Taipan Online: Hotline

And as my WaveStrength colleague Adam Lass states: “If the current price of oil is truly based on excess global demand and inadequate supply, then that is the benchmark where it should settle.”

Adam goes on to quote a Fitch Ratings report: “If oil prices were to remain at US$70 a barrel for a sustained period, world GDP growth in 2006 could fall by around 1% compared to previous forecasts.”

Too right. With the latest estimates putting reconstruction costs from Katrina alone as high as US$200 billion, this year’s hurricanes are bound to have a significant effect on the economy at some point.

And reports this week bore some grim news about Gulf oil production following Hurricane Rita. ODS-Petrodata said the storm caused widespread damage to many rigs in the Gulf, with reports suggesting it actually did more damage than any other storm in history.

Quoted in the Financial Times, ODS-Petrodata’s Tom Marsh says, “The path Katrina took was through the mature areas of the Gulf where there are mainly oil production platforms. Rita came to the west where there is a lot of [exploratory] rig activity.” The US Coast Guard also says there are at least nine rigs adrift at sea.

With all that likely to continue to push up energy costs, your friendly Federal Reserve is always on hand to stave off any inflationary shocks. In a speech in London this week, San Francisco Fed president Janet Yellen said an unacceptable rise in inflation is “clearly not on the table.”

“The Fed must deliver – again and again – on its commitment to price stability,” she proclaimed. Stating the obvious, she noted that threats emanate from high energy prices (which are filtering down to consumers and stifling spending) and deficits – factors that must be kept at bay by a move to a neutral level of interest (whatever that is).

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Six Times Better Than Owning Stock in Google.com...Guaranteed

When Google went public, even the luckiest public investors made no more than 253%, as the stock soared from a pre-set price of $85 to today's price of about $300.

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This works so well... I guarantee you'll make at LEAST 253% doing this, not once but six times this year.

Find out more here:

http://www.agora-inc.com/reports/GRP/WGRPFA03

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A US$2 Billion Roadwork Bill?

“Fixing roads in New Orleans will probably cost at least $2 million per mile.”

That’s according to the September 5 edition of Barron’s.

My giddy colleague Bryan Bottarelli, reveling in his Chicago White Sox winning the AL Central, chips in with this:

“In August, President Bush signed the Transportation Bill that guaranteed at least US$227.6 billion for road construction between now and 2009. This bill marked a 31% spending increase from the previous five years.

“As repair plans get underway, it’s a good idea to bet on highway contractor stocks. At US$2 million per mile, the 40 miles of devastated Highway 90 alone could cost US$80 million.

“Based on early estimates, hurricane-related roadwork will cost at least US$1 billion – with some experts forecasting costs higher than US$2 billion. With roadwork a top priority, companies like Caterpillar should continue their recent uptrend for months to come.”

Of course, while many continue to talk about damage done to infrastructure – houses, utilities, communications, roads, etc – there are other sectors struggling in the post-storm fallout. Not least of these is agriculture, which is forecast to lose US$900 million, according to US Agriculture Secretary Mike Johanns.

Losses from a nasty drought in the Midwest that has crippled corn and soybean production have already hit US$1.3 billion.

TROUBLE IN THE MOTHERLAND

America isn’t the only country struggling with its energy sector.

Over the pond in Britain, the utility consumer group Energywatch just issued a stark warning to the nation.

According to the BBC, Sir Digby Jones, head of the Confederation of British Industry, told British Energy Minister Malcolm Wickes that he is “incredibly worried” about potential supply threats to British business. Specifically, he noted that the country only has eleven days of gas in reserve to supply businesses, compared to an average of 55 days in continental Europe, which he says is a result of poor planning rather than a supply crunch.

That didn’t stop British Gas hiking prices by 14% from the beginning of September.

Meanwhile, the US Energy Information Agency, a division of the Department of Energy, boldly projected a price of US$2.58 for a gallon of gasoline in the fourth quarter, which started just a few hours ago. The group also cut its forecast for demand, arguing that prices are now having an effect on usage.

IT’S ALL ABOUT THE GOLD

Allow me to draw your attention to my esteemed friend and colleague, Mr. Christian DeHaemer, founder of the Red Zone Profits investment group.

Chris has his own 55 Rules of Trading, and Number 49 on the list is that “52-week highs are extremely bullish.”

So what about a 17-year high?

That’s what the price of gold did recently, roaring its way to US$475 per ounce - the highest level since January 1988.

So if you’re looking for a safe haven in an unpredictable market with external shocks coming thick and fast, there’s no better bet than gold.

So it’s good news that Taipan’s friends at Everbank have developed a new financial tool that allows you to diversify, seek higher yields, and safely invest in gold market returns – without actually having to buy a single ounce of the yellow metal. You can do it all with the new MarketSafe Gold Bullion CD.

This is the latest addition to EverBank’s popular line of MarketSafe CD’s. Like all their other CD products, this one comes with 100% principal protection, market-driven upside potential, no account fees, and FDIC insurance.

Yields on this CD are based on the average five-year price performance of the “spot price” of gold, which is based on ten semiannual pricing dates.

We’ve partnered with Everbank for a while now. Back in the 1980’s, it was virtually the only bank that allowed investors to tap into the higher yields of foreign currencies via foreign-currency CD’s.

So if it’s safe, consistent, no-risk returns you're after, I urge you to check out the Everbank MarketSafe Gold Bullion CD here:

http://www.everbank.com/main.asp?idpage=pro_mscd&affid=eb&referID=11665

HOT OFF THE PRESS! TWO BRAND NEW “HOUSE HEDGE” PLAYS ON THE HGX HOUSING INDEX

Before I get into the new plays, however, let me just remind you to check your e-mail for the sell alerts we issued this week on Wednesday and Thursday in case you missed them.

The most notable was a sell alert from Sara Nunnally on half your position in Patterson-UTI Energy (PTEN:NASDAQ), recommended in the June Taipan issue, for 34% gains.

Now, on to the “House Hedge” strategy, developed by Bryan Bottarelli – and two brand new plays…

To sum up, this allows you to protect yourself and profit from short-term upward bounces in the HGX housing index, while also capitalizing on any longer-term downturn.

After we took profits on the August 555 calls on the index, similar September calls proved not to be so successful. But the December 520 puts (the primary component of the House Hedge, strategy because they’re the play on a falling market) are performing just as we expected.

Since we entered these puts on June 27, 2005, for US$27.30, the prices have bounced around between US$19.00 and US$33.00. A big reason for this volatility is that whenever the HGX begins to sell off (as we expect it will do in the long-term), those who think the housing market remains strong come in and support the index from falling to lower levels.

OK, so here’s your next chance to profit from the US housing market. Simply follow this link to get all the info:

http://www.taipanonline.com/htmlcode/members/alerts/20050627.html

Enter your regular login details to access the article:

USERNAME: taipanmember

PASSWORD: profits

Enjoy the rest of the weekend.

Martin Denholm

Executive Editor, Taipan

MMM

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