The Madness of the EU’s Energy Policy

By Marin Katusa, Chief Energy Investment Strategist

The stakes couldn’t be higher. Vladimir Putin has launched a devastating plan to turn Russia into an energy powerhouse. And Europe, dependent on Russian natural gas and oil for a third of its fuel needs, has fallen right into his hands: Putin can bend the EU to his will simply by twisting the valve shut.

Considering how precarious Europe’s economic security is, one would have thought that now would be a good time for the EU to reassess its energy policy and address the effect crippling energy costs are having on its struggling economy. But the EU is never going to agree to a rational reappraisal of its policies, because eco-loons like its new energy commissioner, Violetta Bulc, have taken over the asylum.

A practicing fire walker and a shaman, she’s the sort of airy fairy Goddard College type who only believes in the power of “positive energy.” What will guide us in this frightening new era is, according to her blog, the spirit of the White Lions:

The Legend says that White Lions are star beings, uniting star energy within earth form of Lions. The native ancestors were convinced that they are children of the Sun God, thus embodying Solar Logos and legends say that they came down to Earth to help save humanity at a time of crisis. There is no doubt that this time is right now.

With the European Commission stuffed with green anti capitalist zealots, it’s not surprising that the EU’s response to the challenges of a resurgent Russia is a complete break with reality.

The EU has come up with an aggressive climate plan—just like Obama’s. In defiance of all logic—if not Putin—it’s agreed to cut greenhouse gas emissions by 40% and make clean energy, like wind and solar, 27% of overall energy use by 2030. Instead of guaranteeing the “survival of mankind,” this would cause the extinction of Europe’s industry—unless there’s a secret plan to massively expand nuclear power.

Fortunately for Europe, its leaders haven’t yet lost all their marbles.

These climate goals are just a bargaining chip in the runup to next year’s UN climate summit in Paris. They’re not legally binding. Unless the whole world commits to an equally radical policy of deindustrialization—which seems rather unlikely to say the least—the EU will “review” its climate targets.

This is just as well. In trying to meet the so-called 20:20 target—a 20% reduction in emissions by 2020—Germany and the UK have already discovered that renewable energy is too costly to maintain a competitive industry. As electricity prices skyrocket, Germany’s industrial giants are either having their power costs subsidized or are relocating to the US.

Both countries are struggling with the inability of wind and solar energy to provide reliable baseload power, which is threatening to cause blackouts.

The UK is putting its faith in fracking—and has managed to head off any EU legislation to ban shale-gas. But Germany and its fellow travelers, who have no qualms about reverting to coal, are simply overriding the EU Commission and its zero emissions utopia.

Knowing that EU climate policy would destroy international competitiveness and crush their economies, Poland, which depends on coal for 90% of its energy needs, and other low-income countries have taken a different approach. They've forced the Commission to give them special exemptions from any emissions reduction plan.

Unlike in the U.S.—where Obama is taking executive action to wipe out the coal industry—lignite, or brown coal, is set to become an increasingly important part of Europe’s energy supply, as it is in much of the rest of the world. There are 19 new lignite power stations in various stages of approval and construction in Bulgaria, Czech Republic, Greece, Germany, Poland, Romania, and Slovenia. When completed, these will emit nearly as much CO₂ as the UK.

Which is ironic. The UK is the only member of the EU to have been insane enough to impose a legally binding carbon dioxide reduction target intended to take it to 80 percent of 1990 levels by 2050. It’s also the only modern industrial nation where there’s serious talk of World War II style energy rationing.

As you’ll discover in my new book, The Colder War, Europe and America need to wake up. They’ve never been so economically vulnerable. The time for indulging environmental fantasies and putting one’s faith in White Lions is over—unless, that is, you want to see Putin controlling the world.

Click here to get your copy of my new book. Inside, you’ll discover exactly how Putin is orchestrating a takeover of the global energy trade, what it means for the future of America, and how it will directly affect you and your personal savings.

The article The Madness of the EU’s Energy Policy was originally published at casey research

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War, Peace, and Financial Fireworks

By Casey Research

Politics has long been a driver of international markets and fickle financial systems alike. Everything is connected. Here are some voices from the just concluded Casey Research Fall Summit talking about cause, effect, and war.

James Rickards, senior managing director with Tangent Capital Partners and an audience favorite at investment conferences, says the Middle East, Russia, and China are all working against the U.S. dollar and for gold.

America’s recently improved relationship with Iran is actually bad for the petrodollar, he claims, because the Saudis and the Iranians are bitter enemies. The Russians, for their part, aren’t sitting idly by while the US imposes sanctions on them—aside from Putin being able to freeze US assets in Russia, Rickards believes that Russian hackers may already have the ability to shut down the New York Stock Exchange.

China does want a strong dollar because it still holds over $1 trillion in dollar-denominated assets. But Beijing is aware that eventually the dollar will depreciate, so it’s buying gold to hedge against a decline in the value of the US currency. Current gold reserves are estimated to be between 3,000 and 4,000 tonnes of gold; the ultimate target may be 8,000 tonnes.

Rickards thinks that we are approaching a period of extreme volatility in the U.S. markets and recommends allocating 10% of one’s portfolio to physical gold.

Bud Conrad, chief economist at Casey Research, also is a petrodollar bear. For the past 40 years, he says, the petrodollar has bestowed extraordinary privileges on Americans, but that era is now coming to an end.
Dozens of countries have already set up bilateral trade agreements that circumvent the US dollar. Dollars as a percentage of foreign reserves have declined from 55% in 1999 to 32% today—and could reach 18% by 2019, says Conrad. Ultimately, the petrodollar will fail, which will lead to a rise in sought-after commodities, especially gold.

Conrad thinks the greatest danger we face may be a combined financial and political collapse. Current geopolitical problems are even worse than economic problems, he says, and the trend is toward more, not less, war. Wars, on the other hand, often precipitate financial collapse.

Grant Williams, portfolio and strategy advisor for Vulpes Investment Management in Singapore and editor of the hugely popular newsletter Things That Make You Go Hmmm…, wholeheartedly agrees.

War and financial turmoil have always been inextricably linked, says Williams. Both occur in natural cycles, and one often causes the other. He believes that we’re in an extended period of economic peace because the Federal Reserve has used monetary policy “to abolish the bottom half of the business cycle.”

Although that may sound like a good thing, it is not. The business cycle, argues Williams, is inevitable and natural; we need it to cleanse the economy. But the Fed has leveraged to such unsustainable levels to “keep the peace” that the inevitable fallout will be that much worse.

He foresees serious wars to accompany the coming financial turmoil. Today’s geopolitical setup, he says, is similar to 1914’s. In 1914, France was a fading former giant (that’s Japan today); Britain was a waning superpower, no longer able to guarantee global security (that’s the US now); and Germany was an emerging industrial power huffing and puffing and making territorial claims (today, that’s China).

Rather than all out war, Marin Katusa, Casey’s chief energy investment strategist, believes the new “Colder War” will be fought by economic means, specifically through domination of the energy markets.
While Europe is using less oil than it did over a decade ago, says Katusa, it’s depending more on Russia for its energy. North Sea oil and gas production is in decline, and Norway’s production has reached a plateau and is dropping. Russia, on the other hand, owns 40% of the world’s conventional oil and gas reserves.

The solution, Katusa says, is the “European Energy Renaissance.” As Putin tightens the thumbscrews on his energy trading partners, more and more EU countries are waking up to the fact that they will have to produce their own energy to gain independence from Russia. As the best ways to play this new paradigm, Katusa recommends three undervalued North American companies that are in the thick of the action.

To get Marin Katusa’s timely stock picks (and those of the other speakers), as well as every single presentation of the Summit and all bonus files the speakers used, order your 26+-hour Summit Audio Collection now. They’re available in CD and/or MP3 format. Learn more here.

The article War, Peace, and Financial Fireworks was originally published at casey research

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The Most Anticipated Oil Well of 2014

By Marin Katusa, Chief Energy Investment Strategist

Large international oil companies (IOCs) and the largest national oil companies (NOCs) are all anxiously watching an oil well that’s being drilled by a North American company in a little, out of the way country in Europe. In fact, this country—Albania—has recently garnered so much attention from Big Oil due to the results of the elephant potential of this oil deposit that the Albanian Energy Ministry just decided to establish an open tender system for the next round of sales of blocks with major oil and gas potential. If you’re not familiar with it, “open tender” is an auction process where the highest bidder gets the land blocks.

The Energy Ministry wouldn’t do this unless the demand were significant, and when Doug Casey and I visited the region recently, we were very impressed with its world-class potential. We’re both excited to see the oil well results that are slated to come out within the next few months—so are the IOCs and NOCs, and so should you. To share our excitement, Doug and I thought it would be a great idea to literally bring you into the room to see and hear what we see and hear—and thanks to modern technology, I present to you today the Casey Energy Report (CER) Crossfire.

One of the few times I filmed a CER Crossfire was with Keith Hill from Africa Oil. It’s not something I do regularly—only when I’m really excited about a company. The company we have on CER Crossfire today, Petromanas Energy (PMI.V), is chasing world class, elephant oil deposits, but rather than deepwater Africa (like Keith did with Africa Oil), it’s drilling deep onshore in Europe.

As you will hear me discuss in the video, the last time I’ve seen a company chasing deep world class oil deposits with this kind of massive upside was Africa Oil. Shell, one of the largest IOCs, is paying almost all of the US$70 million this oil well costs to drill to earn its 75% share of the project, and it will do the same with the next well. We haven’t seen such a high reward-to-risk ratio in a long time. So, rather than reading a long missive, I invite you to watch this edition of the Casey Energy Report Crossfire with Glenn McNamara, the CEO of Petromanas. I think it will definitely be worth your time.

Now You Can Take the Lead… We Make It Simple

We expect great things from this company. You can read our ongoing guidance on Petromanas and our other top energy stocks every month in the Casey Energy Report. In the current issue, for example, you’ll find an in depth field report on the Europe trip Doug and I took, what we learned at our site visits, and which companies are poised to benefit most from the budding European Energy Renaissance. There’s no risk in trying it: If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund.

Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. You don’t have to travel 300+ days a year to discover the best energy investments in the world—we do it for you. Click here to get started.

The article The Most Anticipated Oil Well of 2014 was originally published at Casey Research.com.

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How a Big Cat Started Europe’s Addiction to Crude Oil

By Marin Katusa, Chief Energy Investment Strategist

On July 1, 1911, a German gunboat named Panther sailed into the port of Agadir, Morocco, and changed history. For the previous two decades, a faction within the British Admiralty had called for the navy to switch from coal fired ships to ones powered by a new fuel. Admiral John Fisher, First Sea Lord, led the charge, trumpeting oil’s numerous advantages: It had nearly twice the thermal content of coal, required less manpower to use, allowed refueling at sea, and burned with less telltale smoke.

Doesn’t matter, replied naval tradition: Britain lacks oil, and she has lots of coal. The switch would put the greatest navy in the world at the mercy of burgeoning oil rich countries and the oil trusts that operate in them. (It didn’t help that the navy’s first test of oil firing in 1903 engulfed the ship in a cloud of black smoke.)

It wasn’t common knowledge at the time, but Germany had surpassed the mighty British Empire in manufacturing in the late 1800s, most notably in the production of steel. Britain’s manufacturing base had largely moved abroad, taking investment along with it. Germany, meanwhile, was determined to build up the quality as well as quantity of its goods. That included its military technology and capacity, especially its navy. Has a familiar ring, doesn’t it?

Then came the Panther. Germany said she was there to protect German businessmen in restive Morocco, a reason more credible had there actually been German businessmen in Morocco. Britain read it as a challenge to its supremacy, a maneuver toward expansionism, and a threat to trade routes west out of the Mediterranean.

Britain’s young, up and coming home secretary wondered what specifications would be required to outmaneuver the ships of Germany’s growing navy. The war college gave a deceptively simple answer: a speed of at least 25 knots.

Coal couldn’t do it—too many boilers, too much weight, too long to build up a head of steam, too short a range. But oil could.

With the Panther’s arrival in Morocco, Admiral Fisher’s faction gained a new and eloquent advocate for converting the British Navy to oil, and it wasn’t long before Home Secretary Winston Churchill became First Lord of the Admiralty and the fellow whom history often credits with guiding the British Empire’s destiny with oil.

Germany’s Great Game

 

If Britain were to switch its navy to oil, it would need a secure supply of the stuff. Churchill saw that the struggling Anglo-Persian Oil Co. had the resources, but lacked the cash.

With Germany setting its cap for control of Middle Eastern oil—building a railroad between Berlin and Baghdad was the last straw—it wasn’t hard for Churchill to convince the Parliament that cutting a deal with Anglo-Persian Oil Co. was a good idea.

In exchange for an infusion of cash, the British government got 51% of the company’s stock. A hush hush rider on that deal was a contract for Anglo-Persian to supply oil to the Royal Navy, with very favorable terms, for the next 20 years.

All this happened just in time for the spark that finally ignited the Great War, or as we call it today, World War I. Because of Churchill’s preparations, among them a new class of oil-fired ships, Allied naval forces were able to restrict the flow of essential supplies to Germany.

By war’s end, every country realized the strategic importance of a secure supply of oil. The players have been maneuvering ever since.

Fast-Forward 100 Years—the Rise of Mother Russia

 

The fortunes of the various players may change, but the scrimmage remains the same. Oil does everything from power vehicles on land and sea to supply manufacturers with the building blocks of medicines, plastics, and a host of other products.

The Soviet Union was a global powerhouse and a major oil producer until its disintegration in 1991, and Russia then had to shop hat in hand for loans to keep its economy afloat. It was largely its oil and gas resources that have enabled Vladimir Putin, Russia’s canny and forceful president, to wrest his country back onto the world stage of heavyweights in recent years. The European Union is currently Russia’s largest customer.

Indeed, Europe is feeling the squeeze from Russia, which has gunned hard to make it easy to get its oil and gas, but not so easy to keep getting them. Putin will happily play hardball with any country that won’t meet his terms—just ask Ukraine—and doesn’t mind if others down the line feel the sting of his stick.

The EU-28 imports over 50% of all the energy consumed. Russia provides about one-third of all the oil and natural gas imported by EU-28. Germany is the largest importer of Russian oil and natural gas.

The member countries of the European Union may be cheering Belarus on, but they’re also taking the hint from Russia. And they’d better: Between growing demand in Asia and instability in the Middle East, the European Union faces some serious energy challenges.

Slowly but surely, Europe is waking up to its situation. Alternative energies are a noble goal, but the hard truth is that the technology isn’t there yet to replace hydrocarbon fuels. For energy security, there’s little choice for EU countries but to back the oil and gas companies that call Europe home.

“We must get on and explore our resources in order to understand the potential,” declared Britain’s energy minister in July. Other countries, such as Germany, are taking on this pursuit as well. We believe that governments and oil giants in other European countries will follow their lead.

This article is from the Casey Daily Dispatch, a free daily e-letter written by renowned investment experts in the fields of precious metals, energy, technology, and crisis investing. Click here to get it your inbox every day.

The article How a Big Cat Started Europe’s Addiction to Oil was originally published at Casey Research

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Maximizing Your IRA: An Interview with Terry Coxon

By Dennis Miller

As working folks get closer to hanging up their spurs, it is easy to become overwhelmed. When should you take Social Security? What type of insurance do you need? Should you buy an annuity? Do you need nursing home insurance? Should you roll over your 401(k) into an IRA? The list goes on and on.


Retirement planning requires many irreversible decisions. We each need to get it right; however, what is right for us is not always right for someone else. And, in addition to basic number crunching, we each make assumptions about life and politics—sometimes without even realizing it.

One of my most significant personal decisions pertained to a Roth IRA. Managing your traditional or Roth IRA is an ongoing process, no matter how near or far you are from retirement. And the options are worth investigating regardless of the size of your portfolio. Making sure your money lasts requires much more than picking the right stocks. Owning those stocks—or whatever else you invest in—inside the right type of account can grow your portfolio faster and save you thousands of dollars in taxes, if not more.

I’m not shy about seeking out experts in different investment niches. In this spirit, I reached out to Terry Coxon, a senior economist and editor at Casey Research and principal in Passport IRA.

In the spirit of full disclosure, I want to add that Terry has taken the time to mentor me on occasion, and he’s encouraged me to bring some of my vast life experience to our readers. As Terry has reminded me from time to time, math is only part of the retirement puzzle—the uncertainties inherent to politics and the law are also integral pieces.

Terry travels the world, and I was lucky to catch him upon his return from a recent trip to the Cook Islands.

Dennis Miller: Terry, welcome. Many investors use a traditional IRA or retired with a lump sum from their 401(k). Can you tell us how a Roth IRA differs from those plans?

Terry Coxon: With a traditional IRA, if your income isn’t too high, you get a tax deduction for your annual contribution. But later, the money you withdraw is taxable as ordinary income, except to the extent of any non-deductible contributions you made. In the meantime, earnings accumulate without current tax, which helps the money grow much faster.

A Roth IRA is different. With a Roth IRA, you don’t get a tax deduction for your contributions; but all the withdrawals you later make can be tax free. The only requirements for keeping withdrawals 100% tax free are: (a) the Roth IRA must be in at least its fifth calendar year of existence; and (b) you must have reached the calendar year in which you will be at least 59 1/2 years old. As with a traditional IRA, earnings accumulate and compound free of current tax – which is the special power source of any retirement plan.
Most 401(k) accounts are similar to a traditional IRA in that contributions are deductible; withdrawals are taxable; and while they stay inside the account, earnings go untaxed. However, there is a variant called a Roth 401(k) that is available to sole proprietors and to participants in employer plans whose rules provide for Roths. With a Roth 401(k), there is no deduction for money that goes in; the money is invested free of current tax; and everything can be tax-free when it comes out.

Fleeing the High Tax Zone

 

Dennis: When I retired, I had a 401(k), and then rolled it over to a traditional IRA. As I began to understand the Roth IRA, I realized there were real benefits to putting my nest egg in a Roth. I had a CPA tell me not to do it, and he ran the numbers to show me why.

In April 2012, you published an article, Doing the Roth Arithmetic, which painted a much different picture. Can you explain all the factors and why they are so important?

Terry: Staying with a traditional plan or going to a Roth is a big decision, and it’s not always an easy or simple one. The decision needs to be based on the individual’s current circumstances, which are a matter of fact, and also on his hard-to-know future circumstances. Make the right decision, and you can come out way ahead. Let’s look at two extreme situations—which is helpful because extreme situations point to clear answers.

Situation #1 is the individual who has all of his investments in an IRA or other retirement plan, who is not in the top tax bracket, who expects that his tax rate is more likely to decline than to rise, and who expects to consume all of his assets in his own lifetime. That individual has nothing to gain by going the Roth route and might be walking into a higher tax bill if he takes it. If that description fits you, sit tight with your traditional IRA or 401(k).

Situation #2 is the individual with substantial investments outside of retirement plans, who is in or near the top tax bracket and expects to stay there, and who has more than he needs to live on for the rest of his life. That individual should definitely convert to a Roth. He’ll have to pay a big tax bill now rather than later, but he’ll get the better of the bargain. He will be buying out his minority partner—the government—that in any case will, sooner or later, collect 40% or so of his traditional IRA in taxes.

The money for the tax bill can and should come out of the individual’s non-IRA assets—which live in a high tax zone. That way, the net effect of converting to a Roth is to move capital from the high-tax zone (direct personal ownership) to the no-tax zone (the Roth).

You can get an added bonus by converting to a Roth IRA, and it’s a lot more valuable than a second ShamWow. A Roth IRA is not subject to the minimum withdrawal requirements that kick in at age 70 1/2 for someone with a traditional IRA. Escaping the minimum withdrawal requirements lets money stay in the no-tax zone longer, especially if you won’t need to spend it all in your own lifetime.

Don’t ask why, but unlike a Roth IRA, a Roth 401(k) is subject to minimum withdrawal requirements. However, you can convert a Roth 401(k) to a Roth IRA without tax cost.

Dennis: I have a friend who has a traditional IRA and is of the age where he has to take a required minimum distribution and pay taxes on the income. He is quite a bit older than his wife and would prefer to leave the money in the sheltered account. With a Roth IRA, are there any required withdrawal times or amounts?

Terry: Your friend is a good candidate for a Roth conversion. If he converts, he can stop making the withdrawals he doesn’t want to make. And once the Roth reaches its fifth calendar year, withdrawals he or his wife take will be tax-free. And if his wife doesn’t use it up, the Roth will be available for tax-free withdrawals by their children or other heirs.

Self-Directed and Open Opportunity IRAs

 

Dennis: A lot of folks think you have to have an IRA with a bank or brokerage company. Can you explain the concept behind self-directed Roth IRAs?

Terry: Quite a few people will be knocked over by the news, but the rules written by Congress allow an IRA to invest in almost anything (there are only a few, easy-to-live-with limitations). But when you go to a bank, broker, mutual fund family, or insurance company, you find that you can only invest in… their stuff. So go elsewhere.

“Self-directed” IRAs are available with a number of IRA custodians that specialize in opening doors to the full world of investment possibilities for IRA participants. They don’t promote any particular investments or investment products. Instead, they earn fees by doing the paperwork for pulling whatever investments you want under the umbrella of your IRA. It could be an apartment house or a farm or gold coins or private loans or tax liens or almost anything else. Rather than buying CDs from a bank, your IRA can be the bank.
It can be even better. A few custodians administer a special type of self-directed IRA called an “Open Opportunity” IRA. The idea is as powerful as it is simple. The IRA owns just one thing—a limited liability company that you manage. Since you are the manager, you have hands-on control, and you are free to buy almost any investment you think is right. You don’t need to wait for anyone’s permission or stamp of approval. The hands on the steering wheel are yours.

Dennis: What tips do you have for folks who want to roll their 401(k) over to a Roth? When should they start? Should they pay the taxes from the proceeds or other funds?

Terry: As I said earlier, the decision to convert isn’t simple. The best single indication that it is the right move is that you are able to pay the tax out of non-retirement-plan assets.

Dennis: I recently wrote an article about encore careers. If a retiree decides on a second career, can he start making contributions to his Roth?

Terry: Yes, no, and yes.

The first yes is: you are as eligible to contribute from your earnings from your encore career as you were during your earlier careers.

The no is: if your income is too high, you are not eligible to contribute to a Roth IRA.

The second yes is: Anyone can convert a traditional IRA to a Roth IRA. There are no income limitations. So you can always get to a Roth by contributing to a traditional IRA and then converting. The required waiting period is less than 15 nanoseconds.

Internationalizing Your IRA

 

Dennis: I’ve recently spoken with Nick Giambruno, senior editor of International Man, about international diversification. Can you help us understand our international options if we have money in a Roth?

Terry: This is one more wonderful thing about the Open Opportunity IRA structure. The LLC that lives inside the IRA can invest anywhere in the world. Want a brokerage account in Singapore? The IRA’s LLC can be the account holder. Want a farm? The LLC can buy it in New Zealand. Want gold? The LLC can keep it in a safe deposit box in Austria. Want your IRA to go into the ski rental business? The IRA’s LLC can open a shop in Chile. And the IRA’s LLC can own—or be—a foreign LLC.

Dennis: I have a good portion of my Roth offshore, but it is not inside an LLC. It is invested in traditional investments—stocks, bonds, etc., except on a worldwide basis and in a variety of foreign currencies. Are there times when an LLC might not be necessary?

Terry: Whatever you want your IRA to buy and wherever you want the investments to reside, doing everything through your IRA’s wholly owned LLC is quicker, easier, and cheaper. With the LLC in place, you don’t need to keeping going back to the IRA custodian for every transaction. You avoid fees and you avoid delays. You are in the driver’s seat.

Using a foreign LLC to hold foreign investments may give you two additional advantages. First, some foreign institutions are more willing to deal with a non-US LLC owned by a US person than they are to deal directly with a US person. Second, if the US government ever imposes currency controls or capital controls or undertakes a program of forced gold sales, an IRA’s foreign LLC—depending on the specifics of the new rules—might go untouched.

Dennis: Terry, I want to thank you on behalf of our readers. You have opened up avenues for real tax savings and additional safety.

Terry: People work hard, and it is tough for some to save money. Understanding their Roth IRA options is a good way for people to keep it and make it last. Enjoyed it, Dennis—glad I could help.

Final Thoughts from Dennis

 

With a traditional IRA, you get a tax deduction when you make your contribution, and that money grows tax-free. When you take it back out, it is subject to taxation.

A Roth works in the opposite manner. There is no tax deduction when you make the contribution, but it also grows tax-free. The difference is that when you take it out, there is no tax as long as you follow a few basic rules, which Terry discussed.

I am a strong advocate of maximizing your 401(k), particularly if your employer matches all or part of your contributions. Save as much money as you possibly can during your working career. At the same time, there are many reasons why, as Terry suggested, you might want buy out your business partner (the government) so you can grow your nest egg tax-free and make tax-free withdrawals as you see fit.

As you’ve just read, as the editor of Miller's Money Forever, I often have the pleasure of interviewing my colleagues on a variety of topics to give our subscribers even greater exposure to different investing sectors. Recent interviews include:

• Energy Profits with Marin Katusa, senior economist and editor at Casey Research;
• The Ultimate Layer of Financial Protection with Nick Giambruno, editor of International Man;
• Juniors for Seniors with Louis James, globe-trotting senior editor of Casey Research's metals and mining publications; and
• Other esteemed colleagues.

Gain access to everything our portfolio has to offer, as well as access to these top minds through occasional interviews and input, with your risk free 90 day trial subscription to Miller's Money Forever.

The article Maximizing Your IRA: An Interview with Terry Coxon was originally published at Millers Money.

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99 Problems… And Crude Oil Ain’t One of Them

By Marin Katusa, Chief Energy Investment Strategist

America has some serious problems.


Despite the fact that the United States spends $15,171 per student—more than any other country in the world—American students consistently trail their foreign counterparts, ranking 23^rd in science and 31^st in math.

The US also spends more than twice as much on health care per capita than the average developed country, yet underperforms most of the developed world in infant mortality and life expectancy. The U.S. rate of premature births, for example, resembles that of sub-Saharan Africa, rather than a First World country. And if you think Obamacare is going to change that… I have a bridge to sell you.

K Street has a bigger influence on American politics now than Main Street, and economic key players like the TBTF banks, the insurance industry, etc., have nearly carte blanche to act in whichever way they see fit, with no negative consequences.

The US government is spending more money to spy on Americans and foreigners than ever before. Since August 2011, the NSA has recorded 1.8 billion phone calls per day (!)—with the goal of creating a metadata repository capable of taking in 20 billion "record events" daily.

More than one in seven Americans are on the Supplemental Nutrition Assistance Program (SNAP)—better known as "food stamps."

The list goes on and on.

But there is one problem that America doesn't have......getting oil out of the ground.

After decades of declining domestic production, U.S. producers finally figured out how to extract oil from difficult locations, whether that's the shale formations or deposits under thousands of feet of water… and they've kept going ever since.

Today, the U.S. is one of the few countries in the world that have seen double digit growth in oil production over the past five years.

This presents some great investment opportunities for the discerning investor.

The oil industry's new treasure trove, the legendary Bakken formation, has turned formerly sleepy North Dakota into one of the hottest places in the United States. According to the Minneapolis Fed, "the Bakken oil boom is five times larger than the oil boom in the 1980s."

Unemployment in the state with 2.7% is the lowest in the nation; in Dickinson, ND, even the local McDonald's offers a $300 signing bonus to new hires, on top of an hourly wage of $15.
Here are some more fun facts, courtesy of the Fiscal Times:

• There are now an estimated 40,856 oil industry jobs in North Dakota, plus an additional 18,000 jobs supporting the industry. Between 2010 and 2012, Williston, ND, a town with a population of only 16,000, produced 14,000 new jobs.

• While other US states are struggling, some even being close to bankruptcy, North Dakota now has a billion-dollar budget surplus.

• The number of ND taxpayers reporting income of more than $1 million nearly tripled between 2005 and 2011—and that in a state with a total population of 700,000.

• The low population numbers will soon be a thing of the past, though: the population in the oil-producing region is expected to climb over 50% in the next 20 years.

• 2,000-3,000 new housing units are built every year in Williston, ND, but it's still not enough to fill the need. Rents have gone from a pre-boom $350 per month for a two-bedroom apartment to over $2,000 today… the equivalent of a studio apartment in New York's rich Upper East Side.

The entire "energy map" of the United States has been altered by the Bakken: the Midwest, rather than the Gulf, is now the go-to area.

And who profits the most? The pipeline companies that can quickly adapt to this new situation and the refinery companies that can use this readily available domestic oil.

Though the rest of the world is trying to catch up, the United States has a huge head start over everyone else. The advancements it holds in hydraulic fracturing and horizontal drilling had been built on the back of one and a half centuries of oil and gas exploration and the thousands of firms that service the drillers and producers.

So far, other countries simply lack the experience and the infrastructure to even compete.

In fact, American companies have spent 50% more money on energy research and development (R&D) than companies anywhere else in the world. What's more, they are exporting this technology across the globe, enabling other countries to unlock their own hydrocarbon reserves.

Obviously, they're not doing this out of philanthropy; there is a lot of money to be made by licensing out their technology and "lending a helping hand."

The biggest winners, hands down, are the energy-service companies that already know how to get oil out of US fields… and that apply these methods to other fields worldwide to boost production and reduce decline rates.

As the easy-to-extract oil depletes in the U.S. and abroad, oil companies and governments are beginning to look at past-producing oil fields. As it turns out, the producing wells drilled in the 1970s and '80s weren't very good at getting every drop of oil out of the ground. With modern technology, however, it is now possible to access previously out-of-reach deposits. Even a mere 5% or 10% improvement in oil recovery rates means billions, if not trillions, more in revenues.

Rediscovering previously overlooked fields was what started the boom in the Bakken as well as the Eagle Ford formations… and other countries are beginning to catch on.

We believe that this new trend of applying new technologies to old oil fields is not a fad but here to stay. That's why our energy portfolios are stocked with companies doing just that in Europe, Oceania, and even South America.

As it's becoming clear that the era of cheap, light, sweet crude is nearing its end, the industry is adapting to this new reality of oil becoming more difficult to access. And if investors want to make profits in today's energy markets, they, too, must learn to adapt.

Read our 2014 Energy Forecast for more details on what's hot and what's not in this year's energy markets. This free special report tells you about the 3 sectors we are most bullish on for this year, and which sectors to avoid in 2014. Read it now.


Don't miss this weeks free webinar "How to Architect the Trade"

The Energy Sectors You Should Invest in This Year

Top energy analyst Marin Katusa, frequently featured in the financial media such as Forbes, Business News, Financial Sense News Hour, and the Al Korelin Show, says two undervalued energy sectors will provide windfalls for smart investors this year.

The bullish side: The report details the most bullish energy sectors for 2014 and beyond.

In one of those bullish sectors, there is a country that boasts one of the lowest taxation rates for oil and gas plus has the benefit of a $12.00 per barrel difference in price.

The second one is an energy sector that is extremely undervalued right now, but is slated for major growth this year.

Another is poised to make big gains from the Putinization of Europe—and the resulting push for European countries to produce their own oil and gas.

See which companies are ready to make the biggest gains in the oil and gas industry this year (and it’s not the actual oil and gas producers).

The right time to get into these sectors is now, before the big gains are being made. Investors who get positioned early on can reap big rewards.

The bearish side: There are also three other energy investments that Marin recommends not to touch this year—not because these energy resources don’t have merit (Casey subscribers have invested in them before), but because the risk of losing your money is just too great right now.

Read his assessment, including which energy investments you should be bullish on for 2014 and which you’d only lose money on.

Click here for Marin’s free report, The 2014 Energy Forecast.



Don't miss this weeks free webinar "How to Architect the Trade"

The 2 Energy Sectors You Should Invest in This Year

Top energy analyst Marin Katusa, frequently featured in the financial media such as Forbes, Business News, Financial Sense News Hour, and the Al Korelin Show, says two highly undervalued energy sectors will provide windfalls for smart investors this year.

Read his assessment, including which two energy sectors you should be bullish on for 2013....and which two you'd only lose money on. Click here for Marin's free report, The 2013 Energy Forecast.


Read "Fortune Favors the Bold Energy Investor"