Russians Claim On North Pole Opens Up Investment Opportunity

The tiny London-listed share that’s on the brink of doubling in post-war Georgia Dear Subscriber,

There’s a popular misconception that the Chinese word for "crisis" means "danger and "opportunity". You see this used all the time by people marketing investment books or seminars. I won’t go into the fairly long explanation I read by a China linguistics expert as to why this is not accurate. We’ll look at that another day.

What is true, though, is that often a temporary crisis can indeed lead to a genuine opportunity. Today I want to talk about one such outstanding opportunity that investors with a little sense of adventure and some spare cash should consider.

On 2 August 2007, a mini-submarine dropped a titanium capsule on the ocean floor beneath the North Pole. In the capsule was a Russian flag.

In what the New York Times labelled at the time, "an openly choreographed publicity stunt", the Russians were making a symbolic gesture. In a brazen display to the world’s media, they were laying claim to the Arctic’s vast oil and mineral treasures.

Almost to the anniversary of this particular gesture of war-mongering from the Russians, came another: the Russian slap-down of Georgia.

When Georgia President, Mikheil Saakashvili, launched his ill-conceived attack against the breakaway region of South Ossetia, he did so under the misguided assumption that he would have the support of Western government.

But, Western powers have been preoccupied with Afghanistan, Pakistan, Iraq and Iran. Russia took the chance to throw its weight around, knowing that no one was going to rush to defend Georgia, even if Georgia had applied to join NATO.

We’ve all seen the results. Georgia has been on our TVs and on the low-numbered pages of our newspapers for the last couple of weeks. Its troops were decimated, its tanks destroyed and its Government was shown in no uncertain terms who’s boss in the region.

What’s clear is that by attacking an American ally that was being considered for NATO membership — and getting away with it — the Kremlin demonstrated that Russia is, without any doubt, the region’s dominant power.

But nowhere in the mainstream press has there been any talk of investment opportunities in all of this. No one has been looking beyond the headlines to see how Georgia stacks up. Maybe now that the Russians are preparing to pull their troops out that’s all about to change.

Certainly, that’s what colleague Manraaj Singh’s been banking on. Tucked away in our emerging markets cubbyhole here at the Fleet Street’s HQ, Manraaj has been working on an outstanding investment idea. At last it’s ready and now you have a chance to make a very decent profit as this recent temporary crisis fades and Georgia’s excellent growth credentials start to attract smart investors once more.

Manraaj was already looking at investing in Georgia before fighting started on 7 August. In fact, he was coming back for more, having already taken profits from an investment there at the tail end of last year.

Georgia is a great growth story, as Manraaj explains:

"Georgia rarely got a mention in the press before this conflict broke out. But it’s been one of the hottest growth stories over the last five years.

"The country declared independence from the Soviet Union in April 1991. From 1995 to 2003, Georgia was led by the former Soviet Foreign Minister, Eduard Shevardnadze as President. He introduced democratic reforms. But he failed to tackle widespread corruption. "In November 2003, he was replaced by the U.S.-educated current president, Mikheil Saakashvili at the head of coalition of reformers and democrats. Under him, Georgia has made huge strides in tackling corruption. Large swathes of the economy have been privatised. And he has taken a strong pro-Western stance.

"The reforms have had a huge impact. The economy grew by 12.4% in real terms last year. And it is expected to grow by 9% cent this year and next. The average Georgian had an annual income of just $686 at the start of the decade. That could reach $3120 by the end of this year. People in this tiny country are getting richer very, very fast.

"And foreign investment has been pouring in. The country received $1.4 billion in foreign direct investment last year. That was 30% higher than the $1.1 billion the year before."

But the average investor hasn’t been taking note of this potential. And why would they? You never hear about Georgia — until now, that is.

And the most exciting thing is that since Georgia has been front-page news in the mainstream press, Georgia-related investments have been universally beaten down. Nothing has changed as far as long-term prospects for Georgia are concerned, as you’ll see when you read Manraaj’s report.

For a true profit opportunity coming out of a temporary crisis, read Manraaj’s essay here

Suddenly it seems that everyone wants to buy dollars. The buck has just risen to its highest level against the euro for 6 months, as traders predict that the eurozone economy is heading for protracted problems.

But don’t believe everything that you read in the press. Our man Tom Bulford’s just come back from his holidays in the Seychelles ands he witnessed first hand a different story. Read on to find out about the impressive vote of confidence he witnessed for the euro and why the dollar is no longer the king of currencies.

Ben will be back tomorrow.

Best regards,

Frank Hemsley

[Past performance and forecasts are not reliable indicators of future results.]

Today’s selected articles:

Manraaj Singh on the tiny London-listed share that’s on the brink of doubling in post-war Georgia

Tom Bulford on Beer, Beaches and the Euro.

Erin Hamilton on the gold price volatility

The Daily Reckoning — Deflation, Inflation and the Gold and Commodities Meltdown

A lot to talk about today...

The "word" on the street is "sub prime." According to the American Dialect Society, it’s the most important new word this year. Along with "jingle mail," "exploding ARMs" and "liars’ loans," it came into the popular language recently...and now everyone uses the term "sub prime" to describe anything that is cheap, low down, or deceitful...says the ADS.

We also want to talk about the collapse of gold and commodities...

About the coming surprise to investors...

And more about the fraudulent economic model America has been flowing for the last quarter century...

You can read the Daily Reckoning in full here P.S. If you enjoyed this article then we encourage you to sign up for the free Fleet Street Daily eletter. Learn what you can expect from today's markets -- and how to prosper in the face of uncertainty. You won't find more thought provoking writing anywhere on the Internet.

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Russians Claim On North Pole Opens Up Investment Opportunity

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The Tiny London-Listed Share That's On The Brink Of Doubling In Post-War Georgia