Chaos in the Global Markets Could Provide The Profit Opportunity Of a Lifetime

Last Thursday, Germany’s finance minister stood before parliament to proclaim the death of the world financial order.

“The US will lose its status as the superpower of the world financial system. This world will become multi¬-polar with the emergence of stronger, better capitalised centres in Asia and Europe. The world will never be the same again.”

That’s what Peer Steinbruck said. And he was spot-on..

Because the chaos in global markets right now isn’t just a recession…

It is not even just the biggest recession in decades…

What we are seeing now is nothing less than the realignment of global economic power.

Economic and financial power is shifting eastwards faster than almost anyone could have imagined…

And it is causing huge disruption in the financial markets.

We are about to see the biggest transfer of wealth in history.

By 2010 the Western economies will be in irreversible decline.

And the oil-rich Arab countries and Asian industrial powerhouses will move to the centre of the global economy…

The big question for you as an investor is which side of that shift in financial power you want to be on.

And I am going to show you what you can do to profit from it.

Why this financial crisis could be the opportunity of a lifetime

What exactly is this crisis about? US housing market woes? Dodgy securities? Yes. But that’s just half the story. What’s really going on here is a massive realignment of global economic power. The tectonic plates of the world economy are shifting fast. And that is causing a huge amount of disruption to the global financial system.

But we actually see the current chaos in the markets as major investment opportunity. Because at Profit Hunter, we have been steadily positioning our portfolio to ride that wave.

So, let’s just step back for a moment and look at some of the big trends that are guiding our investment strategy here at Profit Hunter.

I believe that the crisis in the West is actually going to get a lot worse over the next two years. Let me tell you why.

By 2010 the West will be in irreversible decline

By 2010 oil production in the non-OPEC countries will be in decline. And that is extremely bad news for the oil-dependent Western countries. Because it is going to leave the OPEC countries with their hands on the throat of the global economy.

And I have already sent members of my Profit Hunter investment service a special investment report on how to get a slice of this petrodollar bonanza. If you like, I will send it to you as well – more on that in a moment.

You see, the age of energy security for us here in Britain is about to come to a quick and nasty end. Just look at North Sea oil production. In 1985 it was producing 2.5 million barrels of oil per day from just nine fields. Today that’s fallen to just 1.7 million barrels per day. And that is from nearly 100 fields!

Russia looks like it has hit peak production already. The US is in the same boat as well. Its giant Prudhoe Bay oil field in Alaska has seen production fall by 65% in the last two decades. And the huge Cantarell field in Mexico is seeing production collapse.

OPEC produces just 40% of the world’s oil today. But that is going to change very quickly after 2010. The idea that they are then going to set the price of oil at a level to benefit the declining Western economies is a fool’s hope. Prices are going up.

In fact, I believe that we will see oil at about $300 per barrel by 2015. And that’s when the fun is really going to start.

I have repeatedly said that we are now in the era of $100 oil. And I’ll say it again. I simply don’t believe that are we are ever going to see oil trade at below $100 per barrel for a sustained period of time. We could see it fall back below that for short periods like it has this week, maybe even for a couple of months at a time. But those are going to be blips. And I believe that it is headed much higher.

One of the themes that we have been following here at Profit Hunter is the great petrodollar migration. The Gulf countries are now raking in $1 billion a day from oil exports. And with oil at $100 per barrel, the oil exporting countries will acquire $12.2 trillion in foreign assets by 2013. That’s four and a half times the size of the UK economy!

The Gulf States will make up the lion’s share of that. And if oil hits $250 or $300 per barrel we are going to see a transfer of wealth on a scale almost beyond imagination.

The Western countries are already being bled white by soaring energy prices. The Gulf countries alone now rake in $1 billion a day from oil exports. That figure is going to soar as the price of oil heads higher.

The coming financial tsunami that no one is talking about

But all that money flowing to the oil exporters is just the start of it. It grabs all the headlines. But there is another huge threat to the current financial order that we are following very closely here at Profit Hunter. You won’t hear about it in the mainstream media.

You see, on September 18th, the Gulf Co-operation Council took the first steps towards setting up a common Gulf currency. They have been talking about this for a long time. But last week the GCC finance ministers approved a draft agreement on the general structure of the proposed monetary union. And they are now discussing the location of a central bank.

What they are planning is a monetary union like the eurozone. And a final agreement is meant to be signed by the end of this year. The target date for the new Gulf currency? 2010.

It doesn’t sound like a big deal does it? After all, who really cares what a bunch of Arab countries are doing with their currencies?

But this is going to have a colossal impact on the world economy.

It may take a little bit longer than they are aiming for, but when it happens it is going to redraw the global financial map. Because you can bet that the Gulf countries are going to price their oil in their own common currency.

And that is the last thing that America needs…

Another nail in the dollar’s coffin

Right now the dollar receives a huge amount of support from being the standard currency for international trade. The international oil trade is a big part of that. Oil is priced in dollars on the international market. It is bought and sold in dollars.

What that basically means is that countries that want to buy petrol need to have dollars. Countries that sell it are left holding dollars. That fuels demand for the American currency. It props up its value. Right now the only major producer that sells in a different currency is Iran. They take their payments in euro and yen.

But now think of a situation where global oil production is increasingly concentrated in the hands of the Gulf Arab countries. And that is what is going to happen as non-OPEC production collapses. Now consider what the impact on the dollar is going to be when those countries say they don’t want to be paid in dollars anymore.

The dollar looks like it is going to have one of its legs kicked out from under it in the next couple of years.

America’s financial woes are far from over…

The great money merry-go-round has broken down

One of the clearest signs of that shift in power are the buy-outs and strategic investments that the Arabs and Asians have been making in Western assets recently.

Nomura has just snapped up the remains of Lehman Brothers’ European and Asian operations. The Gulf state of Qatar is now the biggest shareholder in Sainsbury’s and Barclays. Citigroup has had to go hat-in-hand to the Arabs and Asians for money to keep operating…

The list goes on well beyond that. And you can bet that we are going to see a lot more of that happening because this trend is only going to pick up steam…

All that money draining out of the old industrialised countries has undermined their economies. This trend has been gathering speed for a long time. But the smart chaps in Washington and Wall Street, and in the City and in Westminster were able to ignore it for a long time. Because a lot of that money made its way back to Western countries through the all-powerful financial industry.

The exporters invested a huge chunk of their reserves in Western debt securities. In a nutshell, they were lending that money back to the West. And all that easy money helped fuel the massive economic boom that we have seen since the start of the decade.

But along with that economic boom came a massive financial bubble. And the bursting of that bubble with the start of the sub-prime crisis in autumn last year is going to have massive repercussions for the world financial order.

You see, the oil exporters and the Asians aren’t happy just to keep-on recycling the reserves that they have built-up in this way anymore. And there are good reasons for that.

And key Western assets are being sold for peanuts

The key thing to remember is that the currency in circulation isn’t really “money.” It is just an IOU. It represents a notional value or worth for the goods and services that we buy and sell.

Americans have bought so much of everything from the rest of the world and given them a bunch of IOUs. As those IOUs pile-up, creditors have become increasingly nervous about their ability to pay all of them off. So they start to demand more of them to compensate for the risk of not being paid. That, in a nutshell, is what a falling currency means. You are forced to pay more pounds or dollars for something because creditors begin to doubt its value.

And now the world is demanding to be paid. It wants to be paid for its oil and gas, and for its cheap sneakers, Barbie dolls and flat screen televisions. After years of living beyond our means, we now have to pay up.

One upon a time you could cash in those IOUs for gold. Money was backed by the yellow metal. So you were actually assured that you would get paid with something of real value. But countries started abandoning the Gold Standard in the 1930s. Britain went off it in 1931. And the system completely broke down when the US abandoned it in 1971.

But the Arabs and Asians are now cashing in those IOU’s that the world calls “money”. And instead of gold, they’re taking payment in other real assets like prime properties and strategic stakes in top companies.

And these countries still have plenty more of these IOU’s to cash in. China now has $1.8 trillion in foreign exchange reserves, Japan $997 billion and Russia $560 billion.

We are going to see some of the crown jewels of international business pass into new hands over the next couple of years. Cash rich companies from Asia and the Middle East could be set to for exponential growth in the next few years. They’re going to snap-up battered Western companies for peanuts.

Just last week, Japanese broker Nomura bought the European operations of US merchant bank Lehman Brothers for a measly $2! You can’t even buy a pot of yoghurt for that anymore.

There is plenty more to come…

And when the dust finally settles, the world is going to be a very different place.

The commodities exporters and newly industrialising countries are looking at bumper times ahead. Things are going to look a lot rougher for the old industrialised economies.

Where we are looking right now

Of course this shift in global economic power isn’t all about oil or even commodities. We are also seeing a huge shift in the global manufacturing capacity. The East Asian tiger economies have been at the forefront of this.

These countries went through a massive financial crisis of their own beginning in 1997. Markets tanked, property prices crashed, economic governments collapsed

But the crisis gave them a chance to clean up their economic systems. And they did. That’s laid the ground for a massive economic revival. These are now some of the strongest economies in the world. The battering that their markets have taken in the global selloff doesn’t reflect their long-term potential.

In fact, I have shown readers of my Profit Hunter service a simple way to invest in the hottest Asian Tiger economy while keeping their money right here in London. And we’re now looking at other opportunities in the region.

Last year, China, India and Russia alone were responsible for half of global economic growth. Asia is at the heart of the new economic order. And this is where we expect to see the first rebound in share markets.

And Asia’s rapid growth has a spill-over effect on the commodity producing countries as well. One of the big winners from this has been Africa. It has become a crucial source of the raw materials that feed China’s economic boom. And we have already uncovered a two specific ways to invest in Africa’s turnaround.

One is a company that owns infrastructure that is vital to Africa’s development. The other is a mining company that could soon become the world’s biggest producer of one rare metal that is crucial to the modern global economy. And it extracts it from a mine in the darkest heart of Africa.

The big question now is which is going to be a bigger factor in the global economy: the decline of the West or the rise of the emerging economies?

I am betting that global growth will continue.

And the current market weakness offers huge investment opportunities.

Falls in these markets have opened-up buying opportunities

Gordon Brown and the Chancellor are whinging about how the “global credit crunch” is at the heart of our economic crisis. But that’s a flat out lie. There isn’t a global credit crunch. As I have said before, the credit crunch is a Western phenomenon. The Gulf is awash in capital. And go out to Asia and the banks are still lending. Economies out there are growing. Profits are rising.

It is easy to be pessimistic about the economy when you read the headlines in the papers or listen to the news. But the global numbers tell a very different story. The IMF predicts that world economy is actually going to grow by 3.7% this year. Things aren’t looking so good for the UK though. We are looking at 1.6% growth. And last week, Ireland became the first euro zone country to officially fall into recession.

But China’s economy is predicted to grow by 9.27% this year, Brazil by 4.75%, Kuwait by 6.2%. And Angola is looking at a whopping 16% growth this year.

So why are these markets down if they are such a good investment?

The answer is fairly banal.

In a bull market, shares of bad companies rise along with the good. In a bear market like we are seeing now, good companies get sold off along with the bad. What we are seeing in global markets right now doesn’t really reflect the underlying economic realities. The European and US markets probably have further to fall. Some of the emerging markets are now hugely oversold. We are looking to profit from that disparity.

How to profit from the decline of the West

Now, I am not a doomsayer. And I sometimes cringe at the whole “death of the West” hype. Europe and America will remain the richest parts of the world for a long time to come. But the momentum has clearly shifted to the developing countries.

There is still enormous entrenched prosperity in the West. But you can’t grow rich by investing in stability. You add to your wealth by investing in growth. And the real growth is now happening in the emerging economies. And that’s where the growth is going to be in the decades ahead.

Here at Profit Hunter, we have built our investment record by looking for special situations – investment opportunities thrown-up by misunderstood or overlooked events – and getting into them ahead of the crowd. Play it correctly and the current shift of power to the emerging economies is going to be the biggest special opportunity of your lifetime.

And right now, we have spotted a brilliant opportunity thrown-up by this crisis. I have been closely following the rise of one of Asia’s hottest economies. This little country looks set to keep growing for decades to come. Regardless of the current market turmoil. If you want a clear example of economic power shifting East and the kind of profits that it offers, look no further.

Right now though, its stock market has been battered by the global sell-off. This is exactly the kind of investment opportunity that we look for. A long-term growth story that is out of favour at the moment.

I have written a special report on this outstanding opportunity. And you can take a look at it by clicking on this link. You will quickly see why I think this could be the biggest profit opportunity of your lifetime. I’ll also show you how to receive that special report on investing in the Gulf’s petrodollar bonanza when you sign-up for a trial of my Profit Hunter investment service.

Regards,

Manraaj Singh
Editor
Profit Hunter

P.S. If you enjoyed this article then we encourage you to sign up for Profit Hunter. Track down exciting opportunities in the worlds’ emerging markets and always stay ahead of the curve.

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Chaos in the Global Markets Could Provide The Profit Opportunity Of a Lifetime

Why Chaos in the Markets Could Provide the Profit Opportunity of a Lifetime.