China, Russia, Iran...and the $40 Billion Gamble

Dear Subscriber,

While the markets cautiously await the next move by the Fed — due this Thursday — there are a few significant developments in the hard money sector that are worthy of your attention...

1.  The $40 Billion Gamble that Metals Will Keep Climbing

Earlier today it was reported that Phoenix-based Phelps Dodge Corp. had reached an agreement to buy Canada's Inco Ltd. and Falconbridge Ltd. for a total of about $40 billion.

Talk about putting your money where your mouth is.

The deal would create the largest North American-based mining company...the world's largest nickel miner...and the world's largest publicly-traded copper producer.

So what should investors make of this enormous transaction?  Here's a quote from the story that appeared on the Wall Street Journal's web site that sums it up best...

"For Phelps, the premiums represent a big wager that metals prices -- buoyed by China's voracious appetite for raw materials -- will stay high for a long time, outlasting the industry's previous up cycles, which have lasted a few years."

This is a huge transaction for the metals industry — and it's a very positive signal that the bull market is still very much in the early stages.

To learn more about the deal, follow the link below...

http://www.cbc.ca/cp/business/060626/b062634.html

2. China Moves Full Speed Ahead

Speaking of China's "voracious appetite" for energy, as mentioned above, it looks as though the Chinese have enlisted another partner.

Just a few days after news leaked of China's oil deal with Saudi Arabia comes word that the Chinese have now got themselves a Russian oil field.

China is clearly becoming aggressive in its bid to secure future energy supplies.  The Chinese government clearly understands the simple principle of supply and demand: Demand for energy in China is soaring...and it will continue to do so. 

That's why it's imperative that the Chinese take an aggressive position now...and as they do so, they'll continue to fuel the red-hot energy markets.

To read the details of China's $2 billion investment in Russian oil, follow the link below...

http://www.thebusinessonline.com/Stories.aspx?Kremlin%20go-ahead%20for%20China%20oil%20deal&StoryID=BCF3F894-B934-46E4-A672-E5C72355FD7C&SectionID=8099C021-87B0-48CA-A5F1-6335FDE21694

3. Iran Continues to Threaten Oil Supply Disruption

The final story I want to draw your attention to today is more proof that we've been right about the Iranians all along.

For the second time in three days, an Iranian official has gone on record as saying that Tehran will use oil as a weapon in the ongoing battle for nuclear capability.

On Saturday, Iran's Oil Minister, Kazem Vaziri-Hamaneh, had this to say in an interview that appeared on Iranian television:

"Tehran would not use oil as a weapon, but if its interests come under attack, it will use all available means, including oil."

And then today, Iranian spokesman Gholam Hossein Elham followed that up by saying...

"There is no reason not to use tools to protect the interests of the country...These threats are directed to those who use force and seek to dominate."

While neither man gave any specifics as to how Tehran might use oil as a weapon in this battle, we all know that Iran has the potential to cause a serious disruption in world oil flows by blocking the Strait of Hormuz.  And it's sounding more and more like they just might be willing to do it. 

To read more about this story, follow the link below...

http://www.bloomberg.com/apps/news?pid=10000087&sid=aT.RNHOO36gM&refer=top_world_news

Finally today, I want to leave you with a reminder — the options seminar being held by legendary options trader Bill Johnson is fast approaching...and seats are disappearing quickly!

This unique, two-day options seminar, which I first wrote you about last week, will give 35 investors — over the course of two days —the opportunity to become Bill Johnson's protégés...and become "master" options traders in just a matter of days.

There is still time for you to sign up for this once-in-a-lifetime event.  But that time is running out fast!

Click the link below to learn more...or to sign up now!

http://www.powerhouseoptions.com/page/pho/seminar/oms/?x=phosem0009

Best Wishes,

James DiGeorgia
Editor
Gold and Energy Advisor