Coal: An Opportunity Whose Time Has Come?

July 6, 2012 Global Economy, Politics, Profiles, Succesful Investing Skills No Comments

Gold is being pounded again today, so I thought now would be a good time to change the subject and take a look at an investment that could really pay off if the political cards fall as they should this November. Before I get started, it is probably wise to note that for those of you that are hostages to the political ideology of the left, it may be appropriate for you to stop now before your commitment to the gods of Marx, Mao and Chavez are threatened by the truth.

The investment that I am speaking about is coal, which has been threatened to the core by “The Community Organizer in Chief’s” stated desire to bankrupt the industry. In his first 3 & 1/2 years in power it is one of his campaign promises that he has almost made good on. Today, I want to examine coal’s role in the energy markets and why the U. S. needs to replace the “Leftist in Chief” with a president that understands the role that coal should play in the world’s energy markets. “The Community Organizer in Chief” has done everything short of outright banning the mining of coal and in the process has decimated the economies of the states that are dependent on the mining industry.

Coal In The United States

There are 27 states where coal is currently being mined, but the bulk of the known reserves, almost 90%, are located in 10 states. Montana is the leader with 25% of the total proven reserves. Wyoming is third among the states with the most coal and is the first in coal production with its 18% of the annual production among the coal producing states.

One little known fact that the green movement, the global warming crowed and the academic elitists that occupy the White House do not want you to know is that U.S. coal reserves contain 12 times as much energy as all the oil in Saudi Arabia! Another interesting fact to note is the technology that is used to produce and burn coal for electricity in America is very clean, contrary to what the ideologues are spewing.

The United States Geological Survey indicates the the U.S. has 1.7 trillion tons of identified coal resources. These are known reserves of which a certain percentage are currently not recoverable due to cost, or the technology required has not yet been developed, but the survey also acknowledges that more coal deposits are likely to be discovered in the future. The survey estimates that total coal resources could amount to 4 trillion tons with future discoveries. When looking at realistically recoverable coal, the the number is in the 472 billion ton range.

States That Mine Coal

The 27 states that are actively mining coal today could play a critical role in this November’s election as their populations are rapidly waking up to what the current administration’s policies are doing to their state’s economies and employment numbers.

People are getting fed up with the deficit spending, the strangle hold on growth in the economy, “Obama Care and the socialist tilt that President Obama has brought the nation under the banner of “Hope and Change”, or to be more accurate, his current Marxist party’s “Forward” slogan. It would be ironic if the residents of the states that his policies led to the brink of depression were able to be the margin that was required to vote him back to obscurity.

The key states in this fight against tyranny are Montana, Illinois, Wyoming, West Virginia, Kentucky, Pennsylvania, Ohio, Colorado, Texas and Indiana.

A Gamble That Could Really Pay Off

It is really easy to see that with a change in the direction in Washington, the coal industry will take off due the energy demands of the the United States and countries like China that are desperate for energy in any and all forms.

One example of a low risk investment in coal that should really perform when the free markets return to the U.S. is Arch Coal, ACI.

Just look at this chart. There is no better example of how politics can affect your investments than this chart. I traded this stock for a long time before the Marxists took over in 2008 and was able to trade consistently and make money. As soon as Obama took office the shares began to crater. Another investment opportunity went up in smoke at the hands of political ideologues.

Obama’s rule may be coming to an end soon, so I for one am willing to invest in Arch Coal on the hopes that sanity is restored to the nation. There is very little downside risk in ACI if you buy between $5 and $8 per share. There is a ton of upside potential if the politics change and free markets are restored. Arch should be trading at between $45 and $50 per share today, and if the economy picks up around the world, $90 to $100 is not out of the question.

A Word Of Caution

A lot of this play is dependent upon a change in the country’s direction, so only consider this with disposable income that you want to put at risk. The upside is huge, but the potential for further loses is a possibility that could go to the 50% range if there is no shake up in Washington. To me the risk is more than worth it, because I remain confident that the American people can see through the charade that is the current occupant of the White House.

As is always the case, do your own research because it is your money that you are putting at risk.

Till next time, good luck and good trading!