Matt Insley

Coal isn’t going away any time soon.

What’s better, knowing this simple truth could be our ticket to profit.

Geez, have you seen the price of coal stocks lately? The way the chart looks for many of the U.S. majors, you’d think the industry is about to shut its doors.

But from what I’m seeing, that’s far from the case. And today I want to prove it to you…

Two big names in U.S. coal have been simply crushed this year:

Alpha Resources – down 66%
Arch Coal – Down 56%

Looking further out, the past five years represent an epic downfall for king coal. Get this. In 2008 Alpha was a $100 stock and Arch was a $70 stock – now both trade around 6 bucks a share. There must be blood in the streets!

Most other coal plays in the U.S. have had a similar fate, too. And fundamentally it makes some sense…

After all, coal is considered “dirty” energy. So legislation has not been favorable here in the U.S., especially under the Obama administration.

Plus, at the same time the coal industry is facing a formidable headwind from Washington, the shale gas boom has made coal-burning power plants and coal-using steel manufacturers virtually a thing of the past. Natural gas as you know, is now cheaper, more efficient and cleaner to burn. So when coal-fired power plants have the choice to switch, they do. Same goes with big steel manufacturers like U.S. Steel.

It’s a coal bloodbath! It’s also our perfect opportunity to buy low in this resilient power source…

You see, although U.S. coal use is dropping off the charts, demand from Asian and European markets is booming.

Just remember, coal is plentiful… easy to transport… and cheap. The way I see it, this versatile fuel source isn’t going anywhere – and rock-bottom prices for some of the industry’s best companies represent a true opportunity.

The best way to look at this situation is through U.S. coal exports. After all, the export numbers should be a good indication of where the industry is heading. Here’s a look at the recent export action…

Of note, 2012 is on pace to set the record for coal exports with a forecast of 125 million short tons, smashing the previous record, 113 million short tons, in 1981.

This is another reason why America’s future is very promising. Along with more petroleum product exports, and potential LNG exports and manufacturing exports the U.S. is seeing a huge rebound in coal exports!

When you take a close look at the ticker tape you can see who’s buying, too: China, India, Brazil and Europe are the major markets. Coal use in those markets has been ramping up of late. After all, those countries don’t have a bounty of cheap natural gas – so easily-transferable coal is the second best option. It’ll remain that way for years to come.

Coal stocks are due for a rebound. With shares beaten down to 3-year lows, now’s the time to look at your favorites. More on this to come…

Keep your boots muddy,

Matt Insley

Original article posted on Daily Resource Hunter

Matt Insley

Matt Insley is the managing editor of The Daily Resource Hunter and now the co-editor of Real Wealth Trader and Outstanding Investments. Matt is the Agora Financial in-house specialist on commodities and natural resources. He holds a degree from the University of Maryland with a double major in Business and Environmental Economics. Although always familiar with the financial markets, his main area of expertise stems from his background in the Agricultural and Natural Resources (AGNR) department. Over the past years he's stayed well ahead of the curve with forward thinking ideas in both resource stocks and hard commodities. Insley's commentary has been featured by MarketWatch.

  • Pfc. Parts

    Graphene?

Recent Articles

Buy the Dips: Why the Pullback in US Shale is Only Temporary

Matt Insley

Since early July, there's been a sharp pullback in the prices of most major U.S. shale players. Is this the start of a long-term meltdown, or is this simply a great opportunity to "buy the dips"? Matt Insely explores, and offers four specific ways to play the trend. Read on...


A Federal Program that Could Turn Your Town into a Warzone

Chris Campbell

Media coverage of the situation in Ferguson, Missouri has documented a very disturbing trend in local law enforcement... namely, why is a small town police force armed to the teeth with military equipment? Well, as Chris Campbell explains, it's all thanks to a little-known Pentagon agenda called the "1033 Program." Read on...


The New Bitcoin Trend that Could Make You $100,000 Per Month

Josh Grasmick

Few investments have yielded better returns for early investors than Bitcoin. But now that the price has stabilized, are there any gains left to be made? Today, Josh Grasmick details one investable Bitcoin service coming online that could still lead early investors to massive profits... and with less speculation and risk. Read on...


Maestro
Preserve Your Wealth in the Face of Financial War

James Rickards

The Cold War introduced the world to a terrifying new phrase: mutually assured destruction. Thankfully the cold war ended without ever realizing this outcome. But the remnants of that "balance of terror" between the US and Russia still exist... and are beginning to surface in the financial sector. Jim Rickards explains...


How to Use Market Forecasts to Your Advantage

Greg Guenthner

'Tis the season for fall market predictions. But don't dust off that crystal ball just yet. Good traders don't try to predict when an important price move is going to happen - they just react when it does. However, as Greg Guenthner explains, forecasts can help you manage your risk/reward, as well as your non-trading portfolio. Read on...