Northern Exposure

The Daily Reckoning – Weekend Edition
November 4-5, 2006
Baltimore, Maryland
by Kevin Kerr


I hope this week’s market action didn’t exhaust you as much as it did to me. I am not sure what to make of Friday’s jobs numbers, and it doesn’t seem like anyone else does, either. I mean, the revisions for the two prior months were so big that it really calls into question the validity of any of the numbers the government puts out.

Anyway, it was a busy week in the precious metals, as the tarnish got rubbed off the silver and gold a little and we saw a nice rally. While some of that was given back on Friday’s NFP number, it seems that continued geopolitical tensions, among other things, will tend to lend support and prop the metals back up, especially as we head into December and the end of the year.

I will be seeing Justice Litle down in New Orleans the week after next, and I hope to see you, dear reader, too. I think some slots are still open.

They must have something bad in the water up there in Ottawa; I mean, who’s running the show? I agree that as this taxation issue grows and impacts the Canadian stocks and trusts, we will see a quick rethinking on the whole subject up there by the government, so stay tuned.

Meanwhile, over in the uranium sector, I was rather upset to see the news about Cameco, since I really like the stock, but the shutdown of the Cigar Lake uranium field is really bad news. Flooding has apparently made it impossible to mine, and it’s a mess. The bright spot is every other uranium producer’s stock has exploded (pardon the pun) on the news.

Long-term uranium miners are the best bet, especially ones that are diversified. The bottom line is that nuclear is the only clean, reliable and fairly easy to deal with energy supply we have, and that means more uranium will be needed, big time. The Cigar Lake field problem for Cameco is equal to if Saudi Arabia suddenly ran dry of oil. Imagine OPEC and the world’s oil supply without Saudi Arabia and that’s now what the uranium market is faced with, since everyone was counting on Cigar Lake. All of this means it’s time to take a hard look at some of these uranium stocks.

The oil price firmed Friday on the ongoing problems in Nigeria and threats to kill workers, along with BP in Indiana getting a bomb threat, as well as cold weather moving across the plains and the East Coast. Simply put, oil was too oversold. Even with the abundance of supply, it’s still wintertime, and traders know temps will plunge soon, and there is also simply too much geopolitical uncertainty right now to be overly bearish on oil.


Kevin Kerr
for The Daily Reckoning

— Daily Reckoning Book Of The Week —

Hot Commodities: How Anyone Can Invest in the World’s Best Market
by Jim Rogers

Commodity investing has gotten a bad rap. Everyone seems to have heard of someone who “lost his shirt” trading commodity futures. What are commodities? Commodities are “things,” the essential raw materials that go into making everything from bread to automobiles. This includes foodstuffs such as sugar, wheat, soybeans, and coffee; the fossil fuels crude oil and natural gas; and industrial materials such as lumber, copper, lead, gold, and silver. As a group, they typically do well when stocks are doing poorly, and vice versa. But unlike stocks, the price of commodities can never go to zero.

Rogers, known for his world travels, his ability to size up any market, and his contrary approach to investing, says we are in the beginning of a multiyear bull market in commodities. Although he is promoting his new commodities fund, he makes a very good case that commodities belong in any balanced portfolio, particularly now. Rogers walks us through the sometimes obscure language of commodity trading, and shows us how to get involved without “losing our shirts.”

THIS WEEK in THE DAILY RECKONING: Recently, the world’s largest oil company reported that it banked $10.5 billion in the third quarter profits. Why, then, does Outstanding Investments’ Justice Litle, assert that ExxonMobile could be flat broke in twenty years time? Find out below…

The Million-Dollar Trailer, Part I           11/03/06
by Bill Bonner

“We are still not sure that the great bull market in U.S. residential real estate has come to an end. What we are sure of, on the other hand, is that it isn’t at the beginning.”

Mining and the Markets                        11/02/06
by Doug Casey

“Even though the natural resource bull market is now in full swing, the lumpeninvestoriat still hasn’t caught on to this trend. Doug Casey explains why you should jump on the resource train before everybody else does…”

Get Rich – While Exxon Goes Broke                 11/01/06
by Justice Litle

“Last Thursday, the world’s largest oil company reported that it banked $10.5 billion in the third quarter profits. Why, then, does Outstanding Investments’ Justice Litle, assert that ExxonMobile could be flat broke in twenty years time? Find out below…”

Stage-Three Gold Rally                                    10/31/06
by James Boric

“You can invest in gold stocks now – before the third stage of the rally begins (and while prices are trailing the overriding fundamentals). Or you can wait for confirmation from the herd. James Boric explains…”

25-Cent Tacos Still a Pipedream                       10/30/06
by The Mogambo Guru

“The Mogambo is a bit confused. How is it that gold exports are up, but our gold isn’t actually leaving the country? The answer to this question – and more – below…”

FLOTSAM AND JETSAM: If you’ve always thought a tropical island getaway was beyond your reach, think again…

Living Rich
by Barbara Perriello

In well-known Caribbean escapes like St. John in the U.S. Virgin Islands, you’ll pay a minimum of $300,000 for a quarter acre with a view.

But on a small dollop of sand I know of just two hours from the States, you can own a little slice of paradise a few sandy steps from the beach for less than 1/4th that price.

Here you won’t find any high-rise condos lining the shore or any department stores. Only a handful of cars drive the sandy roads. It’s quiet. But you’ll like the tidy, ginger box town with its good restaurants, little boutiques, dive shops, and smiling locals.

I’m talking about an island called Utila – about 7 miles long and 3 miles wide – twenty miles from mainland Honduras, on the largest barrier reef in the hemisphere. It’s a place divers revere but few other folks know about.

Along the northern coast of this little island, some intrepid developers are creating a new community designed to compliment the landscape and take smart advantage of the tropical breezes and Caribbean views.

It’s called “Escapa,” and it’s located in a bay protected by the reef, which means the waters here are calm and crystal clear and perfect for swimming and snorkeling.

The natural white sand is very fine and soft – extending several hundred feet back into the property, which means you don’t really need shoes.

Over 100 palms line the beach, which has been only partially cleared, ensuring that the setting retains its natural – almost wild – feel. Here you get the sense that you’re at the end of the Earth. And that’s what you want in an island escape, isn’t it?

It’s a very satisfactory little slice of Paradise. Residential lots start at $59,000 and beachfront lots start at $249,000.

The Daily Reckoning