Why the Stock Market Is a Horrible Wealth Protection Strategy

Here in the States everyone is keen to see the non-farm payrolls report. It comes out on Friday. Anecdotal evidence (what people say) suggests that the employment situation here is still pretty bad. But government statistics can say pretty much whatever you want them to say.

If you’re looking for the internals of the market, try breadth. That is, if you want to judge how intrinsically strong a rally is, look at how broad it is. Is it just concentrated to a few of the top stocks for 2010 (banks and basic material, for example). Or are all stocks marching up in lock stop on higher earnings and higher valuations. Is the equity premium visible?

Take a look at the chart below. It’s the advance-decline index on the New York Stock Exchange from early 2007 unto today. The scale of the chart is less important than the trend. The index tracks the difference between advancing and declining issues on any given day. When there are more advancers than decliner, the index is bullish. When there are more decliners than advancers, it’s bearish.

NYSE A/D Ratio Looking Toppy

If you’re trying to use the A/D ratio as a predictor of what’s next (and who isn’t?) then what does it really tell you? The chart above shows you that market breadth started to deteriorate months ahead of the actual high in the Dow Jones (which came later that year in October.) The June-July revelations that two Bear Stearns funds were in trouble accelerated the deterioration.

The March 2009 low in the A/D ratio more or less coincided with the low in the index. There wasn’t any advance warning from the index. That’s likely because the March lows were reversed by the active (and perhaps direct) support of the Federal Reserve via interest rates and a program of Treasury bond buying.

Whether the Fed worked a way, via its primary dealers, to get top stocks moving too (another word is ‘manipulation’) is an interesting but ultimately unanswerable question. The important point here is that nothing in the fundamental mechanics of the market indicated a reversal. It was an external event.

And what about now? The A/D ratio is going up, up, and away. It could be that corporate cash positions are solid, the employment market won’t get worse, and that the end is in sight for the U.S. housing market. Some combination of these factors could explain the steady advance of top stocks to buy since last March. But maybe not.

Our guess is that this is simply evidence of the Fed’s Great Reflation (see Marc Faber’s March Gloom, Boom, and Doom Report). All the new money created by the Fed, and the new lines off credit made available to U.S. financial institutions, made its way into the stock market by force off habit. It was easy to borrow and there was only one sensible place to put it: stocks.

But is that still the best trade going now?

No.

Your best bet, as we’ve said for a while, is to retire now. Gradually liquidate your stock portfolio and pare it down. People are buying stocks now because it’s what they’ve always done and what they’re still told to do. But as a wealth survival strategy, the stock market is a death trap.

You should, by our reckoning, own a small portfolio of stocks leveraged to positive Black Swans (low probability but high magnitude events that drive a share price higher...like the discovery of a new ore body or the development of a new drug). These are the sort entrepreneurial ventures that will create new wealth. A portfolio of these business experiments is like a call option on the world we’ll live in after governments have gone bankrupt and lost the ability to perpetuate the follies of the previous credit bubble.

But for now, the public sector campaign to bail out the plutocrats in the private sector is in full force. And in the meantime, the public sector in Europe is trying to save itself. Markets in Europe have reacted with contented indifference to the affair in Greece. Has anything important happened there?

Well, the Greek government presented a plan to cut spending by $6.8 billion. If effected, it will reduce the deficit-to-GDP ratio from 12.7% to 8.7% in the next year, which is pretty ambitious. The Greeks plan to do two things: raise revenue and cut spending.

The Greeks will raise taxes on fuel, tobacco, and sales taxes. And if the communist unions don’t derail the plan, bonus payments to public sector servants will be cut by 30% and wages will be frozen for civil servants.

If Greece is having a fiscal crisis, why is anyone in the government getting a bonus payment at all?

The Greeks have $20 billion in sovereign debt maturing in April and May of this year. The negotiations between the Greeks and the rest of Europe are trundling along. But to what end? The Germans refuse to pony up for a bail out. But will the EU sacrifice Greece to save the Euro as a currency?

Nobody knows. But our main point today is that you should not think Greece has gone away. It’s true that since February, the cost of insuring sovereign governments against default has fallen. According to the folks at Bespoke Investment Group, only Vietnam, Argentina, and Egypt have seen wider credit default swap spreads in the last two months.

So we have a pause in the crisis-think. Markets rally on reflationary monetary and fiscal policy. But the underlying structure of the fiscal welfare/warfare state is badly damaged. This is still an excellent time to reduce your exposure to top stocks and add, on the dips, your exposure to precious metals and precious metals equities (in full knowledge that even gold stocks are going to decline on another general decline in stocks).

It’s probably not just stocks you should re-think, though. Last week we mentioned that fund manager Colonial First State (owned by the Commonwealth Bank) has told investors in its Mortgage Income Fund that it could be as long as four years before they get their money back. The average age of the 17,000 investors in the fund is 74 years old.

Redemptions in the $850 million fund were frozen not long after the Federal government guaranteed bank deposits. High-yield mortgage trusts are not bank accounts. Investors and pensioners who treated them like high-yield bank accounts — because that’s how they were sold — were suddenly not generating needed income on precious savings. And now the savings are locked up.

But it wasn’t just the government guarantee that pummeled the mortgage and property funds. It was the underlying securities. On February 9th, Colonial announced it would wind down the Mortgage Income Fund because the bad debts on some of the underlying property loans were, “too big to manage.” It has another $1 billion of pensioner savings locked up in similar funds.

Now without knowing the composition of assets in the other funds, it would be hasty to say that mortgage funds in general are lousy investments. However we’re inclined to think just that. But more importantly, there’s a point here about having your money locked up in large pools of capital these days.

These large pools of capital — mortgage funds, property funds, super funds, 401(k) plans in the States — are extremely attractive to people who need capital. Call it “captive capital.” Banks covet it because it keeps them cashed up when facing declining asset values in commercial and residential property.

Governments covet the capital even more. It’s a ready source of funding for government deficits. If you can compel banks to buy government bonds (via credit requirements), or if you can compel savers to own government bonds for “safety” and “annuity” reasons, then you can force people to fund your deficits. That means you may not have to cut spending so deeply that you lose an election because of it.

So what should you expect and what should you prepare for? Higher taxes are a given. “Nutter expected to tax sugary drinks, set trash fee,” reports a Philadelphia newspaper. The Nutter in this case, quite appropriately, refers to the Mayor. He’s taxing fizzy drinks and garbage to raise extra money for the city. At the city and state level, you can expect a lot more of these creative ways to finance spending — along with cuts in services.

This is part and parcel of the over-reach of the Welfare state. If the U.S. Warfare State has over-reached in Iraq and Afghanistan, it’s been over-reaching domestically for years with programs paid for out of an empty pocket. The same is true in Europe, Japan, and increasingly, in Australia.

Some places are better off than others. Australia has a relatively smaller public sector debt burden. But the country overall, if you look at the net foreign debt, owes its prosperity to foreign lenders. You can expect the strain on public sector finances to only increase in the coming years.

All of that suggests, to us anyway, that you should re-think your reliance on traditional income and savings vehicles. Look for changes to be made that make it harder for you to get at your money. Or, if you can withdraw it from certain accounts and schemes, you will do so at a massive penalty. Governments need capital. And when they can’t compel you to use yours to finance their spending, they are going to get at least a pound of flesh if you choose to remove your money from the system.

What should you do instead?

As we said above, a small portfolio of stocks — business projects leveraged to very high returns — is nearly the only good reason to stay in stocks. The other good reason is that as governments monetize debts and confidence in paper money fails, stocks may beat inflation a lot better than cash. The rally of the last year is evidence of that.

Next week, when we get back to Australia, we’ll take on the main objection to all of this: deflation. That argument is simple. As the global debt burden becomes too heavy, it will crush asset values, leading to falling asset prices across the board, including precious metals. We have too many objections to this to list here. But stay tuned next week. Until then!

IMF Doubles Inflation Target!

I grew up in Germany, a country that went through hyperinflation twice during the 20th Century. Maybe that's the reason I learned inflation is bad and inflationary policies are diabolic.

Inflationary periods are highly unjust. They undermine the ethics of hard work and thrift. They destroy solidarity, lead to widespread hardship and often to social unrest.

All these points are well documented in history. Many countries have suffered through the destruction brought on by huge surges of inflation. And many people have lost their wealth, their savings, and even their perspectives in the wake of inflationary episodes.

Inflation Is the Result of Deliberate Policies

Inflationary periods share three major points:

1. They have taken place under fiat money.
   
   
2. They are caused by huge public deficits, which are largely financed by money creation.
   
   
3. They are manmade, always the result of deliberate political decisions.

So where do we stand now?

Well, the first point above has been fulfilled on a global basis since the end of Bretton Woods. And point two is increasingly becoming the political answer to the burst housing bubble.

And now the International Monetary Fund (IMF) comes on the scene: In Rethinking Macroeconomic Policy, IMF economists recommend that the world central banks double their official inflation target from 2 percent to 4 percent.

Hence, point number three has arrived.

Plus, we have ...

Ben Bernanke ... a Dedicated Inflationist

With Ben Bernanke at the helm of the world's most important central bank, a designated inflationist is accountable for the world's most important reserve currency.

In fact, here's what he had to say during a famous speech on November 21, 2002:

"But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost."

By speaking these characteristic words, the Federal Reserve chairman commended himself for his job as the most important monetary bureaucrat: Promising politicians to always print his way out of any predicament or crisis.

And that's exactly what he has done during the past years. And that's exactly what the IMF is now recommending.

So does this mean inflation is no longer a bad thing? No, definitely not.

Inflationary policies are as bad and devastating as they've always been! But now they seem presentable. The big problem is, neither Bernanke nor the IMF bureaucrats seem to remember how difficult and painful it is to get the inflation genie back into the bottle once it has been let out.

Gold Has Historically Been the Best Inflation Hedge

Economic growth is one of the main, long-term drivers of best stock and real estate prices. And when inflation hits there is generally little or even negative growth. Consequently, stocks and real estate do not hold up well.

In contrast, gold has been the best hedge as investors seek to protect themselves against the large purchasing power losses of inflated currencies.

While top stocks for 2011 have been in a secular bear market since 2000, gold has been in a secular bull market. And the inflationary times that loom ahead argue that this bull market has a long way to go. So strategically gold still is a strong buy. But what about the shorter-term picture?

Interestingly, gold in euros has already broken out to an all-time high. As you can see on the chart below, it also broke out of a nice consolidation formation. This is a clear buy signal with a minimum target of 900 euros.

Priced in dollars, gold is also looking attractive. After the strong run from $950 to above $1,200 a healthy correction began. Gold nearly fell back to its rising 200-day moving average. In doing so a wedge formation took shape, and a short-term downtrend line became visible.

As you can see on the following chart, gold broke above this trend line. Then a short-term correction ensued, visible as a test of this broken trend line. This principally bullish behavior is being confirmed by medium-term momentum indicators (not shown). Being oversold, they have turned around thus giving buy signals.

All in all, the situation for gold looks very attractive. Fundamentals are bullish and policy makers are recommending and implementing inflationary policies. The short-term correction that started in December 2009 seems to be over. And I believe gold is ready for a resumption of its long-term bull market.

Power of Source Gold SRGL

Source Gold is quickly gobbled up by a major producer, such as Barrick or Goldcorp, at a huge share-price premium – resulting in very wealthy SRGL shareholders

 

Source Gold takes its bonanza-grade preliminary gold indicators at its KRK West claims and advances the property to the production stage – resulting in very wealthy SRGL shareholders

 

The price of gold moves into the $2,000 to $5,000 an ounce range – as predicted by many of the world's leading precious metals analysts – resulting in very wealthy SRGL shareholders

 

I view this stock (Source Gold - SRGL) to be entering its triple-digit growth phase! Later, I will tell you just how high it could go – but first let's talk about my unparalleled record of legendary gold stock picks.

You may recall the last gold stock boom we played -- Here are just a few of my picks that went through the roof:

• I recommended Francisco Gold (FGX) at $2.85…and in 18 months it skyrocketed 1,100%
• I selected El Misti…right before it went up 146% in 8 weeks
• I presented Miramar Mining at $0.82…and within 35 months it rose 985%
• I recommended Highgrade Ventures at $2.90, and in 6 months it increased 313%
  
• I identified Metallica Resources…and within 8 weeks it shot up 84%
  
• I recommended Consolidated Minerva at $1.00…it rose 200% in 90 days
  

Yes, there were vast increases on Francisco, El Misti, Highgrade, Metallica, and Miramar…to name a few — plus recently 7 other gold companies blasted through 200%, 500%…and 900% in the booming gold market:

Novagold …Up 835%!
Claude Resources …Up 515%!
Golden Star …Up 922%!
Richmont Mines …Up 452%!
New Gold …Up 225%!
Crystallex …Up 320%!
Northgate Minerals …Up 518%!

I could go on but you get the idea. Millions, and perhaps billions, of dollars of wealth were accumulated during these amazing runs.

But forget all that and simply remember one thing…Source Gold (SRGL) – with its HUGE early gold-data indicators – may become my TOP performing gold stock of ALL TIME!

SRGL Blows Away Market with HUGE Gold-Data Indicators
-- A Major Jump in Share-Price is Now Imminent

On the heels of the company's initial 250-sample trenching program, which returned incredibly high gold values of 9.55 ounces/ton (270.74 grams/ton) and high grade copper of 15.5 percent – Source Gold has now announced an aggressive exploration campaign on 3 key areas of interest on its prime KRK West Gold Project, Ontario, Canada.

These are among the richest data indicators I've ever seen – and Wall Street may soon be clamoring to get in on this deal as the SRGL profile increases and as the company begins to attract major market attention.

Those of you who made vast profits on Francisco Gold enjoyed the SAME benefits that could be attained with Source Gold. On the eve of an advanced exploration program, investors were able to pick up shares in Francisco Gold while they were still dirt cheap. Then, as Francisco released additional news on their stunning discoveries – the share price went BALLISTIC.

Source Gold (SRGL) could be next!

Source Gold has quietly amassed an impressive land package encompassing some of the most high-potential gold prospects I have ever seen. Backed by an impressive management team, an exciting multiphase exploration program, and participation in one of the hottest gold regions in the world, Source Gold is entering an accelerated period of hyper-growth.

Translation: Your SRGL share-value could go through the roof.

All knowledgeable Contrarians should own a piece of this bonanza immediately. In my more than 17 years as a Contrarian market guru, I have rarely seen a company with more spectacular profit potential than Source Gold. My proven experience in picking gold stock-winners before they skyrocket indicates that Source Gold (SRGL) may become my biggest success of ALL TIME.

So let me reiterate: Top management; major benefit from higher gold prices; tremendous exploration potential; superb infrastructure; initial results to be released in the near-term. Sounds like a project with big-time profit potential, doesn't it?

With its current share price below $1, the market capitalization of Source Gold is a fraction of what I think it is going to be. And exciting exploration results will soon be released, which I project will greatly increase the company's already off-the-chart gold-data indicators.

Already, the company's first round of assays points to the company being valued at a higher multiple in the near-term. At that point, Source Gold should be attracting the buying attention of Wall Street's giant financial institutions – and early Contrarians should be in the enviable position of deciding what to do with their profits.

Now is the time to establish your early position in Source Gold (SRGL) below the $1 per share level – then, get ready to ride the wave of excitement to much higher levels.

I don't want you to think the only reason I'm so keen on Source Gold Corp (SRGL) is because the price of gold is going to double, but $2,000-an-ounce gold by the end of 2010 is part of the picture. So, just in case you have any doubts, let me tell you what the experts are predicting. Rob McEwen, founder of the world's 3rd largest gold producer is not the only one saying gold is headed much higher:

 

Eric Sprott, the fund manager known as "The Energy Guru," also forecast a target of at least $2,000.

 

Jim Sinclair, Chairman of Tanzanian Royalty Exploration, projects a price of $1,650, stating, "If I am wrong it will because my estimate was much too low."

Jim Rogers, renowned commodity investor, and Christopher Wood, equity strategist, are each anticipating a price of $3,500 per ounce.

 

Peter Schiff, a well-known economist, author, commentator and popular video blogger who regularly appears on numerous financial news networks is on the record that gold will reach at least $2,000.

Frank Holmes, the head of U.S. Global Investor's Gold and Precious Metals Fund, a Morningstar 5-star rated gold fund, is saying everyone should allocate 10% of their money in gold to combat hyperinflation. He's predicting "gold can easily reach $2,300."

 

John Hill and Graham Wark, Citibank precious metals analysts, wrote… "Frankly, we're surprised, that gold is not already at $2,000 an ounce."

I See YOUR Future Path to SRGL Shareholder Wealth and Source Gold Shareholders To Get Richer in February

 

February 2010: Source Gold's immense preliminary gold-data will no longer be a secret and the intense reactive buying from broad market institutions is expected to thrust the SRGL share price to the $2 level. If you accumulate more SRGL now at the $0.75 level, this value expectation translates into 185% profits to your account balance.

 

July 2010: Source Gold continues to process more trench samples to add to its current and incredible indicators of 9.55 ounces of gold per ton and 15.5% high grade copper content. These are among the richest data indicators I've seen in 17 years. The major gold companies are acquisition hungry and I am 100% confident that Source Gold tops the target list at a much higher share price.

 

December 2010: As a commodity, Gold's global role as an economic and asset value stabilizer is back in full swing. My most reliable signal of a sustained increase in the gold price is the expansion of net-buying by the world's central banks. This proven signal shows the gold price currently on pace to finish 2010 just above $2,150 per ounce. As Source Gold proves its in-ground gold resource, the catapult effect on the SRGL share price will continue to increase.

Obama Wants to Spend Your Retirement Money

I have, from time to time, ranted in these very pages about one of the more pernicious — and quite frankly embarrassing — policies of Socialism (and hence, the United States government): their hatred for savings.

At the height of the recession, my U.S. Senator from Maryland, Ben Cardin, was heard on a local radio talk show urging Americans to go out, spend money... hit the restaurants for an evening on the town.

He was ripped to shreds by callers.

For those of you who think that I'm a Republican, let me say I'm not. George Bush urged Americans to spend money right after 9/11. He was just as dumb as Ben and the Democrats.

But Ben and the Democrats doubled-down on that proposal. In an effort to get Americans consuming again — and not saving — they briefly flirted with the idea of taxing the money in your savings account. After all, spending generates sales tax revenue for the state, right?

But there's more to this. You see, the socialist economist John Maynard Keynes argued that saving money was immoral. In other words, when you put money in your savings account, it sits there "unproductively"; a dollar in your savings account is a dollar not in your comrade's wallet.

Bottom line: When you save, you're not being a responsible citizen. Capital is therefore universal... not personal and private. And going in to debt is good.

I will repeat Dick Cheney's economic mantra that "deficits don't matter." I challenge you — whether you're a Democrat or Republican — to defend the deficit spending of Cheney or Obama... Do it, I dare you!

Top Stocks For 2011

Keynesianism was described by Zygmund Dobbs in the illuminating exposé, Keynes at Harvard:

The great virtue is consumption, extravagance, improvidence. The great vice is saving, thrift and 'financial prudence... If there are no savings there is no private money for investment. Without private investors the government must provide investment capital. If the government provides for investment it has the power to dictate the conduct and processes of those who need investment capital.

In addition to the potential attack on your savings, the gov't is contemplating "reforming" your retirement account. You see, the Chinese have dramatically reduced their purchases of U.S. treasuries... which means they are no longer funding our gov't debt.

So guess who the gov't is gonna turn to in order to continue deficit spending?

That's right... you and me.

What am I talking about? What I believe to be plans by the Obama Administration to, in effect, seize your retirement funds and use them to finance their deficit spending. Remember, more than $3 trillion is sitting out there in individual retirement, IRA, and 401(k) plans. Liberals just can't stand the idea if this much money sitting out there in private investments, out of the grasp of politicians.

Something needs to be done. And sure enough, something is going to be done.

The Treasury Department and the Department of Labor are contemplating ways to promote the idea of converting 401(k) savings and IRAs into government-managed annuities or other steady payment streams.

You can read more about here.

If this passes, it's sure to be a game changer.

This also means you have to make as much money now as possible... and get it out of the reach of the U.S. government.

Stay tuned. I'll report top stocks to buy more on this later.

Investing Top Penny Stocks

I feel like I shouldn't even tell you about this. But frankly, now that the Navy itself has let the cat out of the bag...

They've tapped a secret source of energy 113 miles northeast of Los Angeles.

And in the next few minutes, I'm going to tell you how this source of energy that I call "China Lake Energy" has enough reserves to significantly reduce our dependence on foreign oil. The energy is...

...so powerful that the U.S. Department of Energy believes it has the potential to produce 50,000 times the known oil and gas reserves in the world...

...so efficient, MSNBC reported that it will soon equal the energy output of all 104 of the United States' active nuclear power plants...

...so environmentally friendly, the California state Senate recently mandated that 20% of the state's energy must come from renewable sources just like it within a decade...

In this letter, I'm going to tell you about five penny stock companies ― whose top stocks for 2010 are all priced less than $1 per share ― that are set to take this energy public in a very aggressive and profitable way.

At the same time, I'm going introduce you to a strategy we've come to rely on that we call the 'MI Investing Advantage' ― leveraging military research and intelligence to establish a hugely successful civilian industry.

We've seen it time and again.

I'll show you the examples.

And when we're done, I'm sure you'll agree that you could harness the 'MI Investing Advantage' to get in on the next huge wave of expansion... and propel your investment success forward with alarming speed.

I'm so confident this approach to investing is right for your portfolio, I've developed a very interesting offer I don't think you'll be able to resist. More on that in a minute...

But for now, let me explain what's happening...

The Ancient Secret of China Lake

There is a secret, carefully guarded "energy discovery site" just 113 miles northeast of Los Angeles, Calif., that anybody who's ever wanted to explore booming energy stocks needs to know about.

The U.S. Navy has given it a code name: "China Lake ― Navy One."

It's surrounded by barbed wire. Guards with machine guns watch everybody who comes and goes. And armed Navy jets patrol the skies above.

What could possibly be so secret?

A very rarely talked about and previously untapped new energy resource that's so efficient and abundant, it could ― according to our own U.S. Department of Energy ― crank out enough power to replace 50,000 times the current usage of all known gas and oil resources... in the world.

That's a huge claim.

But not so huge that privileged investors aren't already making a move on this.

According to Dow Jones, Merrill Lynch's commodities group just earmarked $35 million in private financing for this emerging energy breakthrough. You could have even bought shares in this yourself, during 2007 and...

Every $10,000 you would have put in would have soared to $26,300.

Every $20,000 invested would have returned you a whopping $52,600.

The Navy owns the property where this new resource was discovered and developed. Until now, the Navy has kept it very quiet ― top secret, even.

The Navy's mandate, going all the way back to the United States Constitution, is to provide for the national defense. It's one of the largest consumers of energy on the planet... that much is true. But it isn't supposed to make money selling the stuff. That makes this discovery, according to our top former Navy 'insider' and energy expert, one of the best undiscovered moneymaking opportunities in the world of energy investing today... for individuals like you.

In fact, he names five penny stocks to buy ― all of which should do especially well as this previously unknown information is revealed to the public.

How well could you do? Just one of these tiny, unknown "secret energy discovery" stocks I'm about to disclose to you already skyrocketed 263% during 2007.

And since you could jump in on the ground floor, the opportunity just gets richer from here.

Here's everything you need to know...

The End of Our Dependence on Foreign Fuels?
Energy costs are rising. You and I both know that. Heck, in the past few months alone, the cost to heat and power my home has gone up by 27%.

The Navy knows that, too.

That's why many years back, Carl F. Austin, a well-known geologist with over 40 years of experience, published a report for the Navy that outlined a new energy plan that could power its entire Naval weapons testing base in California. 

Back when the report was written, the cost of foreign fuel was low enough that the Navy didn't have to act on Austin's energy plan. It planned on using the report as a 'worst-case scenario' only.

But when oil topped $100 per barrel during 2008, the worst-case scenario arrived. The U.S. government knows that we need to reduce our dependence on foreign fuels. And the Navy is taking the lead...

The Navy took Austin's work and immediately went to work. According to the U.S. Department of Energy, the Navy outlined one simple goal in drilling, testing and extracting its new form of energy:

'[The Navy seeks to] provide an alternative energy source, allowing [it] to reduce overall Navy dependence on fossil fuels, especially imported fuels.'

After decades of testing, the Navy perfected the energy extraction at its secret Naval air warfare site called China Lake.

China Lake sits just 113 miles northeast of Los Angeles on an area of land known as the Coso Hot Springs.

If you were standing in the center of China Lake, you wouldn't have a clue what lies beneath. The earth beneath your feet would be rocky and sandy. If you touched the ground, it would feel exactly like the ground outside your house.

But underneath the ground lies an energy form that can provide energy for 1 million Californians. And that's just from the power stored underneath the Navy's China Lake base alone...

Across the entire United States, 1.7 million people are already benefiting from the recent extraction of this ancient energy source.

And the Department of Energy claims that another 50,000 times the known energy of all known oil and gas resources in the world still lies untapped underneath the earth

When tapped, the potential of this ancient energy could reduce our dependence on fuel from the Middle East ― just as the Navy wanted. It could significantly lower our monthly heating bills... and provide as much energy as it would take to power the U.S. for up to 750,000 years.

But the Navy couldn't keep its secret forever... The news has now begun to circulate through the groups of in-the-know energy CEOs.

Several smaller companies are now beginning to get into the business of identifying and extracting the same kind of energy that I call 'China Lake Energy.' You probably don't know this, but they've already begun testing the extraction at sites spread across several Western states...

After researching this new energy form for the past four months, my former Navy 'insider' has found a total of five ways by which you could grab a piece of the profits. Let me explain...

How to Claim Your Piece of the Next $194.9 Million Energy Payout
What the Navy discovered was an easy way to harness an energy form so powerful that the U.S. Department of Energy recently conducted a large-scale study on its potential impacts for energy independence in the U.S. The findings surprised everyone...

The Department of Energy found that the known reserves, when tapped, could produce as much energy as it would take to power the U.S. for the next 750,000 years, based on current consumption rates.

The Massachusetts Institute of Technology conducted its own study. The result was a massive 3.72-pound document that detailed how this previously unused '[China Lake Energy] could play an important role in our national energy picture as a noncarbon-based energy source.'

The way it works is simple...

The U.S. Navy got lucky. Its China Lake base sits on top of the Coso Hot Springs, one of the hottest land masses in the U.S. It partnered with CalEnergy, a privately held California energy provider, to bring that heat up to the surface. Together, they developed a simple three-stage process for extracting the heat energy out of the ground...

First, they drill a hole deep into the Earth, tapping the area beneath the Earth's surface that produces heat over 400 degrees. Next, they inject water into the hole. The water instantly boils and begins to produce steam that rises out of the hole. After that, they put a large turbine over the hole that captures the steam and turns it into electricity.

The process itself doesn't matter. What does matter is that the energy source that comes out is clean, reliable and best of all, renewable ― meaning that, unlike oil and natural gas, the energy source never runs out. The Earth has always and will always produce heat...

The entire process releases three times less carbon dioxide than natural gas... five times less than oil... and seven times less than coal.

The best part is that this energy isn't limited to California. In fact, multiple 'hot spots' exist throughout the Western United States.

Sen. Harry Reid of Nevada has even said, 'Nevada is the Saudi Arabia of [China Lake Energy]...'

And the U.S. Department of Energy believes that 'China Lake Energy' has the potential to produce 50,000 times the known oil and gas reserves in the world.

The Navy is currently powering its entire China Lake base with this newly tapped source of energy. In fact, it's already generating more power than it can use...

So much power that it's recently begun to sell the "extra" power back to California utility companies. And the Navy is making a fortune doing it.

When the United States Government Accountability Office found out about the Navy's energy extraction, it dug into the accounting books to see what it's worth. What it found was nothing short of amazing...

According to the Accountability Office's data analysis, the Navy has already collected energy royalties in the amount of $194.9 million

Now that it's let the profits out of the bag, public energy companies are scrambling to grab their piece of the payouts.

So what does this mean for you? The public developments are providing a roadmap for people like you and me to follow the energy insiders to our piece of the next $194.9 million payout...

When I first heard about the Navy's secret energy extraction and the potential that it has, I had to learn more.

So I sent our Harvard trained geologist ― a gentleman who, by chance, has very close ties to the Naval War College ― to research the situation.

After four months of research and over 36,121 miles traveled, eight high-level meetings and over 217 hours with his nose in books, this geologist and former Navy 'insider' has put together all of his findings in a special report, titled The Five 'China Lake Energy' Companies That Could Make You $253,434.

Before I give you the exact details on how to download your copy, let me show you how much money you could stand to make by grabbing shares of these top penny stocks now...

Make $253,434 or More By Getting in Now...
I'm sure you've heard of nuclear power plants. As I type, 8.4% of the U.S.'s electricity consumption comes from nuclear energy.

Compare that with the small 0.3% that 'China Lake Energy' is currently producing, and it's easy to see that investing in its extraction is a ground-floor opportunity.

Why am I comparing 'China Lake Energy' to nuclear? Because MSNBC recently said that ['China Lake Energy'] production could soon equal that of all 104 nuclear power plants in the U.S.

Back when nuclear technology was new, energy insiders flocked to invest in the new form of power. And during the past few years, nuclear companies have been turning out some serious profits for their shareholders.

Take these companies for example:

• Entergy Corp., a nuclear energy producer based out of New Orleans, has ran up 261% between 2000 and 2006

• During the same time period, Dominion rose from $19.92 per share all the way up to $41.92 per share... showing investors a hefty 110% gain

• A uranium miner that provides the material needed for nuclear power production, named Cameco Corp, returned a whopping 1551% over the same time frame.

If you had bought just 500 shares of each of these three nuclear companies when the technology was on the rise, you would be sitting on $63,359 in pure profits. A larger 1,000 shares in each would have made you $126,717.

And if you took a large 2,000-share stake in each of these three companies, you'd have been able to send all your kids through college, pay off your house and buy a new Corvette on a $253,434 payout.

According to my former Navy 'insider,' if you get in on the right companies now, you could potentially see gains even larger than those early nuclear investors saw...

How? Just look at the advantages of this energy form over nuclear...

'China Lake Energy' Secret #1 ― Less Land to Build a Plant:
It takes 5 � 10 acres of land per megawatt to build an operating nuclear power plant, compared with only 1 � 8 acres per megawatt to build a 'new energy' plant. Less required land means the opportunity to build plants in tighter locations...

'China Lake Energy' Secret #2 ― More Environmentally Friendly:
Nuclear power produces toxic waste that requires time, energy and money to dispose. Even worse, it hurts the environment. This new energy form is clean and produces no toxic waste. Governments around the world are already begging to mandate that higher percentages of their energy come from environmentally friendly sources. They're even willing to provide substantial tax incentives to companies providing clean energy...

'China Lake Energy' Secret #3: - Cheaper Than Nuclear:
According to inside energy experts, energy from renewable sources like 'China Lake Energy' is cheaper to produce than Nuclear power.

With these advantages in mind, California's state Senate created Senate Bill 1038, which mandated that as much as 20% of the state's energy MUST come from 'clean energy' sources like 'China Lake Energy' by 2017. I expect other states to soon follow California's lead...

And when they do, companies that have perfected the technology should explode, potentially showing investors even bigger gains that the 721% that nuclear energy showed.

With only 0.3% of the U.S.'s energy production coming from 'China Lake Energy,' the time to jump in is now.

And since my former Navy 'insider' and Harvard-trained geologist has been in the business for the past 34 years, he knows exactly how to get your hands on the companies that are set to profit.

The 'MI Investing Advantage': Test Extraction Has Already Begun
After four months of studying all of the Department of Energy reports, visiting the hot spots in person and talking to his friends in the industry, my former Navy 'insider' and Harvard-trained geologist has identified five tiny companies that he wants to tell you about...

Before we get to the details, let me assure you, this isn't the first technology that the U.S. military has discovered. In fact, it's got a long history of inventing technologies that change everyday life. For example...

In the 1950s and 1960s, the military needed to "one-up" its enemies by being able to see in the dark. So it pioneered the way for thermal imaging, an imaging system that cuts through darkness and smoke to show heat sources. The companies that were involved on the ground floor of helping the military develop thermal imaging ― Honeywell and Texas Instruments ― have now become household names.

During the Gulf War, the U.S. Army needed a system to quickly communicate information from its global positioning systems to the battlefield, allowing it to make instant decisions on where to position the troops. From this technology, the Internet was born, paving the way for companies like Google to shoot up 605%...

Once again, in order to help track the movement of its troops, the U.S. Navy invented the modern-day Global Positioning System. Now almost every car manufacturer includes a version of the technology as a standard feature. Shares of Garmin, the leading GPS company, went from $9.63 per share to over $100 per share ― showing investors a 938% gain.

The list goes on and on...The military's invention of the jet engine paved the way for companies like Boeing to profit... their invention of Radar allowed Raytheon Corp. to shoot up 645%.... And the military's use of satellites proved profitable for Lockheed Martin... 

All of these technologies were developed by the military but went on to build fortunes in the public sector. Seeing these opportunities early enough to get in before the mainstream is what I call the 'Military Intelligence Investing Advantage.'

Now the military is ready to do it again. As I pointed out, the Navy has already made $194 million in royalties on this energy. But if the Government Accountability Office has something to say about it... those royalties should be earned in the private sector ― not by a branch of the U.S. military.

So the military is going to let this energy loose in the free market. And the following five companies are first in line. They're going to be the companies to bring this technology to market. They should be the beneficiaries of the 'first-mover' advantage in this huge new industry.

And if history of the 'MI Investing Advantage' is any guide, they're going to be the Fortune 500 energy companies of the future.

Let me show you what I mean...

'MI Investing Advantage' Company #1 ― With a 20-year Energy Deal:
In 2002, this company acquired the rights to a former Department of Energy production field. It immediately began its testing... and the early numbers have just come in...

A third-party consulting firm estimated that this company could be sitting on enough energy to eventually power 110,000 Idaho residents, year after year. On Sept. 26, 2007, it signed an exclusive 20-year deal with an Idaho energy provider to sell its energy back to the citizens of Idaho.

Now it's in the process of bringing a second location online. The numbers aren't complete yet, but the company has said that its initial tests 'indicate the potential for prolific production...'

'MI Investing Advantage' Company #2 ― Currently Sitting at Just 25 Cents per Share:
This company just inked an initial 20-year deal with the state of Nevada to provide energy to 24,000 homes. It owns a 100% stake in a known hot spot area in north-central Nevada with heat reserves close enough to the surface for easy extraction.

Even the U.S. Department of Energy is excited about the potential of the land that this company possess ― so excited that it's just awarded a $1.25 million grant to begin extraction.

Based on the numbers, I expect it to at least double in the next 10 months. And best of all, you can still load up on shares of this company for just 25 cents per share...

'MI Investing Advantage' Company #3 ― Owns More Than 70,000 Acres of 'Hot Spots':
This company has hot spot projects currently in development and 11 more waiting for test drilling to begin. In total, it has an interest in 70,000 acres of hot spots in California and Nevada.

On Oct. 22, 2007, the company announced that drilling had begun at its exploration well known only as 'Well 56-4.' It believes that 'Well 56-4' alone could have enough heat inside to power 24,000 homes. If all of its other wells produce the same amount, there's no telling how high this best stock can go. Another alternative energy company has shot up over 33% in one day. This one could go up even further when it announces the results of its other heat wells...

To be completely honest, I'm not sure how long these companies will go unnoticed. The major media is just beginning to catch on, and I'm positive that their stock prices will begin to jump any day now...

MarketWatch recently reported that it doesn't know why 'free energy from ['China Lake Energy'] isn't more widely used'... CNN said, 'Just below the Earth's surface is a virtually limitless supply of energy...'... The Economist calls 'China Lake Energy' a 'huge, unrealized potential' source of energy.

To help you get in right away, I've asked my Harvard-trained geologist to write up all of his findings in his new report called The Five 'China Lake Energy' Companies That Could Make You $253,434.

In this report ― which you can have instant access to ― he'll tell you the names of these companies, how to buy shares of each of them and what exactly to tell your broker.

But that's only three of the five companies he's found. Let me quickly tell you a little about the other two...

'MI Investing Advantage' Company #4 ― Powering 277,000 People in Latin America:
Like the first two companies I've told you about, this company has recently agreed to a 20-year deal to sell its power. But instead of selling it to the U.S., it's providing the power to Latin America.

A recent press release by the company shows that it expect its main energy hot spot to produce enough energy for as many as 277,000 people in Latin America. It wouldn't surprise me if this 34-cent stock shot up 628%, just as Amen Properties, a similar energy provider, did just a few years back.

'MI Investing Advantage' Company #5 ― Up 48% Since Aug. 22:
With two major hot spot projects in the works, this company is an industry leader. It has 100% of the rights to a 1,017-acre hot spot located 75 miles north of San Francisco, called the Geysers. The Geysers is the largest active energy-producing field in the entire world. Its second location, located in British Columbia, is estimated to have the potential to supply power to over 80,000 households in western Canada.

News is already getting out on this company. With increased drilling and extraction planned, this is my favorite stock to buy right now...

The best part of this new opportunity... the mainstream hasn't caught on yet... and these companies are all still dirt-cheap. Not one of them costs more than a dollar a share. But they all have the 'first mover' advantage when it comes to taking this military secret into the private sector. The returns on just one of them could be phenomenal. But with all five? Well, we really like our chances of hitting a home run.

Inside your copy of The Five 'China Lake Energy' Companies That Could Make You $253,434, you'll learn everything you need to know to get in early.

And you can get instant access to this report for FREE. Here's everything you need to know...

How to Receive This Report for FREE

My name is Joe Schriefer ― and I'm the youngest financial publisher in the industry. As my first big project on the job, I've decided to take on the 'China Lake Energy' opportunity. I couldn't be more excited... I truly believe that it's the single best moneymaking opportunity out there right now.

Although I'm young, I work for Agora Financial, a publisher that for the past 23 years has provided investment ideas to over 522,000 people. We've delivered our subscribers profitable ideas on everything from emerging technology to options investing, from commodity futures to penny stock analysis.

I'm not telling you this to brag, but rather to show you that we're not some fly-by-night company. If we don't publish great ideas to our readers, they can cancel their subscriptions and walk away. But almost all of them stick with us...

Why?

Because in the past our subscribers have had the chance to see gains of 365% when we recommended purchasing options on raw sugar. As of November 13th, we currently have open recommendations that are posting gains of 227% in Suncor Energy... 97% in Valero... 267% in American Century Global Gold... and 119% in EnCana Corp...

We've even had the honor of publishing the No. 1-ranked financial newsletter in the industry, according to Hulbert Financial Digest, the industry's leading watchdog.

Each day, I'm lucky enough to work with some of the best financial minds in the world. I hear about dozens of life-changing financial ideas before the mainstream ― ideas that could make you rich. And that's exactly how I first found out about the Navy's 'secret' energy discovery. 

Let me explain...

I started working with a man named Byron King. Byron's resume was seriously impressive...

He graduated from Harvard with a degree in geology... he holds a law degree from the University of Pittsburgh... he spent a lot of time in the U.S. Navy and the Naval Reserve...and he's worked in the 'enhanced oil recovery' division of Gulf Oil Co.

In his early days, working for Big Oil, he was the man responsible for pioneering techniques to get more oil out of oil fields. In the latter half of his career, he was practicing bankruptcy law for a Pittsburgh law firm.

His knowledge of geology, coupled with financial analysis, made him the perfect addition to a monthly natural resource newsletter that I publish, called Outstanding Investments.

I wouldn't trust just anyone with running Outstanding Investments. The newsletter is our pride and joy. It's been ranked as the #1 performing newsletter over the past five years three times. Here's just some of what Outstanding Investments readers have written us to say over the past few years...

'Booked $18,000 in Pure Profits'
I dumped [shares of your Anderson's recommendation] all at $123, after entering at $105 per your suggestion. I bought 1000 shares...any questions?!

- R. Garrison

'You're the Best!'
Perhaps a Nobel Prize for Resource Trading should be awarded.

- D. Dunham

'Profits of 560% and 652%...I'm up $45,000!'
Our financial year runs July to June and so far I am up some A$45,000.

On Monday I sold for a profit of 560%. This morning it was my birthday and you gave me the greatest birthday present I have ever had ( financially ) a profit of 652%...

- G. Carlson

'Very Pleased...'
Boy do you guys know how to pick'em. It's nice to find a buy and hold newsletter that delivers.

- K. Southland

So when Byron first told me about the Navy's energy discovery and the potential for early investors to make $253,434, like the early nuclear investors made, I couldn't wait to start writing this letter to you. But, he told me we couldn't publish the information.

You see, Byron's Outstanding Investments newsletter has over 47,000 subscribers. And these five companies are too simply small to recommend to that many people. The largest of the five trades for just under $1 a share.

He told me that if he recommended these tiny top penny stock companies to his readers, too many people might rush to buy the tiny stocks, and they'd push the prices up too fast. Many readers could get in at artificially inflated highs.

Fact is we are publishing this information for only a small group of readers.

And that's exactly why we've agreed to start Energy & Scarcity Investor ― an elite research service comprised of Byron's most serious readers... And those who are interested in his most sensitive recommendations.

To celebrate the launch of his new service, I'd like to send you a FREE copy of The Five 'China Lake Energy' Companies That Could Make You $253,434. All I ask in return is that you agree to a subscription of his new service, Energy & Scarcity Investor.

Why do we call it Energy & Scarcity Investor? Let me explain...

The Era of Cheap and Easy Oil Is Over: New Energy Companies Will Be the Leaders of Tomorrow
With each day that passes, the world consumes more oil than it produces. The oil left in the ground is getting scarce, harder to find and extract and far more precious than in the past. Even in a global economic slump, simple economics tells us that when supply is reduced, prices will rise.

The reduction of oil means the opportunity for new energy forms and new technology to power the world.

And that's exactly what Byron will focus on in his new newsletter, Energy & Scarcity Investor. He'll tell you not only how to protect yourself when energy prices start rising again, but how potentially to profit as well.

With a subscription to Energy & Scarcity Investor, you'll receive a free copy of The Five 'China Lake Energy' Companies That Could Make You $253,434. Then each month after that, Byron will automatically e-mail you an exclusive opportunity on the best way to make money by investing in companies providing the energy and technology needs for the future.

Remember, his recommendations will be small ― most will trade for under $10 per share. Almost all of the companies will be ground-floor opportunities. So the gains you stand to see from these recommendations have the potential to trump what he can provide to his other 47,000 readers.

For example, back in August 2005, Byron came across a company named Core Labs. The company provides engineering services for oil resevoir enhancements... and based on Byron's analysis was ready to explode. But at the time, the company was too small to recommend to his weekly readers. So he did the next best thing...

Byron delivered news of the company to a set of 258 conference attendees at our Vancouver Investment Symposium. Even after nearly all top penny stocks got clobbered in 2008, this stock is still up 61%. Over time, the amount of the small, previously unpublishable recommendations grew to the point that we asked to start a more elite research service, Energy & Scarcity Investor.

Before I give you details on how to sign up, let me tell you about another opportunity that Byron just uncovered...

How 'Enhanced Oil Recovery' Could Make You 209% in the Next Few Years
Did you know that you could extract oil from used tires?

Each 20-pound tire contains approximately 1.2 gallons of oil... and Byron has found the one company set to rise 209% by extracting the oil.

I call the process 'enhanced oil recovery' because its technology goes beyond the 'standard' recovery into outside-the-box sources ― like the 290 million tires that are thrown away each year.

The amount of oil that we currently throw away is shocking...

The 1.2 gallons of oil inside each tire, when recovered, could provide the U.S. with an extra 348 million gallons of oil. With oil prices sitting at $44.30 per barrel, that's an extra $367 million in thrown-away oil.

The company currently has a worth of just $88 million. If it's able to extract oil from just one-half of the tires that are thrown away each year and book the oil profits, it would be set to return you 209%.

Time recently named this company one of the Best Inventions of the Year in the environmental category for its technology of recovering previously lost oil

Its oil extraction technology works on a microwave-like frequency that gasifies the 'hard to extract' oil, collects it and later turns it back into oil.

The public is just starting to catch on. Within four months of its initial stock offering, the stock shot up 358%. According to my numbers, it's got a lot further to go...

And it doesn't just focus on tires. Its microwave extraction is now being used to explore previously 'capped' oil wells, the well-known tar sands in Canada and the oil shale deposits that holds the potential to produce 2 trillion barrels of previously untapped oil.

Like Byron's tiny energy companies, this company trades for under $10 per share, allowing you to load up without having to dip into your retirement savings.

I've asked Byron to write up all of his findings in a report, titled This Under $3 Stock Turns Old Tires Back Into Oil . This report is also FREE with your subscription to Energy & Scarcity Investor.

Before you decide to join Energy & Scarcity Investor, let me quickly tell you a little more about the service...

Traveling 36,000 Miles to Uncover Hidden Natural Resource Gains
Byron has more contacts in the natural resource and energy field than I've ever seen. A while back, he discussed the topic of Peak Oil with T. Boone Pickens, the famous oil investor that Forbes named as the 131st richest person in America...

Before that, he had lunch with the U.S. Navy's admiral in charge of nuclear reactors, and they talked about the future of nuclear power. He's met and talked with the geologist who discovered the Prudhoe Bay oil field in Alaska and spent a few days touring the facility with one of the senior geophysicists for British Petroleum.

He's even been asked to provide advice on national energy policy by the U.S. Department of Defense

He's been a part of the American Association of Petroleum Geologists for over 30 years, and he's a former member of the Society for Mining, Metallurgy and Exploration. In the past 12 months alone, he's traveled over 36,000 miles to uncover hidden natural resource opportunities for his readers.

And during his travels, he personally met all five of the principal players in the five "China lake Energy" companies I told you about earlier.

Each month, he'll use his contacts in the industry to bring you new ways to potentially profit from the natural resource and energy field that you won't hear about in the mainstream news.

He'll tell you which companies have the technology to power the future, he'll tell you who's discovered the newest oil extraction techniques, and he'll deliver to you the secrets behind the latest energy discoveries. All of his recommendations will be simple to carry out through one five-minute call with your broker, if you choose to get in.

So how much does it cost to get started? Well, since we need to keep the number of subscribers small, I can tell you that the price isn't cheap.

But before I tell you the exact amount, let me let give you the details on another opportunity that Byron alerted me about...

The 'Keno Hill' Secret to Collecting Free Silver From the Canadian Government

Chances are, you've probably never heard of George Carmack, Skookum Jim and Dawson Charlie. But for those who have, they're using their secrets to collect 'free' silver from the Canadian government.

And after two and a half months of research, Bryon has found a simple way that you could join the parade of investors who've had the chance to make 117% since Aug. 21.

According to one report, the Canadian government is set to 'hand out' as much as 17.6 million ounces of silver starting in 2009 ― and maybe more

I call it the 'Keno Hill' secret to collecting free silver. Here's the story on how to make sure you claim a spot in the 'handout' line...

Back in 1896, three men by the names of George Carmack, Skookum Jim and Dawson Charlie discovered gold along the Klondike River in Northwestern Canada. A rush of miners quickly flooded the area and mined $95 million in gold over the next seven years.

But they found much more than just gold... They discovered large deposits of coal, lead and eventually silver. The largest of the silver deposits were found underneath an area called 'Keno Hill.'

Over 217 million ounces of silver have been mined at Keno Hill over the years ― making the district the second-largest silver producer in Canada. At current silver prices, that amounts to just over $2.3 billion worth of silver. Now the Canadian government is willing to give away any silver left in the mines... allowing you your chance to get in on a piece of the handouts

How is this possible?

In the 1980s, metal prices fell, forcing the existing Keno Hill mining companies into bankruptcy. They eventually closed the mines in 1989. With silver prices low, it was simply too expensive to get the silver out of the ground. So the mining companies closed up shop and left town.

For years, the property lay abandoned, even though tons of silver might still lie underneath. The mines soon became an environmental hazard and major liability to the Canadian government.

That's why on April 18, 2006, the Supreme Court of the Yukon Territory of Canada signed a $50 million deal with a small environmental company to clean up the mines. To sweeten the deal, the government agreed to let the company keep all of the silver left in the mines.

The deal was a win-win for both parties. The government got rid of the environmental liability of the mines and the small environmental company generated cash flow through the cleanup process with a 100% upside of collecting the free silver it's able to mine. The trick to the success is that this tiny environmental company is a cleanup and exploration/mining company combined.

An official Canadian government document reveals that just one site in the Keno Hill region is packed with 17.6 million ounces of silver.

Even if 20 million ounces is all it finds ― which I personally doubt, considering the area has already produced 217 million ounces ― that could mean a safe 593% rise in its stock price. And that doesn't count the cash flow that the Canadian government is sending its way to clean up the mines...

If you're interested, you can start loading up on shares of this company for just $1.00 per share.

Byron has spent the past two and a half months researching the situation, meeting and talking with company officials and writing up his findings in a special report called The 'Keno Hill Penny Stock' Secret to Collecting Free Silver From the Canadian Government.

As part of your subscription to Energy & Scarcity Investor, I'll also send you this report FREE of charge. But let's get back to the task at hand: 'China Lake Energy.' I want to send you our free report The Five 'China Lake Energy' Companies That Could Make You $253,434.

How to Get Started Right Now
I'm confident that using the 'MI Investing Advantage' to get in early on the Navy's energy discovery could make you $20,000, $75,000, heck, even $253,434 over the next year.

The technology could significantly reduce our dependence on foreign oil some day ― and that makes it the most exciting moneymaking opportunity in the world right now. You could get in before your neighbors, friends or even you stock broker know about it. Imagine the gains you could make by getting in before everyone else...

And I'm going to help you by giving you an incredible offer...

Based on the profit potential of 'China Lake Energy,' I could easily charge you $5,000 a year for a subscription to Energy & Scarcity Investor. Even if one of the named companies hits it big, you'd have a chance to make your $5,000 subscription cost back many times over.

But since this a special offer, I'm not going to charge you $5,000...

I'd like to sign you up for 12 months of Energy & Scarcity Investor for just $1,495. But I can't allow this offer to last forever...

I'm going to allow only 2,500 copies to be published. Since these opportunities are small, Byron told me that he can't afford to recommend them to more than 2,500 people. And frankly, I don't want to screw up my first big project on the job...

As I write, over 44% of these reports have already been spoken for, so it is imperative that you act quickly.

I'll also throw in the other two reports I just told you about, The 'Keno Hill Penny Stock' Secret to Collecting Free Silver From the Canadian Government and This Under $3 Stock Turns Old Tires Back Into Oil.

And as a subscriber to Energy & Scarcity Investor, around the second week of the month, Byron will deliver an in-depth monthly issue on what he believes to be the best opportunity to in the energy arena straight to your e-mail box. You'll receive a total of 12 of these ideas a year.

Since the opportunities will be small (most will trade for under $10 per share) and could explode within days of his recommendations, you should be set to read them immediately, consider your financial situation and choose whether and how to act on the recommendations.

If you're not a subscriber already, I'll give you a FREE subscription to The Daily Reckoning ― a contrarian market e-letter by New York Times best-selling author, Bill Bonner. On top of that, you'll get elite access to the Agora Financial Executive Series. The Executive Series is a members-only dispatch of two profit-laden e-letters, Agora Financial's Executive Reports and the 5 Min. Forecast. These e-letters will alert you to specific investment research and recommendations from across the entire world of investment opportunities that Agora Financial covers.

Is a subscription to Energy & Scarcity Investor worth it? I think so ― but that's up to you to decide. So here's what I suggest you do...

Dodge Taxes Legally... Become Treasury Secretary

If you don't want to pay capital gains taxes, work for the President...or have lots and lots of kids.

In the biggest stock sale of his life, former Treasury Secretary Hank Paulson didn't pay one dollar of capital gains tax. Nearly $500 million worth of Goldman Sachs shares – a profit of hundreds of millions of dollars – and not a red cent went to the IRS. Paulson's Treasury predecessors Robert Rubin and Paul O'Neil enjoyed a similar tax dodge themselves...as did many other familiar Washingtonians over the last 20 years, like Donald Rumsfeld and Donald Evans.

You could enjoy the shade of this shelter too. All it takes is the President's blessing.

President George H. W. Bush is the originator of this refuge for the political elite. His Ethics and Reform Act of 1989 – ironically – was a soft-core crackdown on abuse of privilege in government...no more honoraria for federal employees (except Senators, of course), post-employment restrictions on Congressmen, increased financial disclosure and so on. But the Act also introduced Section 1043 of the Internal Revenue Code, a tax shelter available to those that need it the least.

Under the guise of not wanting to "discourage able citizens from entering public service," Section 1043 is an alteration of the government's conflict of interest rules. Before 1043, executive appointees (mostly high-up cabinet members and judges) had to sell positions in certain companies to combat conflict of interest – like say, a former Goldman Sachs CEO-turned Treasury Secretary with millions of GS shares. After Sec. 1043, the appointee gets a one-time rollover. Upon their appointment, he or she can transfer their shares to a blind trust, a broad market fund or into treasury bonds. They'll have to pay taxes on the position one day, but not immediately after the sale... like the rest of us.

So if you were Hank Paulson, sitting on 3.23 million shares of Goldman Sachs in 2006, the chance to defer tens of millions of dollars of taxes was a pretty sweet deal. Paulson, along with almost every executive appointee (and their spouses and kids!), have been granted a tax shelter that is totally unattainable for the everyday investor. Section 1043 goes beyond leveling the playing field for public servants. In fact, it incentivizes service. It puts appointed officials on a higher playing field than their constituents.

Many investors will, if they haven't already, experience a moment where they're desperate for a free pass out of one investment and into another. Imagine getting willed a million shares of Enron in 1999, or being on the verge of retirement in 2007. Your editor had shares of PNC passed down in his family for decades... Dad took a notable tax hit when he sold before the credit crisis. Too bad he wasn't Secretary of the Treasury. He could have rolled those shares of PNC into a money market fund – largely what Hank Paulson did – and enjoyed income on subsequent gains BEFORE being taxed on the original investment.

(All of this underscores the oddity of the US capital gains tax. It's not a tax on gains, but a tax on transactions. What does an investor truly "gain" from moving out of one position and into another? The capital gains tax should only be exacted when an investor truly cashes out of a position. Otherwise, it's tax on changing your mind. It's a tax on diversification and rebalancing. In other words, the government is giving you incentive to "buy and hold," a principle that has been just terrific for American mainstay top stocks like GM, Bank of America or General Electric.)

So what's a humble investor to do?

If you really feel like wasting your time, write your Congressman. Otherwise, maximize the potential of our absurdly complicated tax code. It's damn hard, if not illegal, to get a pass on capital gains tax the way Hank Paulson did. But you can take the edge off.

One of the most popular – and legal – ways is giving appreciated stock to your child. Each child can get a "gift" of up to $13,000 a year from each parent, tax free. Unless you've got a very entrepreneurial kid, he or she is probably in the lowest tax bracket. So you can give them the stock and they can sell it at a much lower tax rate.

There are other, more complicated ways, too – some of which involve forming corporations or trusts. Charitable remainder trusts, for example, produce tax benefits, while also providing funds for charitable endeavors. Of course the money won't belong to you anymore, but at least you would have the chance to finance the charities of your choosing, rather than the pork-barrel projects of the government's choosing.

Either way, don't just sit back and assume that paying the full tax is the fair consequence of investment success. You're in this mess to make money for you and the people you care about. Hank Paulson and his executive branch buddies found a shortcut – so should you.

My understanding of American tax law is far from comprehensive. Think of it like skydiving... I'm comfortable explaining the basics, but you wouldn't want me packing your parachute. If you want to minimize your capital gains taxes, find a good accountant.

Why I'm Playing the Smart Phone Tsunami Right Now

If you've ever tried to use an iPhone in New York City, you know firsthand how badly wireless networks need to be upgraded.

Speaking from personal experience, it's miserable. Some estimates say 20% of AT&T calls are dropped in the Big Apple. The 3G network crawls at times. Check out this spoof AT&T ad about dropped calls (warning: involves explicit language). There's even a Facebook group called AT&T Sucks boasting 445 members.

People aren't happy with slow wireless, and providers are being forced to upgrade to meet demand. The market is projected to grow at an astounding annualized rate of 131% until 2013, as this chart from Cisco shows:

Growth like that should set alarm bells off in your head.

Because certain companies are going to make a killing off this inevitable — and huge — wireless upgrade cycle.

One of them is Tellabs (NASDAQ: TLAB), and I think it's a buy here. Let me explain why.

First off, Tellabs is a $2.6b company sitting on $1.3b in cash. Debt is minimal at $268m. They're profitable and the company just started paying a dividend this quarter (current yield: 1.2%). Their balance sheet is immaculate. Management has been on a cost-cutting crusade over the past year and is now shifting the company's focus to high-margin products.

Tellabs also happens to be very well-positioned for the wireless data build-out. TLAB sells products that improve data flow — for both wired and wireless markets. They sell products that improve performance and lower costs for mobile carriers, internet service providers, and traditional voice companies.

While TLAB should also benefit from the wired broadband market, wireless is where the real growth is at. Demand for their wireless data management products soared 52% last year. According to Reuters, Tellabs CEO recently said at a recent conference that he expects 60%-70% growth in 2010.

Smart Phone Tsunami

Smart phones like Apple's iPhone are pushing wireless networks to the breaking point. Customers are using more data than expected, earlier than expected.

Apple took the industry by surprise with the iPhone; it was the first mobile product that's truly fun to use on the web. But they're not the only company with a great web phone anymore... Their lead is slipping, and demand on 3G and 4G networks will only get heavier as competitors like Google and PALM catch up.

Tellabs has products to help solve these data problems. One of their new releases — the Smart Internet Breakout Gateway — is a good example. The name is a mouthful, but the product has big potential. The Gateway routes traffic and data more efficiently through mobile networks, saving bandwidth and improving performance. It's currently being tested by major mobile operators.

The company said in a recent press release: "Users want fast mobile data, so operators must prepare their networks for the mobile Internet tsunami," said Rehan Jalil, senior vice president, mobile Internet at Tellabs. "Tellabs' Smart Internet Breakout Gateway enables operators to handle traffic easily while reducing their costs dramatically."

The Whole Package

TLAB has just about everything I look for in a best stock: a rock-solid balance sheet, a strong growth catalyst, and a dividend (albeit a small one).

There's also some buyout potential, but that's not on top of my list. Tellabs has great technology, a portfolio of intellectual property (patents), and a pile of cash. When recently asked about takeovers, the company's CEO said, "There have been inquiries over time but we are still a standalone company and we like it that way and so do our customers."

So a buyout may not be on the table in the immediate future, but it's always a possibility. Small strong companies like TLAB are attractive acquisition targets. Especially with giants like Cisco sitting on $40b in cash...

If the price were right, I'm sure the board would come around.