it was equally possible these were rebel troops of the FARC or ELN guerrilla movements — both of which are known for kidnapping and holding prisoners in the jungles for months, years, or even decades. As they waved for us to come forward, we had a tense moment of decision — go peacefully into what might be a trap or make a run for it up the hillside? The terrain was against us, so we chose to approach. Hearts in our mouths, we neared the group of men — who then identified themselves as army. It was one of the greatest rushes of relief I’ve ever felt. They gave us a lecture… Read More

Anyone following the market via their broker’s recommendations would understandably not think very highly of energy stocks. Fortunately, we have charts to follow what the market, not the analysts, has to say. And right now, the charts of numerous oil refiners look to be on the verge of upside breakouts. Despite a pair of major analyst downgrades this month, my favorite refiner right now is Valero Energy (NYSE: VLO). Admittedly, it took more than a quick glance to conclude this stock was worthy of our trading capital. After all, it is still trading below its key 200-day moving average, which… Read More

Anyone following the market via their broker’s recommendations would understandably not think very highly of energy stocks. Fortunately, we have charts to follow what the market, not the analysts, has to say. And right now, the charts of numerous oil refiners look to be on the verge of upside breakouts. Despite a pair of major analyst downgrades this month, my favorite refiner right now is Valero Energy (NYSE: VLO). Admittedly, it took more than a quick glance to conclude this stock was worthy of our trading capital. After all, it is still trading below its key 200-day moving average, which is a metric that many institutions and trend followers use to distinguish between bullish and bearish trends. #-ad_banner-# But that is just one indicator, and it usually lags the market. The shorter-term 50-day moving average, which lags less, has already turned higher and is closing the gap between itself and the 200-day.  Still, that is not enough to get bullish, even though bull markets do have to start from a low place. What I like even more is how volume has played out… Read More

The latest rumor around the global water cooler that Russia and OPEC-leader Saudi Arabia have agreed to freeze oil production at January or February levels has been dispelled… for now. The OPEC leaders meeting in Doha failed to reach an agreement to cap production, with Iran bowing out of the meeting altogether, and refusing to pull back on its oil production. As a result, oil prices took a big tumble. Brent crude fell a harsh 7% on the news. West Texas Intermediate (WTI) fell almost as much at 6.6%. #-ad_banner-#But does a “no deal” result from the OPEC Doha meeting… Read More

The latest rumor around the global water cooler that Russia and OPEC-leader Saudi Arabia have agreed to freeze oil production at January or February levels has been dispelled… for now. The OPEC leaders meeting in Doha failed to reach an agreement to cap production, with Iran bowing out of the meeting altogether, and refusing to pull back on its oil production. As a result, oil prices took a big tumble. Brent crude fell a harsh 7% on the news. West Texas Intermediate (WTI) fell almost as much at 6.6%. #-ad_banner-#But does a “no deal” result from the OPEC Doha meeting mean production caps are off the table? Or that OPEC wouldn’t seek an alliance outside its cartel? Hardly. In response to the meeting, Qatar’s energy minister Mohammed bin Saleh al-Sada said, “We of course respect [Iran’s] position… The freeze could be more effective definitely if major producers, be it from OPEC members like Iran and others, as well as non-OPEC members, are included in the freeze.” Al-Sada said that OPEC members need more time. Which says to me that this won’t be the last we hear of production caps. Indeed, this wasn’t the first time we’d heard about potential cooperation… Read More

People have been expecting a boom in renewable energy for years — but now it might finally be happening. Bloomberg New Energy Finance and the United Nations New Energy Program reported in March that renewable energy as a percentage of global energy production is growing faster than expected: wind, solar, geothermal and biomass together made up more than half of all new electricity-production capacity brought online in 2015, an unprecedented milestone. Renewable energy accounted for 10.3% of the world’s power production in 2015, up from 9.1% in 2014. Throw hydroelectric and nuclear power into the mix, and non-fossil-fuel production now… Read More

People have been expecting a boom in renewable energy for years — but now it might finally be happening. Bloomberg New Energy Finance and the United Nations New Energy Program reported in March that renewable energy as a percentage of global energy production is growing faster than expected: wind, solar, geothermal and biomass together made up more than half of all new electricity-production capacity brought online in 2015, an unprecedented milestone. Renewable energy accounted for 10.3% of the world’s power production in 2015, up from 9.1% in 2014. Throw hydroelectric and nuclear power into the mix, and non-fossil-fuel production now accounts for a third of total power production.  #-ad_banner-#This trend is almost certain to continue, as nations around the world try to reduce carbon emissions to slow global warming. Last December in Paris, almost every nation on Earth agreed to do so, and since then scientists have reported ever-more-dire warnings about the consequences if they fail.  What does this mean for investors? For one thing, billions of dollars will be spent on non-carbon power sources over the next few years. In 2015 alone, $286 billion was spent on new renewable electricity capacity. So the market-share leaders in solar and wind… Read More

Once heralded as the bridge to an oil-free energy future, natural gas seems to have been relegated to stepchild status in the hierarchy of carbon fuels. Why? It’s cheap, clean, efficient and plentiful. That’s part of the problem. The Energy Information Administration (EIA), estimate that there are 388.8 trillion (yes… trillion) cubic feet of proven natural gas reserves in the United States. That’s a lot of product to be pumped along with the 20+ trillion cubic feet of dry natural gas we pump annually. And we keep discovering more. Take a peek at a 20-year study of the spot price. Read More

Once heralded as the bridge to an oil-free energy future, natural gas seems to have been relegated to stepchild status in the hierarchy of carbon fuels. Why? It’s cheap, clean, efficient and plentiful. That’s part of the problem. The Energy Information Administration (EIA), estimate that there are 388.8 trillion (yes… trillion) cubic feet of proven natural gas reserves in the United States. That’s a lot of product to be pumped along with the 20+ trillion cubic feet of dry natural gas we pump annually. And we keep discovering more. Take a peek at a 20-year study of the spot price. After a couple of flirts with ridiculous prices, we’re pretty much back to where we started when I still had hair and wore size 32 jeans. #-ad_banner-#The other challenge is lack of industry consolidation. The top 10 U.S. natural gas producers control 31% of the market. That’s a decent number. But compare that to the top 10 petroleum producers who tap 52% of the market. Thin margins due to low prices don’t get companies excited about acquisitions. So with prices in the toilet and lack of merger activity, can investors make any money with natural gas? The answer… Read More

The price of a barrel of oil has rebounded from February lows, but most analysts are not yet ready to sound the all-clear on the sector. Promises of a production cap from OPEC and Russia mean little without action, and North American production has yet to come down appreciably. #-ad_banner-#The plunge from $105 per barrel has been a nightmare for exploration & production (E&P) companies, sinking the price of their shares along with revenue.  However, it hasn’t all been dark clouds for companies in the space. In fact, a few are taking advantage of fear in the market to position… Read More

The price of a barrel of oil has rebounded from February lows, but most analysts are not yet ready to sound the all-clear on the sector. Promises of a production cap from OPEC and Russia mean little without action, and North American production has yet to come down appreciably. #-ad_banner-#The plunge from $105 per barrel has been a nightmare for exploration & production (E&P) companies, sinking the price of their shares along with revenue.  However, it hasn’t all been dark clouds for companies in the space. In fact, a few are taking advantage of fear in the market to position themselves for faster growth when energy prices rebound. These proactive companies will emerge as some of the most financially fit, and investors may want to follow their lead.  A Financial Silver Lining On Energy Storm Clouds The price of oil has come down slightly from its 50% rally off of February lows. The industry isn’t yet out of the woods after price drops of nearly 75% in less than two years, but there does seem to be a renewed optimism in energy.  That sense of optimism is giving companies in the E&P space the power to do… Read More

The price of oil has jumped more than 50% since hitting a 12-year low in February, on hopes of production freezes that could reduce the global supply glut. But there is good reason to believe the market is getting ahead of itself. Little has changed in the oil supply picture to merit this price rebound. In fact, several signs suggest there could actually be even more supply over the next few months.  Another plunge in oil prices would not just drag down companies in the space, but likely the entire market, which is why I want to have… Read More

The price of oil has jumped more than 50% since hitting a 12-year low in February, on hopes of production freezes that could reduce the global supply glut. But there is good reason to believe the market is getting ahead of itself. Little has changed in the oil supply picture to merit this price rebound. In fact, several signs suggest there could actually be even more supply over the next few months.  Another plunge in oil prices would not just drag down companies in the space, but likely the entire market, which is why I want to have some protection in place.  Oil Rally Not Driven By Fundamentals The problem with the recent run in oil prices is that it hasn’t been driven by fundamentals; it’s been driven by speculation and trading. We have seen massive short covering in oil futures. Data from the Commodity Futures Trading Commission (CFTC) shows investors increased net-long positions by 17% in the week ending March 15 to the highest level since June.   But once weak fundamentals come back into focus, the market may not be so positive. #-ad_banner-# For starters, the Saudi-Russian agreement to freeze production at current levels may not… Read More

Most investors think it’s just the oil industry that suffers from bottom-of-the-barrel prices, but that’s not true. Consider this: Major integrated Oil & Gas companies have a debt-to-equity of 41.4. Chevron (NYSE: CVX) alone has $35.88 billion in debt. And that debt touches other industries and sectors, like banks. And just how much of U.S. bank assets do these energy loans make up? The answer might surprise you. #-ad_banner-#U.S. banks have thrown down enough money on energy to fund a small country: A whopping $123 billion-worth of outstanding loans and lending commitments. To put that in perspective, that $123 billion… Read More

Most investors think it’s just the oil industry that suffers from bottom-of-the-barrel prices, but that’s not true. Consider this: Major integrated Oil & Gas companies have a debt-to-equity of 41.4. Chevron (NYSE: CVX) alone has $35.88 billion in debt. And that debt touches other industries and sectors, like banks. And just how much of U.S. bank assets do these energy loans make up? The answer might surprise you. #-ad_banner-#U.S. banks have thrown down enough money on energy to fund a small country: A whopping $123 billion-worth of outstanding loans and lending commitments. To put that in perspective, that $123 billion is greater than the annual GDP of Ghana, and twice the size of the GDP of Puerto Rico. These loans and lending commitments account only for U.S. banks’ stakes. The global implications of oil debt could forecast a far scarier scenario for the global economy. What happens when these banks’ bets on energy is wrong? What happens if energy companies default on their loans, a la the housing crisis? According to the report, these assets wouldn’t trigger a financial crisis like the mortgage scandal back in 2008. But that doesn’t mean that these banks are going to weather an energy… Read More

Warren Buffett strikes again. We learned this past Tuesday the billionaire investor has been buying when there’s “blood running in the streets” in the energy sector.  #-ad_banner-#It was no secret that Buffett and his investment team at Berkshire Hathaway (NYSE: BRK-B) are big fans of Phillips 66 (NYSE: PSX), the nation’s largest refiner. Up until the fourth quarter of 2015, Buffett had steadily increased his stake in the company to the tune of 14.2% of shares outstanding (a position worth more than $5 billion).  But the big surprise in Berkshire’s latest 13F report revealed that instead of building onto their… Read More

Warren Buffett strikes again. We learned this past Tuesday the billionaire investor has been buying when there’s “blood running in the streets” in the energy sector.  #-ad_banner-#It was no secret that Buffett and his investment team at Berkshire Hathaway (NYSE: BRK-B) are big fans of Phillips 66 (NYSE: PSX), the nation’s largest refiner. Up until the fourth quarter of 2015, Buffett had steadily increased his stake in the company to the tune of 14.2% of shares outstanding (a position worth more than $5 billion).  But the big surprise in Berkshire’s latest 13F report revealed that instead of building onto their stake in Phillips 66, Buffett and his investment managers (Ted Weschler and Todd Combs) seem to have found a new darling in the energy space: Kinder Morgan (NYSE: KMI). Kinder Morgan is the largest pipeline operator in the United States. And just as you’d expect, while the price of West Texas Intermediate (WTI) crude has tanked over the past year, so too has the price of Kinder Morgan shares. Now that oil prices have rebounded somewhat in the past week (back to near $30), the talk on the Street is whether we’ve seen… Read More

#-ad_banner-#​Although inflation is low and the U.S. dollar is high, gold seems to be waking up. It’s hard not to notice that the yellow metal has already made quite a few changes for the better on the charts. And it appears gold mining stocks are coming along for the ride. First, let’s take a look at the long-term chart of gold futures. Using a log scale chart, we see they decisively moved above the major trendline drawn from the 2012 high, as well as the top of the trend channel drawn from the 2014 high.  When… Read More

#-ad_banner-#​Although inflation is low and the U.S. dollar is high, gold seems to be waking up. It’s hard not to notice that the yellow metal has already made quite a few changes for the better on the charts. And it appears gold mining stocks are coming along for the ride. First, let’s take a look at the long-term chart of gold futures. Using a log scale chart, we see they decisively moved above the major trendline drawn from the 2012 high, as well as the top of the trend channel drawn from the 2014 high.  When we see breakouts through two different measures of trend, we should pay attention. Not only that, but gold futures are now above major moving averages, including the 50-day and 200-day.  On the chart above, I used the 40-week moving average as a substitute for the 200-day. This month, prices moved to their highest spread above the moving average since 2012, which was arguably before the bear market really began. Gold mining stocks have also broken through long-term trendlines, and I think the smaller companies offer the most bang for your buck. To cut down on single stock risk, though, the… Read More