How to Front-run the Chinese, Legally By Brian Hicks | Wednesday, July 21st, 2010

"The 19th century was the century of the UK, the 20th century was the century of the US, the 21st century is going to be the century of China." — Jim Rogers

"China is going to be an enormous force that will make the Japanese threats of the seventies and eighties look like a water pistol." — former CE CEO, Jack Welch, 2001


Dear reader:

According to British author and soldier Sir John Bagot Glubb’s book The Fate of Empires, the seven stages of an empire’s life cycle are as follows:

1. The age of outburst (or pioneers)

2. The age of conquests

3. The age of commerce

4. The age of affluence

5. The age of intellect

6. The age of decadence

7. The age of decline and collapse


It’s not hard to figure out where the United States stands in this life cycle.

We just experienced the greatest housing and credit bubble in history… when homeless people were given mortgages.

We’re also experiencing epidemics in obesity, heart disease, and debt.

The U.S. finds itself in stage #6: decadence.

That’s right, we’re in decadence. At what phase of decadence, I’m not sure...

But decadence will soon turn to decline… if we haven’t already fallen off the cliff.

Nothing proves this point more than the following chart from the International Energy Agency (IEA) that shows that China now consumes more energy than America:

You can draw a circle around where the two lines intersect and write “Historic!”

This chart represents an epic shift in global power, both economically and politically.

Wall Street Journal broke the story on July 18th:

China's ascent marks "a new age in the history of energy," IEA chief economist Fatih Birol said in an interview. The country's surging appetite has transformed global energy markets and propped up prices of oil and coal in recent years, and its continued growth stands to have long-term implications for U.S. energy security.

The Paris-based IEA, energy adviser to most of the world's biggest economies, said China consumed 2.252 billion tons of oil equivalent last year, about 4% more than the U.S., which burned through 2.170 billion tons of oil equivalent. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear power, coal, natural gas and renewable sources such as hydropower.

For many energy and China observers, this wasn’t a surprise — although it occurred much sooner than expected.

But, dear reader, this is a mega-trend that will continue for decades.

And the investment potential is mind-blowing.

You see, later in the WSJ piece…

Mr. Birol, previously an economist at the Organization of Petroleum Exporting Countries, said China is expected to build over the next 15 years some 1,000 gigawatts of new power-generation capacity. That is about the total amount of electricity-generation capacity in the U.S. currently, and the construction of all those gigawatts occurred over several decades. "This demonstrates the major growth we are talking about" in energy demand and capacity growth in China.

Now, China has been all over the world inking deals with oil sand firms in Canada, resource rights in Africa, Australia… and Mongolia.

They’ve been doing this for years. This is not new.

They’ve also been hoarding resources to supply their infrastructure build-out for years to come.

This brings me to the point of this article.

If you know what resources the Chinese will need to maintain their rising energy consumption, you can buy now, sit on the investment… and let the Chinese buy you out.

Chris DeHaemer has already shown you how to front-run the Chinese. He’s done this with a Mongolian gold stock and Mongolian oil.

In fact his latest home run — a Mongolian oil stock — has rallied over 700% this year alone. His readers are making money hand-over-fist.

And that’s just the beginning...

Imagine buying Suncor Energy (one of Canada’s largest oil sands companies) when it went public in 1993 for just a $1.08 per share!

Today Suncor trades for $33… a gain of 2,900%.

That’s what you’re looking at with Chris’s Mongolian oil play.

Mongolia is in an ideal situation. It borders a nation with a voracious appetite for resources… coal, oil, natural gas, etc.

Think about it like this...

Canada is a resource-based economy. Its GDP for 2009 was $1.287 trillion. Canada is in an ideal position because its neighbor to the south still has the #1 economy in the world. So, Canada essentially ships all of its resource production to the U.S.

Now look at Mongolia. It’s also a resource-rich nation. It too has a huge neighbor that needs its resources — China.

And the thing about China is that it appears to be in stages 2 to 4 in the empire life cycle.

China has more millionaires now than the UK and France.

And like energy, it’s only a matter of time before China’s overtakes America in that economic category as well.

Profitably yours,

Brian Hicks