A HUGE "CHINDIA" TREND THAT WILL LAST FOR YEARS
A small edit to our "buy coal" advice from last fall¦ Make sure it's American coal¦
The "buy coal" thesis is simple: Giant developing nations like China and India ("Chindia") are relatively poor compared to the U.S. But these Chindia folks are working their tails off to live "richer" lives. This involves burning a lot more coal to make steel and produce the electricity that lights up factories, cell phones, refrigerators, computers, and televisions. Neither nation can meet its surging needs with domestic supplies.
Last week, catastrophic floods struck Australia, one of the world's largest coal-producing countries. The floods "shut in" a giant chunk of the world's coal production. This is a terrible tragedy for the Aussies ¦ But it has the side effect of making non-Australian coal assets much more valuable.
As you can see from today's chart of the big, mostly non-Aussie, coal investment fund (KOL), this new development has helped push along one of the biggest trends in the world¦ the increasing value of coal producers and their assets. While this big trend is due for a short-term breather, it's one that will grind higher for years.
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