This teaser was sent my way several times right around Tax Day last week, and I must say I’m intrigued … it’s an ad for Peter Krauth’s Global Resource Alert, a commodities-focused newsletter, and it’s all about making money by following in the footsteps of the big banks who are trying to control a particular market.
And yes, this was sent out before the Goldman Sachs foofaraw hit the fan last week, so we don’t get any of that particular part of the nefarious conspiracy theory stuff, but Krauth does certainly lay it on pretty thick. Here’s a taste:
“I’m not talking about just doubling, or even tripling your investment.
“I’m talking about making 15 times your money – or more…
“… enough to turn a basic $5,000 investment into $75,000.
“In fact, in my 20 years in the markets, I’ve never seen anything quite like this.
“Because it involves Wall Street’s biggest banks – and their moves to control one of the largest sectors in the market.
“You won’t read about it in The Wall Street Journal… and you won’t hear Jim Cramer shouting about this on ‘Mad Money.’
“Follow my basic instructions – as I lay them out for you – and I’ll show you how you can use this rare opportunity to make yourself wealthy.
“You won’t have to use options… futures… or fancy derivatives to do it, either.Are you getting our free Daily Update
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“Because I’m going to give you one very simple way to potentially make 15 times your money…”
And then, as we used to see so often in the wild and woolly lands of teaserdom, he teases us about some obscure, hidden stuff that’s hiding in plain sight on a government form somewhere …
“The Riches Hidden Inside an Obscure Banking Form
“I was working late one night, plowing my way through a mountain of financial reports… When I came across something I hadn’t seen before… hidden deep within U.S. government archives.
“It was called FR Y-9C.
“This obscure bit of bureaucratic paperwork gave me a glimpse inside the secret, back-room operations of the world’s biggest, most powerful banks…
“This is something that few analysts have ever been able to get their hands on.
“Until recently, the giant Wall Street banks closely guarded this kind of data.
“But that all changed when the largest investment banks – like Goldman Sachs and Morgan Stanley – became bank holding companies.
“When they did, federal law required them to file Form FR 9-YC.
“It’s like peeking inside the Holy-of-Holies of the financial world…”
And he at least didn’t overdo it and make up a brand new name for this form — there really is a FR-9YC, it’s a consolidated financial statement for bank holding companies that’s submitted to the Fed each quarter, and the next ones that we’ll see (if you really want to) really are due on May 10 for the first quarter.
And since Goldman Sachs is now a bank holding company (along with Morgan Stanley), a change that came about when they picked their noses up from their ledgers and noticed that Lehman Brothers and Bear Stearns had both disappeared, and they thought long and hard about the fact that they might want to have access to a nice big balance sheet like, oh, say, the Federal Reserve … so yes, they have to file these Federal Reserve forms about their holdings.
Apparently, when our friendly newsletter teaser dude read these reports, he found the results quite exciting:
“These banks are moving an incredible amount of money into one market sector.
“The amounts were staggering. The most recent filings show:
- Morgan Stanley has approximately $1.297 trillion in this deal.
- Goldman Sachs is in for $721.9 billion.
- Bank of America is in for over $2 trillion.
- And JP Morgan is in for an additional $665 billion.
“That’s approximately $4.68 trillion… That’s nearly 3 times more money than the national deficit… and twice as much as China’s total foreign reserves…”
Then the lights go on in Krauth’s head, and he tells us that he’s putting it all together — Goldman Sachs et al are publishing aggressive price targets for gold, or for oil, and they’re buying it up for their own portfolios … and then he draws the parallel to past commodity hoarders and manipulators, including Jim Fisk (tried to corner the gold market in 1870), John D. Rockefeller, who build Standard Oil into essentially a refining monopoly, the Hunt brothers, who tried to corner the silver market in 1973 and succeeded in driving the price up by almost 1,000% (before crashing), and Warren Buffett, who did much the same thing, though with an avuncular smile, buying up a huge silver hoard during the dot-com crash.
And of course, there’s some urgency (why else would you jump all over this and buy up the subscription TODAY!):
“And from everything I can see, the big banks are doing exactly the same thing – only they’re doing it on a monumental scale.
“And I’m going to show you exactly you could use their moves to make yourself rich.
“Remember though. There’s a very small window of opportunity here.
“If you want to make money off this information, you must move quickly.
“Let me tell you exactly why…
“Why May 10th Could Be the Most Important Day of the Year
“I didn’t pick the date of May 10th arbitrarily.
“It’s the result of months of research into exactly how these big banks are operating.”
He then backs this up a bit, revealing that, yes, he’s talking about the filing date for those Federal Reserve forms:
“The filing of FR Y-9C sets off an anomaly in the market few people are aware of.
“Almost like clockwork – every time the big banks have filed their latest FR Y-9C form, the price of gold and oil shoot up.
“And quickly, too.
“I went back over every filing since the beginning of 2009… and every single time this form was filed, the price of gold and the price of oil took a sharp move higher. Back in February of 2009, when the banks first started filing this form, crude was $37 a barrel. One month later, it was at $52.”
And he tells us something similar with oil — essentially, that right after the filings are made public, the prices of both these commodities shoots up.
OK, now he may well be right — it could be that now that the big investment banks are forced to file these forms, and now that so many of the big banks are heavily involved in commodity trading, that the revelation of the size of their holdings has some impact (though remember, the big numbers in these reports, like those teased, are usually the holdings that are “held for trading” in the bank’s own account, and they’re over a month old, so who knows if they’re still at all up to date with the rapid trading that often happens in commodities futures).
But more importantly, do be careful about the assumptions you make. Even if Krauth did go back through every filing since the beginning of 2009, that’s only four filings, during one of the most volatile markets in history. I’d be very careful about assuming that the fact that oil and gold went up in the months following each of these reports means that there’s really a relationship, let alone a causal one. And he doesn’t say anything about whether the actual numbers in those reports are significant, just the fact that they’ve released them is apparently the guide — otherwise, the skeptic might note that during some of those quarters the value of commodities on these bank balance sheets actually went down.
So we can go ahead and pay attention, sure, but shove a huge grain of sand in your eye if you’re going to use that data to believe this statement of his:
“I’ve just handed you a reliable indicator of when prices for the world’s most precious commodities move higher.”
And then, of course, we finally get to the meat of the matter: he tells us that these moves by the banks are almost guaranteed to drive commodity prices higher, and then …
“… right now, I’m going to share with you my #1 play to make the most money from the big banks moves.
“This company gives you exceptional leverage in the oil market.
“Look at this:
“Since the end of 2008, crude oil prices have gone up about 95% – from $44 a barrel to today’s close around $85.
“But in the same time period – this company has leveraged the rise in the price of crude 10-to-1 – shooting form a low of .35 cents a share to a recent close of $3.65 – a gain of over 1,000%.
“And at its current price, this company is still dirt cheap.
“See, they’re an oil and gas producer with international range – with properties in Canada, Ecuador, Mongolia – as well as producing projects in China.
“But in addition to the phenomenal leverage this stock gives you – the most impressive thing about this company is that it’s developed an exclusive technology that sets it heads and shoulders above other companies in the field. It’s a patented process called HTL.
“And what it does is nothing short of a miracle. This technology is able to upgrade heavy oil, like tar sands, into more valuable lighter oil… and do it cheaper and faster than ever before. This lighter oil is more desirable on the market because it’s easier to transport and refine, cutting end-costs down… and expanding profit margins.
“What does this mean for the company? It means that while other companies are struggling trying to squeeze a profit from heavy, less valuable oil, this company has the capacity to transform this oil into more expensive, easier to market light oil.
“It’s like having a machine that turns single dollars into $10 bills.”
And there’s more — he tells us that he expects a “quick pop” of 70% soon after that May 10 report (which we’ll remember, has nothing of substance to do with this teaser company), and then a six months target of 150% and a 24 month target of 1,500% gains.
I have to give him credit for round numbers, at least — somehow, I like to see the 1,500% gain teased more than the exact numbers, like, say, 2,513% gains, that give the impression that you’re doing something other than making a wild guesstimate. Notice how I put “timate” at the end, there? Never let it be said that your friendly neighborhood Gumshoe is not a gentleman!
Finally, the tease gets a little bit more detailed, in order to make my life a little easier:
“…their Ecuadorian property boasts an estimated 12.1 billion barrels of oil.
“If oil hits $110 next year, as Goldman Sachs predicts, the market value of this one oil field could become $1.32 trillion.
“And with a current market price of $3.65, I call this company an absolute steal. But that’s not the only reason to love this company.
“In addition to their patented oil technology, one of their China projects gives the company an exclusive 30-year contract with PetroChina (China’s largest oil and gas producer)… covering approximately 900,000 acres – with an estimated potential natural-gas resource of up to five trillion cubic feet.
“An exclusive contract with China’s largest oil and gas conglomerates – and an exclusive, patented oil technology… I call this one as close to a slam-dunk as you can get in the commodity world.”
Oh, and he did also note that Goldman Sachs happens to own six million shares of this stock, too (though that info is note from the FR-Y9C, of course). So who is it?
This, my friends, must be Ivanhoe Energy (IVAN)
Yes, it did get down to 35 cents at the bottom, right at the end of 2008, and it was recently at $3.65, though it’s down a bit from there (more like $3.20 at the moment, was a little higher last week — so you can thank me for not writing about them a few days ago when prices spiked a bit higher on higher oil and, one assumes, on the back of this teaser).
Ivanhoe Mines (IVN) shares a founder and CEO with its sister company Ivanhoe Energy, and both have a big focus on China — or at least, on the stuff China wants to buy. Ivanhoe Energy does indeed have significant operations in China and in Mongolia, under its Sunwing subsidiary, and heavy oil projects in Canada and Ecuador using their patented HTL (heavy to light) technology.
If Ivanhoe Energy does get a pop in the next month or two, it could be a result of some news from their Tamarack project in Canada, which is just north of Fort McMurray and near a bunch of other oil sands projects — they expect to get an updated estimate, and to submit regulatory applications in the first half of this year. But that project won’t be actually producing oil until at least 2014 according to their own estimated timeline.
And for their Pungarayacu property in Ecuador, the upper end of one of the estimates is 12.1 billion barrels of oil in place, which they are apparently working to extract under a special services contract that gets them $37 a barrel — I didn’t look into this in detail, but it looks like this must be some kind of sharing deal since I assume the government didn’t want to give up ownership. Would be worth investigating the details a bit more closely if you’re interested in this one, it’s not clear to me whether or not there’s a massive potential upside.
So these are advancing, but the relatively modest revenues coming in right now are largely from their Chinese oil and gas projects. You can see the basic details and updates in their last quarterly report press release here. The promise is from Ecuador, Mongolia and Canada heavy oil, and from expanding the use of their HTL refining technology in other heavy oil fields around the world.
And yes, as of the last quarterly reporting Goldman Sachs does own about 6 million shares, a little less than 2% of the company. Fidelity Contrafund actually holds a large portion as well (about 12 million shares), which I find a little bit more interesting, but institutional ownership is quite low overall (30% or so, according to the company).
Finally, it’s worth noting that the stock has had a big run over the past year, not just recovering from that 35 cent low back in late 2008 but also more than doubling just since last Summer, so we’re now talking about a company with a market cap of nearly a billion dollars that analysts estimate will have just $30 million in sales next year (unprofitable sales, at that). They do have their fingers in some potentially very large oil projects if oil prices stay high and they’re able to develop strong production using their HTL technology in the years ahead, so any estimates about how much you’re willing to pay for the company should probably start with guesses about the value of their assets, and how much those potential production volumes are worth today. The latest move by the one analyst who appears to follow them was a downgrade to “market perform” … but then, he didn’t know the deep, dark secrets like we do, right?
Let us know if you’re a fan or foe of Ivanhoe Energy with a comment below, thanks!
Full disclosure: I do own shares of Warren Buffett’s Berkshire Hathaway, noted briefly above, but am not invested in any other stock noted and will not trade in any stock mentioned for at least three days.