One More Ten-Bagger in UlaanBaatar

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One More Ten-Bagger in UlaanBaatar By Christian A. DeHaemer | Thursday, June 23rd, 2011 Greetings from UlaanBaatar, Mongolia... the northern-most capital city in the world. The gray skies have been spitting cold rain since I landed two days ago.  CNN tells me this is the same weather pattern that broke the Chinese drought and killed 25 people in that country – not that I trust CNN. This city isn’t built for such a deluge, and the water piles up fast and clear, overrunning the sidewalks.  There is no place to walk, and the taxis take wicked pleasure in dropping a cold puddle bomb on my dumb American ass as I gingerly step past the lakes. Advertisement Undiscovered Country It's the size of Australia, and it contains what the USGS estimates as over 72 billion barrels of crude in easy-to-access shallow earth deposits. And yet fewer than 500 oil wells have been built to date — that's less than 3% of what's in operation in surrounding territories. Find out the name of the company about to open the world's newest, and perhaps last, untapped oil region. G-Force Profits The days run together like a series of bad Japanese cartoons I remember from hungover Saturdays during my college years.  The flight took 31 hours, and the time difference is exactly 12 hours… The clouds are the color of a midwinter suicide and, as the wealthy Kiwi’s here say, it's been "pissing rain" since Korean Air Flight 857 squealed into the Chinggis Khan airport last week. My speech yesterday was the highlight of the carnival, of course.   I just told them what they already know – Mongolia is the best investment since the communists started trading company oil vouchers for vodka.  Man, that was a time to get rich. Most of the speakers here gave the talk you thought they would – all about the problems of frontier markets.  CFO’s, bankers and government flacks never talk about the upside.  Every problem they see is a price-moving catalyst as it is overcome.  Our favorite coal play is trading at $0.24 per pound of Newport quality coking coal.   SouthGobi, its Mongolian peer, trades at $4 a pound.  The open market for coking coal is running around $120 a ton for a full ship on the high seas. Taking Coal to Peking The Baltimore Sun recently ran an article saying the Port of Baltimore has doubled its exports of coal over the last year. Dry cargo ships are stacked up like Nairobi traffic waiting their turn to load up.  It's incredible that it's cost effective to blast coal out of a West Virginia mountain top, ship it to Baltimore, send it through the Panama Canal, and then over the great vastness of the Pacific to China;  But they are doing it. There are plenty of people who think the future of energy lies with nuclear power, wind or solar.  They are fools.  The real power of the future will be coal.  And it will burn in India and China. The Mongolian Dream Everything I’ve told you about Mongolia is coming to pass.  All four of the companies I’ve recommended have increased the size of their assets by simply having international companies audit their resources. One company has increased its coal holdings by more than 300%. One oil company has increased its probable reserves from 614 million barrels to 1.8 billion barrels…  And it still trades at a $350 million market cap.  Unreal.  It should be a five billion dollar company. Advertisement This winter, if you had to choose between heat and food... which would it be? Mark my words, this is a very real possibility. Watch this video and prepare yourself now. And yet, inexplicably, these companies have sold off over the past three months.  James Passin, the genius hedge fund manager of the Firebird Mongolia Fund, quipped that Mongolians believe positive news is a bad omen and will therefore sell all the positive. It’s true the local market is immature, illiquid and naïve;  But that’s all changing since the London Stock Exchange took over management of the Mongolian Stock Exchange (MSE).  Over the next two years, the MSE will become as advanced as any other major exchange and, in fact, will use the same systems (Oden help us).  The upside catalysts in Mongolia remain as strong as ever.  The Chinese slowdown fears coupled with the increase in company assets mean the local stock market is as cheap as it was two years ago – before Crisis & Opportunity produced a 1058% return on one stock, and a 434% percent return on another. Barring a macro shock, this market will run for 10 years.  And even then, it will run for nine out of ten. Good Hunting, Christian DeHaemer Editor, Energy & Capital Related Articles Wind Energy Up to Speed Oil Is One Hell of a Drug Africa: The Next Oil Boom The Biggest Coking Coal Deal Ever Offered From the Archives... Tesla Roadster Production to End, New Model in the Making 2011-06-22 - Brianna Panzica Panels Promised by the Start of Summer 2011-06-22 - Brianna Panzica Forecasts, Trends, and Companies 2011-06-22 - Nick Hodge Energy Transfer and Regency Pipeline Plan for Texas 2011-06-22 - Brianna Panzica Corn Supply is Failing to Meet Demand Growth 2011-06-21 - Brianna Panzica Economic Releases for the week of Monday, June 20th, 2011: Jun 21 - Existing Home Sales Jun 24 - Durable Orders Jun 22 - MBA Mortgage Index Jun 22 - FOMC Rate Decision Jun 23 - New Home Sales Jun 24 - GDP Brought to you by Wealth Daily

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