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Published: July 28, 2010
Last week, I attended one of the best
collections of junior resource companies and investment experts
you can find anywhere... the Agora Financial Investment
Symposium, held in Vancouver, British Columbia.
One of the highlights of the conference was hearing master
resource investor Rick Rule speak five different times. Every
talk held nuggets of information that can make you money,
including the one I'm passing along today...
Right now, Rick's favorite resource sector is energy. In the
past, Western countries competed with one another for energy,
especially oil. Those days are over. It's now the age of China,
whose consumption will dwarf historical volumes.
At the same time, the owners of giant "legacy" oil fields are
killing them. National oil companies in Nigeria, Mexico,
Venezuela, Indonesia, and Iran exported oil and used the
revenues to line the pockets of officials and voters. They
failed to properly reinvest in the oil fields. Now, their oil
production is plummeting.
That is a problem for those countries... but it's also a problem
for everyone else who's competing for oil resources.
Roughly 25% of the world's export oil comes from countries that
have mismanaged their oil fields. It's pretty easy to guess what
happens next... Rising demand and falling supply will lead to
higher prices. As Rick pointed out, that's not an "if"
proposition... it's a "when" proposition.
Britain's Energy Secretary Chris Huhne told the Financial
Times that oil shocks reminiscent of the 1970s are very
likely. He's worried that, as North Sea oil fields decline,
England will face supply problems.
Great Britain is in trouble. But here in the U.S., we have a
solution.
The safest, smartest alternative to tanking in oil from the
Middle East and South America lies about 850 miles north of
Helena, Montana. Canada's tar sands are enormous. And the oil is
easy to recover.
As the world's excess export capacity thins out, and China
gobbles up what's left, the U.S. will depend even more on Canada
for its oil supply.
Rick recommended Canadian Oil Sands Trust (NYSE: COS.UN) on the Toronto
Stock Exchange. The trust is a pure play on the Canadian oil
sands. It doesn't own gas stations or refineries... It just owns
36% of giant oil sands mine Syncrude.
Its partners in the project are a wide range of oil companies
like ConocoPhillips, Suncor, Imperial Oil, Nexen, and Murphy
Oil. Syncrude produces about 375,000 barrels per day. Its
resource is around 5 billion barrels.
Rick says he's not expecting capital gains with Canadian Oil
Sands Trust. He says it's like insurance against rising oil
prices down the road. And it pays a nice 6.9% dividend while we
wait.
-- Matt Badiali
Editor
Growth Stock Wire
Note: This article originally appeared in
Growth Stock Wire
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