As the stock market continues on its spiral downwards, drowning investors in the sea of despair forecast over the past year by Stansberry, Stockman and other pessimistic stock advisory writers, we constantly look for something to give credence to the old adage “when the going gets tough, the tough get going.” The problem is how? Where do we look?
Recent toutings include breakthroughs in new technologies such as lithium ion batteries, 3D printing, driverless cars, robotic surgery, cancer vaccine, even uranium sourcing and other new developments with the potential, if not the promise of 10x to 100x returns. All it takes to learn the names of these retirement gold mines (ah, there’s another one) is a high priced subscription. This is why Travis was sent to us, to help the untutored investor differentiate between reality and promotion, or put another way, between fact and fiction.
With this in mind, nothing appears to have fallen more into disfavor than the drilling for oil and prices have plummeted to reflect this out of favor epidemic. However, that is precisely where Bernard Baruch looked to invest – in companies and industries with stomach churning plummeting prices, and breath taking potential.
Some of you may recall that in February of 2014 and again, in June of last year, I wrote that the realization of and reaction to the problems of pollution, especially in our waterways, was leading to passage of stringent new worldwide regulations, which were in the process of being implemented. One major change was the issuance of regulations, which mandate the lowering of the sulfur content in a vessel’s bunker oil from an allowable 3.5% on the high seas to 0.1% for ships entering inland waterways and current ECA zones, including all US coastal areas and almost all major ports worldwide. By 2020 even ocean going ships will be required to meet a 0.5% standard, including all that currently are allowed to use fuel with the much higher 3.5% sulfur content.
There are 57,400 ocean cargo carrying ships today, compared with 50,000 seven years ago. At the end of 2015, the world’s entire fleet of all types of commercial carriers reached 86,300. These consisted of bulk carriers, tankers, container ships, general cargo, multi-purpose ships, car carriers, roll-on, roll-off vessels, gas carriers, reefer tonnage, cruise ships, off-shore service vessels, tugs and dredgers. To these numbers, we must add the combined navies of the U.S.-Russia-China-UK, which are in continuous service. Not all of these are subject to the new restrictions relating to the quality of bunker or shipping oil, but the growth in shipping, coupled with increasing restrictions regarding sulfur has opened up an opportunity
for very large future gains. All one must do is know where to look.
All of the world’s major ports and increasing numbers of countries are mandating that ships entering their territorial waters comply with the new sulfur content limit of 0.1%. This is presenting a major problem, as the cost of reducing sulfur content from 3.5% to 0.1% is estimated today to be higher than the cost of the fuel oil itself. This is a financial dilemma that presents us with a potential for substantial stock gains.
Once again, I refer to Genoil, which as I’ve mentioned in the past, offers a mouth watering opportunity that appears to have been totally overlooked. The cost last year of making bunker oil compliant with the new regs was estimated at $30/barrel. It’s somewhat lower today, but nothing near the $3 price that it costs using Genoil’s patented GHU technology.
The price of the stock when I wrote my last letter was $0.07/share, but instead of stabilizing or increasing in price, the stock dropped to a low of $0.03/share. This made no sense to me, other than the realization that investors were dubious, if not totally skeptical of the company’s ability to raise the multi-millions needed to build a plant to implement Genoil’s GHU and produce the low sulfur end product that field tests since 2001 have shown to be feasible, practical and economical. Not only that, but I have recently become aware it is also applicable and effective for other petroleum contaminants, which may be of even greater import.
Recent press releases indicate something very significant may be unfolding. A week ago, on January 25th, Genoil signed an agreement with Xi’an Beigeng Energy Technology to market Genoil’s Crystal Industrial Separators worldwide. Xi’an Beigeng estimates the Chinese market alone at 1000 separators. Their optimism was fueled in part due to the 17 separators Genoil has in operation, the oldest of which has been up for more than 20 years.
Just a week earlier, on January 19th, Hebei Zhongjie entered into a contract with Genoil to establish a new company, Dora Energy Technology, to build one of the world’s most advanced heavy oil refineries based on Genoil’s GHU technology, and Hebei further announced it had already invested 25,000,000 RMBs in the project. Strangely, this generated minimal stock market interest, which puzzled me, as it followed a release dated January 11th, in which Beijing Petroleum Energy (BPEC), a division of Shaanxi Yanchang Petroleum, one of China’s four largest petroleum companies, with assets of $43 billion and $25 billion in yearly revenues, announced it had signed an agreement for the marketing of Genoil’s GHU technology worldwide. The agreement states that BPEC will act as the contractor and, more importantly, that it will guarantee the upgrading prowess of the GHU technology.
What has piqued my interest since these announcements over the past month has been the level of trading, which had been averaging below 75,000 shs/day for some time, prior to the current announcements. However, from January 19-25, this increased to an eye-opening total of 1,180,300 shs. This was followed, on the 29th, with purchases of an additional 577,700 shs and a further 325,700 shs the following day. Yet on February 2nd the figure dropped suddenly to 2,700. Since the price has only increased from a low of $.03 to slightly under $.06 today, I can only speculate that the bulk of this buying may have come from China.
Genoil is a paragon of speculative allure. The company has a loss carry-forward, which exceeds the current market value of the shares, while the sudden volumetric increase in trading volume has not resulted in a significant rise in share price. I can only surmise that the level of disinterest is due to the public being unaware of what is happening and no realization of GHU’s huge future potential for profit. Once the first GHU units go on stream, I believe it is not unreasonable to expect the price increasing to $1.00 or more, although I would not be surprised if the Chinese decide their most lucrative course of action would be to simply acquire the company.
At a current price of under $.06, whichever of these scenarios unfold presents an investor today with a situation involving minimal downside risk and an upside potential that can exceed 1500%, offering us a realistic opportunity for a mouth watering return of 15:1 within a reasonably short period time.
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