Ah, as the world turns…

…Russia upstages the president in a recent op-ed regarding Syria.

…The Middle East remains a pressure cooker, on high heat.

…The political “kids” at the U.S. capitol continue squabbling.

…More recently, China ratchets up its “de-Americanize the world” rhetoric .

Say what you will, the daily news beat has been giving us a lot to read lately. Besides your added reading, though, there’s an opportunity brewing that’ll right America’s ship, no matter what happens in the news bytes above. Let’s have a look… 

Russia hates us. The Middle East is slowly forgetting about us (as we’re no longer their #1 oil consumer.) China is trying to be us. Heck, it even seems like Congress is against us!

Add it all up and you’d think the U.S. is in quite a pickle. But you’d be wrong.

Fact is, to become and stay a world power you’ve got to have a lot of things going for your country. A thriving economy, a “stable” currency, a hard-working population and abundant natural resources (like water and food.) But the real kicker is having a vast supply of affordable energy.

No matter what the negative, news blurbs portend, the U.S. has a lot going for it. Of note, our vast supply of affordable energy just keeps getting bigger. Indeed if you’re looking for the savoir of our country’s future, you’ll find it about 7,000ft below the topsoil.

You see, America was dealt a one-two punch of fortune.

The first punch was a swath of oil that’s propelling our country to the top of the world’s oil production ladder. Indeed, America’s shale oil story is playing out in front of our eyes and it’s a savior for the country’s economy.

The second punch hasn’t even wind-milled up yet.

I’m talking about America’s serendipitous natural gas glut.

As I type, the U.S. is producing more natural gas than ever before. Fact is, production has ramped up so high so fast prices had nowhere to go but lower.

It’s an American energy Catch-22. We’re producing so much of the stuff, and the boom was so unexpected that prices have curtailed much of the current drilling. In other words, with such low prices drillers aren’t drilling for regular natural gas.

But just as Muhammad Ali lined up a few jabs before an uppercut, a huge haymaker of natural gas will be a game-changer for America.

All it takes is a little support for natural gas prices to get the next round going. 

Natural gas prices have been in the doldrums for years now. But at some point — as soon as 2014 — the price will start heading higher.

More demand is coming from within the U.S. border. Power plants are switching over to cleaner burning natural gas, chemical plants are popping up to take advantage of low feedstock prices (same goes with fertilizer producers and other U.S. manufacturers) and slowly but surely more natural gas powered vehicles are hitting American roadways.

Not to mention more demand is set to come from outside of the U.S. border. Exports to eastern Canada, exports to Mexico and potential liquefied natural gas (LNG) shipments via tanker could all spur demand for nat gas.

Regardless of the reason, natural gas prices will surely rise. Even a modest rise to $5 or $6 would be a game-changer for the nat gas industry here in the U.S.

You see, the breakeven price for many dry shale gas plays is over $5. We won’t see much more activity in these gas fields until we see $5+ gas.

But when that happens, watch out! The same rig-race we saw run to oil plays throughout North Dakota, Texas, Oklahoma and others will be set to take place in America’s shale gas fields.

There’s just one problem…

There won’t be enough rigs!

“They can’t make enough rigs if nat gas prices rise” one of my Texas oil and gas contacts tells me, hinting at the next big trend in America’s energy comeback.

You see, as it stands many of the now-prolific shale oil plays (the Bakken, the Eagle Ford and the Permian) have enough target zones to drill for the next decade. That means the oil rigs that are out there — all 1,367 that are spinning in the U.S. oil patch this week — won’t be drilling for natural gas.

To be clear, there are 1,743 rigs (total) working in the U.S. right now, according to Baker Hughes rig count. 1,367 of them, a whopping 78% of all rigs, are drilling for oil. The other 369 are drilling for natural gas.

Go back a mere five years and the rig count was flip-flopped. With few oil prospects available back then, natural gas rigs totaled 1,537…77% of total rig count.

In the past five years alone we’ve seen a sea-change in the rig world. With rising potential for higher natural gas prices, we’re set to see our next big opportunity in the sector. Only instead of seeing another flip-flop, we’re going to be looking at an all-out rig shortage.

That’s music to the ears of rig operators.

In the coming 12-18 months keep your eyes peeled for a rebound in nat gas prices. When that happens, make sure you’ve already locked in shares of your favorite rig operators.

Stay tuned for more.

Keep your boots muddy,

Matt Insley 
For Tomorrow in Review

Ed. Note: It’s times like these that make investing so exciting. As Matt said, the coming 12-18 months should yield some great opportunities in the U.S. energy industries. 

But there is much more urgent research that I feel like you deserve to know about today. 

I want to share new research with you that could help you fund a fast and early retirement, or even supplement the money you’re already using. 

Go ahead and take a look to see if it’s something you’re interested in byclicking right here.

The nature of this research requires that distribution be very limited … In fact last time I looked, there were less than 25 openings left. Good luck and God’s speed!

Thank you for reading Tomorrow in Review. We greatly value your questions and comments. Click here to send us feedback.

Wealth management firms look to hard assets for next price boom

As equity markets hit all-time highs again, investors haven’t forgotten the 2008 market meltdown that resulted in a 40 percent loss.

And now they are prodding money mangers to help protect them against another one.

To accommodate the well-heeled investors’ cautiousness, money managers and advisers are diversifying assets away from the bubble-prone stock market and into alternative assets like real estate, commodities and sometimes mutual funds that can short the stock market.

It is a trend that many asset managers see continuing over the next few years, several market-research firms say.

….read the full article HERE

The ultimate lynch pin for the silver market is the flow of physical metal to support ongoing price suppression. The flow of physical metal is mostly an illusion nearly equal to (and in some ways parallel with) the perceived strength of the paper currencies used to measure its value. Actual or threat of default in physical silver delivery to the COMEX could very likely lead to default across the asset spectrum.

The Center of Price Discovery

The CME owned COMEX remains the largest and most important exchange for world price discovery in the world. The major players on the COMEX, the most important futures market and the basis for world silver prices, are perfectly happy to exchange paper rather than physical. 

The fact that the largest players are neither producers nor users of the metal is all one really needs to understand about the integrity of the exchange. The advent of algo driven high frequency trading, and the complete capture of regulators has made the physical delivery and warehousing a secondary concern among the dominate traders.

Often we see ratios between the amount of physical stock and paper traded blow out to more than sixty times without creating a panic.

The ratio of open interest to available stock has often stretched beyond comprehension. However, it is the simple fact of large concentrated positions (not subject to limits-hedged or no) which have enabled the ultimate), which have enabled the ultimate, disconnect in pricing reality. While the LBMA is a much less transparent exchange, the same could be assumed without stretching the imagination.  Paper trading is profitable.

COMEX and LBMA Default

While the thought of default on these giant exchanges seems remote given their size and influence, it is possible for delivery delays to develop without major disruption. Significant enough delays could move price discovery toward the physical market, which would have at least two major effects.

First off, premiums for physical metal would likely move significantly higher – leading to real backwardation. More importantly, price discovery could migrate toward exchanges that deal primarily in physical – not paper dominated. This would likely move in an eastward direction toward Asia.

Buyers at the Margin

If physical price discovery were to suddenly or even gradually manifest, demand could explode.

It almost goes without saying that just-in-time delivery practices for some of the most important industrial uses of silver are a constant albatross for the paper delivery game. One or two user stock piling panics could send the white metal well beyond its inflation adjusted average highs.

In addition, the pool of retirement assets and liquid cash held by individual investors and fueled by the speed of information could result in an ocean of demand. Such demand would also propel fiat prices beyond anything resembling imaginable. The silver story is always compelling, but potentially very dramatic as new demand awakens.

While the masters of sentiment have governed the last remaining supply of readily available silver, failure is just one “accident away”. We’ve already experienced unprecedented counterintuitive price and demand relationships in the physical market. Prepare accordingly while you still can.

Read more from Silver Majestic:

Precious Metals Bullion Banks Making a Killing by Killing Sentiment

We’ve seen wild volatilty in precious metals – moves that allow a lower entry point buying opportunity for the bullion banks.

Continue reading “Precious Metals Bullion Banks Making a Killing by Killing Sentiment”

&

Long Gold, Short Silver And Exponential Demand

The unintended consequence of allowing suppression in the name of industry or to protect fiat currencies has led to a world record surge in physical off-take demand like..

Continue reading “Long Gold, Short Silver And Exponential Demand”

About the Author

Jeffrey Lewis

Jeffrey Lewis has been an advocate for silver purchasing for the past six years. He writes regularly about it at silver-coin-investor.com

Unless you’ve been living under a rock, you must know at least something about hydro-fracking in the U.S…. Come to think of it… if any person in the U.S. actually does fancy living under rocks, I’m sure they know about it too.

As of 2010, according to the Society of Petroleum Engineers, 60% of all new oil and gas wells on the planet are being hydro-fracked. The result: an unrivaled U.S. energy boom.

[Ed. Note: If you want a brief crash course on fracking, check out this shortanimated video on our Daily Reckoning website.]

As you know, fracking injects high pressures of water, sand and chemicals to crack open saturated rock for energy. Rigs can now tap into wells, both old and new, for oil and natural gas — not to mention shale — trapped underneath the Earth. And the juice is definitely worth the squeeze.

The U.S. in particular has benefited greatly from being ahead of the game on this. Since 2012, 2.5 million fracks have occurred worldwide, with over 1 million in the U.S. And that’s a very conservative estimate. Places that are tapping into this new energy, like North Dakota, have effectively been sheltered from the Great Recession. Employment rates in these areas are the best in the country. 

But what you may not know is that this fracking revolution, along with the economic advantages it brings, is all thanks to new technology. And now this revolutionary tech is getting an upgrade.

In short, this upgrade is turning fracking into “super-fracking”…

And “super-fracking” has a brand-new way of dropping balls.

Fracking Just Grew a New Set of Billion-Dollar Balls

I’m talking about fracking balls, of course. What else?

See, right now, for companies to frack, they have to do something kind of funny…

Before real energy production can begin, rigs have to drop down these big balls into wells. They are commonly made from plastic, aluminum or various composite materials.

These frack balls usually measure 1-12 inches in diameter. Their purpose?

These things act as plugs that isolate different areas of the wells. That way, it’s easier to pressurize and extract the goodies you want from underneath the ground. They’re used a lot — in 20 to even 30 different stages throughout the entire process.

But the problem is it can take several days for a rig to go out, sit there and fish out frack balls.

If companies could find a new way to handle their frack balls, they would be able to focus more on production…

Super Fracking: Making Frack Balls Less of a Ball and Chain.

Upgrading the tech and special materials that comprise frack balls is something all companies in this sector will be forced to do. Here are a couple that have innovations in the works…

The first company that’s working on “super fracking” is Baker Hughes Inc. (BHI). They branded a tech called “DirectConnect” that is undergoing field tests by select customers, according to a Bloomberg interview.

Baker Hughes also invented their own frack balls that disintegrate in wells like an Alka-Seltzer tablet does in your stomach. The fix takes a mere 1½ days.

The result is a big cut in two very valuable things: time and money (time is money, right?)

As I said before, any company that wants to remain competitive in this field will have to go in a similar direction.

Take Halliburton (HAL). Halliburton is implementing something similar called RapidFrac. It’s all a part of a plan the company calls “frack of the future” that aims to use better tech to pump up production, faster, with less dependency on materials and labor for each well.

RapidFrac is a little different but accomplishes the same goals as high-tech frack balls. RapidFrac uses a series of sliding sleeves that slip into a horizontal well and isolate zones for fracking. According to a JPMorgan Chase & Co. investor note on Sept. 19, these sliding sleeves can cut costs in the Bakken from as much as $2.5 million per well to $750,000.

Other companies, which our researchers are on top of but haven’t yet published, really take frack balls to a whole new level. These companies make their frack balls out of strong, ultra lightweight, “reactive” materials. That means “intelligent” material that responds to its environment, such as changes in fluid, pressure, temperature, electrical or magnetic fields… and other things that could trigger a desired disintegration while it’s in the well so rigs don’t have to fish them back up.

Ultimately, as frack balls are made from these special materials through new technology, they will be able to withstand deeper and higher pressure wells of 15,000-20,000 pounds per square inch (psi). To give you a comparison, typical dissolvable frack balls made from polymers and salts are limited to 5,000 psi-range wells. There are other advantages to high-tech frack balls, such as 40% less water consumption and easier chemical distribution.

Best,

Josh Grasmick
Managing editor, Tomorrow in Review

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