The Daily Reckoning November 20th

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Gold: An Independent Money

The current system of money and banking is, inherently, a system based on inflation and endless expansion of the money supply. But this wasn’t always so…

Until recently (relatively speaking) the world’s financial system was centered around a time-tested material that has provided sound banking for centuries: gold. In this informative video, Dominic Frisby explains where we went wrong, why the alternative has been so disastrous.

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Gold: An Independent Money appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

The House Is Still a Dump

“Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next.” This is The Wall Street Journal further confirming the mounting evidence that the presidential election did not cure what is fundamentally sick.

The supposed recovery of the last two years is the least convincing in anyone’s living memory. Domestic investment has only recently returned to 2005 levels and business lending trends suggest that it is going to take another hit.

But let’s return now to what marked the beginning of this whole fiasco: housing. The current housing price numbers have shown improvement. Some people claim that now is a once-in-a-lifetime opportunity to buy a house. Housing prices will bubble up again and you don’t want to miss it.

I doubt it.

Here, however, is the indisputable fact: We still have a housing crisis. In cities like Las Vegas, 60-70% of homeowners are underwater. As Paul Jackson, CEO of HousingWire, told banking analyst Chris Whalen recently, “Just because we are all tired of the housing crisis does not mean that it is going away.”

Judging by the presidential campaign, you’d think the effects of the housing crash are yesterday’s news. After all, wasn’t there that $25 billion government settlement with the big banks that was supposed to take care of underwater homeowners. Where did that money go?

Well, like the tobacco settlement money years ago, state governments have siphoned half this dough into their general budgets or other pet projects. For instance, HuffPost reports:

“In South Carolina, the Republican-led state legislature recently voted to override the veto of Republican Gov. Nikki Haley, who sought to spend the money on housing programs as intended. Instead, about $10 million will go to a fund that incentivizes companies to relocate to South Carolina, while $21 million will go to the state’s general fund.”

In foreclosure-ravaged Georgia, all $99 million of the settlement money was redirected to that state’s economic development programs. In California, Gov. Moonbeam managed to redirect all of his state’s allocation ($400 million) to the Golden State’s general budget, which is $15.7 billion underwater itself.

Even if the money went where it was supposed to, it was to go to “housing counseling” and other fuzzy, feel-good government nonsense that does nothing to clear the massive malinvestment in housing.

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There is the appearance that housing markets are tight, leading to some price bumps in various markets. But as Mr. Whalen points out, there are millions of homes in the process of foreclosure that are not yet available for sale.

“There are 2 million-plus foreclosed awaiting movement to sales category,” says professor Anthony Sanders at George Mason University. “But there are still millions of borrowers who can no longer qualify. Count the number who went through foreclosures and add some percentage for people who avoided foreclosure, but went late.”

This housing situation reminds Whalen of the computer chip market. There is a transition period between old and new memory chips when the supply is tight. “Then comes a flood of product.”

What’s keeping the homes off the market are government rules, as in the case of FHA, which has strict limits on the number of homes it can release for sale in a given neighborhood. In various subdivisions in the sand states, entire blocks of homes are underwater with homeowners not making payments. Whalen explains:

“No more than 50% of the REO properties purchased from FHA, for example, can be put on the market for sale as a vacant foreclosure, FHA acting commissioner [Carol] Galante said last month. Instead, the buyer needs to put in place another solution, such as leaving the homeowner as a renter of the home.”

Also, banks have every reason to delay foreclosure. “By dragging their feet on foreclosure, banks delay the day of loss recognition and also keep supply off the market. This is good for prices in the short term, but does not solve the supply problem,” Whalen writes.

In Las Vegas, Ken LoBene, director of the U.S. Housing and Urban Development office, says 65% of FHA loans are nonperforming, or delinquent. It a normal market It would be 8-13%. He added, “We lose about 77 cents on the dollar on every foreclosure.”

According to Venicia Considine, attorney with the Legal Aid Center of Southern Nevada, more and more people who can pay have stopped paying and are strategically defaulting. “I have more people calling me saying they’re the last owner on the block, they paid $300,000 for their home, and everyone else is a renter. That’s the shadow inventory we’re worried about.”

With the banks, the GSEs and the FHA sitting on their hands, more people have become “strategic squatters,” living in homes making no payments and waiting for their inevitable eviction.

At the same time, taxable sales are up in Las Vegas, and local experts point to strategic squatters as the reason. Steve Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas: “I think there’s a good chance that unpaid mortgages are affecting taxable sales. If they have a job, people who aren’t paying their mortgages might have some extra disposable income.”

Realtor Chris Rubeis told the Las Vegas Review-Journal, “It’s certainly more common than ever. The stigma of short sale, foreclosure or bankruptcy is long gone. Seventy percent of the market is underwater. Those people are saying, ‘I bought for $300,000. My house is worth $100,000. Why should I stay? I’ll never get the equity back.’ So they stop paying.”

And if you’re not making a mortgage payment, it’s “common sense” that the consumer economy would get a boost, according to Rubeis.

Yet perversely, builders are scrambling for land to build on in Las Vegas, pushing prices up. Homebuilders are getting more aggressive at buying land, according to John Prlina, president of land acquisition and development for Discovery Homes. His company purchased several lots this year in southwest Las Vegas.

“Things are coming back in the valley because there’s nothing in the resale market and the foreclosure process is just a drip,” Prlina told the Review-Journal. “We don’t know what the banks are going to do. As a builder, that’s OK as long as they don’t pour them out at one time.”

However, the co-creator of the S&P/Case-Shiller index is not so sure about a housing recovery. “It can get as big as it was again maybe in 50 years. This housing bubble was a once-in-a-lifetime thing, I imagine,” Robert Shiller told CNBC’s Futures Now program. “Although, you know, the market might be more volatile, so the future is always unknown.”

Once upon a time, a house was a place to live in. And the mortgage debt was considered a yoke around one’s neck until the loan could be paid off, and a mortgage burning party was scheduled to celebrate. “Fifty years ago, hardly anyone thought of houses as investments, but now people are focused on it like never before,” Shiller said.

Like it was once said about politics, all real estate is local. But post-9/11, the boom went coast to coast. “The funny thing about this recent experience is it became so nationwide. Housing markets aren’t supposed to be correlated all over the country like that. It was a rare phenomenon,” Shiller said.

The housing market hasn’t been allowed to completely correct. At the same time government has thrown every bit of stimulus it has at housing, the outsized government presence in the market and law has all combined to keep the housing market from bottoming. Some of this is easy to understand: tax incentives for first time purchasers, record low interest rates, and legislation making foreclosure cumbersome.

What’s not so easy to understand is why builders want to rush in and buy land, knowing there is this overhang of supply waiting to come on the market. But homebuilders were cashed up with the Worker, Homeownership, and Business Assistance Act of 2009, which, as many people know, extended unemployment benefits and the first-time-homebuyer tax-credit program.

But quietly included in this political potpourri was a provision allowing big businesses to offset the losses of 2008 and 2009 against profits made as far back as 2004. This provision generated corporate tax refunds of $33 billion, according to The New York Times. Previously, only small companies could offset losses against past years’ profits.

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Big homebuilders were the prime beneficiaries. After racking up monster profits during the housing boom, the industry booked huge losses in the bust, accentuated by write-downs of their land positions totaling $28.5 billion for the 14 largest publicly traded homebuilders. These large homebuilders are recapturing some of what Uncle Sam took away during the boom years and they’re buying dirt.

Returning taxes to businesses is great, but homebuilders are reading distorted economic tea leaves. In September, builders started construction on homes at the fastest rate since July 2008, “a further indication that the housing recovery is strengthening and could help the economy grow,” gushed a wire service story. Both construction starts and permits were up at double-digit rates from a year ago.

What all this means is that more supply is being added to the hidden supply of homes that already lurks in the foreclosure shadows. However, builders are being fooled again. So are Wall Street investors who have sent homebuilding stocks through the roof. The SPDR S&P Homebuilders ETF (XHB) is up 56% from the start of the year.

Keep your housing powder dry. This crisis is far from over. No matter what government does, market forces will eventually have their way.

Sincerely,
Douglas French

Original article posted on Laissez-Faire Today

The House Is Still a Dump appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

Santa Cracks Whip on Elves

“I believe that tax increases, especially for the wealthiest, are appropriate,” declared Goldman Sachs CEO Lloyd Blankfein in The Wall Street Journal.

The nice thing about being a CEO at the nation’s premier investment bank and writing an Op-Ed for the nation’s premier business newspaper is that the paper’s editors are unlikely to press you to define your terms.

You could be forgiven for suspecting that Blankfein’s definition of “the wealthiest” might come uncomfortably close to your own pay grade.

No skin off Blankfein’s nose: He has considerable leeway structuring when and where his income originates. You, in all likelihood, do not.

Hold that thought…

A year ago at this time, we undertook a survey of our readership. We asked you what your biggest concerns were about America and your retirement. And we asked what essential information you need to achieve your retirement dreams.

Here’s a representative sample of the replies…

  • “I am afraid,” said one, “that America will turn into another Greece or Egypt or any other country that finally got sick and tired of the corrupt politicians or government in general and begin to riot and start rebelling so much that it turns into almost another revolution right here at home”
  • “Can a man of 61 years,” said another, “even think about retirement by the time he is 67? Will the simple necessities of life be affordable with U.S. dollars?”
  • “America’s government has taken on a life of its own,” said a third. “The government now justifies its own existence and pillages the serfs to fund its ever growing appetite. My concern is how do you avoid the poorhouse in this situation?”

How, indeed?

As part of our analysis, we ran all the responses through a word-cloud generator. This crude but revealing tool shows the words that came up most often…

“Clearly,” Addison said at the time, “you’re worried about the government… and about your retirement. And, no doubt, how the former is mucking up the latter.”

We did not conduct a follow-up survey this year… in part because we figured the results would be much the same.

That said, there’s a variation on the theme showing up lately in The 5’s inbox…

  • “Taxing the rich some more sounds good,” says one, “until you look into the numbers and see how little good that will do in itself. Enough of this class warfare”
  • “I believe the ‘tax the rich’ crowd can’t think further than a dachshund dodo,” says another. “It’s really simple: A) The rich create jobs, B) The less money they have, the fewer jobs they create”
  • “I can only come to the conclusion,” says a third, “that this country is now filled with adult children who were never advised by their parents that Santa is a myth. They are convinced that Santa indeed delivers every day of the year. Only his address has changed. The North Pole is now Washington, D.C., and his elves are those of us stupid enough to work and create a future for our families.”

An extreme response to the election outcome?

Not if you’ve been paying attention. Seven days after the election, Mitt Romney’s top economic adviser Glenn Hubbard agitated in the Financial Times for “closing loopholes” in the tax code for “upper-income taxpayers.”

As “fiscal cliff” negotiations proceed apace, Republicans are “no longer talking about the Dec. 31 deadline for the tax rates as a Masada, a full-bore defense of the old rates,” reports Dave Weigel at Slate. “They’re talking about what they can get if they accede to the Democrats.”

And Dec. 31 might not be the end of the story. Exxon Mobil — which gave 93% of its political donations to Republicans the last two years — “is part of a growing coalition backing a carbon tax as an alternative to costly regulation,” according to Bloomberg.

“Even if higher tax rates take a while to arrive,” says our macro strategist Dan Amoss, “people and businesses are not waiting to adjust their financial plans.”

Startlingly, even The New York Times has figured out this is a problem. The Gray Lady did a story on Sunday. The people they profiled sound a lot like our readership…

  • Kristina Collins, a Virginia chiropractor, says she and her husband will try to stay under the $250,000 income threshold: “If we’re really close and it’s near the end-year, maybe we’ll just close down for a while and go on vacation”
  • John Moorin, the founder of a medical equipment company in Indiana, sold $650,000 in dividend-paying stocks like McDonald’s and Coca-Cola a few days ago. “I’m so scared that now all of a sudden I’m going to get taxed at such a rate with them that they won’t be worth anything”
  • Dyke Messinger, owner of a construction equipment firm in North Carolina, says he has four openings, but will fill only three of them, lest his tax bill rise $100,000. “It’s enough money that you don’t want to make a misstep.”

“The rich will start hoarding more cash, expecting to pay higher tax bills in the future,” Dan says. “They’ll invest more in liquid Treasury bonds and gold; they’ll invest less in illiquid, privately owned job-creating businesses or in the stock market.”

“At the margin,” Dan goes on, “the wealthy business owners in Middle America will have to either borrow against their businesses to raise funds for higher taxes. Or the more likely path will be to put their business in ‘runoff’ mode — boosting free cash flow by halting capital investments and hiring.

“I can’t imagine why this concept is so hard to understand, but I guess if in the experience of a politician’s whole life, he’s never observed family or a friend running a small business, this debate is just an abstraction and there are piles of idle money sitting in bank accounts waiting to be grabbed.”

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Nor is the ignorance confined to Washington. The wealth of many “wealthy” people is tied up in the ownership of privately held companies — “things not so easily liquidated to pay higher taxes,” Dan points out. “This phenomenon is not familiar to many guilty rich people in New York, whose net worth is in liquid financial assets that can be sold piecemeal to pay taxes.”

Like the aforementioned Mr. Blankfein…

Cheers,
Dave Gonigam

The preceding article was excerpted from Agora Finacial’s 5 Min. Forecast. To read the entire episode, please feel free to do so here.

Santa Cracks Whip on Elves appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

The Rule of the Downside

Energy is a good thing. But it is as obedient to the law of Declining Marginal Utility as everything else. The point is obvious, but I’ll prove it anyway. The real question on the table in this section is this: does it also obey the Rule of The Downside? Do you ever reach the point where further inputs of energy are actually negative…or even disastrous? Is there such a thing as too much energy?

In anticipation of the discussion, here are four observations:

1. Energy cannot be divorced from how it is used
2. The more energy resources come under government control, the more unproductive the system becomes
3. Government is subject to the Rule of the Downside too
4. The debt-drenched economies of today’s developed countries are already on the Downside

After 1943, Germany’s investment of more energy in the war effort was not only a waste — it was almost pure downside. Of Germany’s 5.5 million war deaths, most came after the war was effectively lost. The payoff from every ounce of strength, resources and energy devoted to the Wehrmacht after the battles of Stalingrad, North Africa, and the defection of its Italian ally, was needless death and destruction — leaving Germans poorer and fewer than they had been before.

But what about energy itself? Typically, it is the lack of energy, not the surplus of it, that is blamed for disasters. Some military historians, for example, claim that it was a lack of energy that crippled and distorted the German war effort from the very beginning. Instead of committing all his forces to the assault on Moscow, Hitler was forced to divert a large part of his army to the South, where his armies would seize and protect oil supplies in the Ukraine. Japanese military historians also tend to give “too little” as an explanation for their failures. At the Battle of Midway, for example, their ships literally ran out of fuel. After the battle, the Japanese were doomed. Their energy came from Indonesia. Without control of the Pacific they could not protect their supply lines.

It is also typical for archeologists and historians to blame the collapse of ancient civilizations on too little, rather than too much. The Easter Island civilization, for example, is thought to have perished because the natives ran out of trees. They used the wood for energy. When it was gone, they were out of luck. The trees are also credited with helping to keep the environment in good working order. This analysis has been leveled at Ancient Greek civilization too. The Greeks used up the wood and brought in goats, which ate the young saplings. After a few hundred years, the Greek islands were barren.

Should we call this an ecological catastrophe or an energy shortage? Can energy be separated from the civilization that uses it? If that society is short on water, it must use more energy to quench its thirst. If it is short on farmland, it must work harder (use more energy) to increase yields per acre. If it is short on oil, it must devote more of its energy — as Japan and Germany did in WWII — to getting it.

The abundance or shortage of energy, in itself, is meaningless. The rich deposits of uranium under their feet did the ancient Athabascan tribes of Canada no more good than the huge lakes of oil under the feet of Arab Bedouins. It is not so much the availability of energy that counts, but what you can do with it.

In the case of the Classic Maya, the civilization seems to have risen and fallen along with the rainfall. Scientists studied stalagmites from a cave in Belize and were able to track rainfall on an annual basis 1500 years ago. Comparing the rainfall record to the traces left by the civilization they found that building increased in the wetter periods and decreased when the climate turned dryer. Between 1020 and 1110 a severe drought hit southern Belize, finishing off what remained of the Classic Maya in the region. Here too, on the surface, you would say that ‘too little’ water marked the decline. But you could turn that around; the wetter years were perhaps ‘too wet,’ since they encouraged growth that couldn’t be sustained in the inevitable dry years.

Jeffrey Sachs, director of the Earth Institute at Columbia, would argue that using too much energy causes growth, which leads to an environmental disaster…which becomes a disaster for the civilization. Many people believe the world already uses too much fossil fuel, causing the heavens to fill up with noxious ‘greenhouse gases’ and the polar ice caps to melt. They think the downside of all this energy use will begin soon, or maybe it already has. For the moment, however, ‘global warming’ or ‘global climate change’ is just an hypothesis which seems a lot more alarming in the summer time than in the winter. For all we know, the effect of human activity on the world’s climate will be an improvement.

In a broad sense, you could say that all civilizations collapse because they “run out of energy.” Not necessarily oil, wood or coal. Civilizations — like families, businesses, and clubs — depend on the energy of their constituent members. If those members are expansive, innovative and aggressive in their use of the available fuel sources, the organization will thrive. If not, it will decay. But the more aggressive they are in using their energy…the faster it may give out. “More” turns into “too much”…based on the circumstances…and declining marginal utility gives way to the downside.

Where is the exception? Not in the history books. Every organization comes…and goes. Everyone prospers and grows when it uses its energy effectively. Then, when its energy is wasted, dispersed and exhausted, it declines. There is no record of an upside without a downside.

Civilizations based on conquest inevitably decline when they meet their match…or just run out of energy. Civilizations that expend their energy building huge monuments have little energy left to defend themselves against invaders or other challenges. But perhaps most often, civilizations die like humans, from the inside out. They develop power structures, aka government, with almost exclusive monopolies on the use of violence. Then, elite groups get control of the government and use it to shift more resources and energy to themselves. The rich get richer. That is why government is fundamentally a reactionary institution; it is almost always used to protect existing interests. Future interests don’t vote…children don’t stab you in the back…and tomorrow’s industries don’t make campaign contributions. In effect, government moves energy from the future to the past…from what will be to what used to be…and finally, to what will be no more.

You can casually pick up almost any newspaper to see that this is so. In the November, 16, 2012 edition of The Wall Street Journal, for example, was a story with this headline:

Export US Gas, Yes or No?

The headline would be a puzzle to an American reader a century ago. He would say to himself that it was none of his business. It was up to the gas companies to decide what they would do with their product.

But now it is a matter for the Department of Energy, which is being lobbied by Dow Chemical, among others, to prevent the gas companies from selling their output on the open market.

Why would Dow take an interest in this? Because “Dow burns a lot of natural gas in its plants,” the article explains. Dow wants cheap gas, in other words. “The national interest is best served in keeping gas in an abundant and competitively priced position,” argued an executive.

Cheap gas may or may not be in the national interest. But Dow knows where its interests lie. And the politicians can look to see where theirs lie too. Who made more campaign contributions? Dow and other big gas users? Or the gas producers? The squeakiest wheel gets the grease. But the wheels of the future are silent.

Joseph Tainter, in his Collapse of Complex Societies, believes the decline in civilizations can be traced to problem solving. Each challenge, he says, leads to a solution, which involves greater complexity. Bureaucracies, hierarchies, rules, and regulations are imposed. These things cost time, energy and resources. Eventually, the cost is too great and the downside is reached.

In the Roman Empire, for example, agricultural output per person dropped as population increased. The problem was addressed by a policy of conquest.

The Romans took resources — grain, slaves, gold — from their neighbors. But this required a large army, which was an expensive, energy-consuming enterprise. The return on investment declined…and eventually went negative. The Empire collapsed. That was not necessarily a bad thing. When the decline on energy investments is negative, you are better off stopping the program. And archeological evidence from bones and teeth suggest that many people were actually better fed after the collapse of the empire.

As the size and complexity of society grows, the governments that are most competitive are those that draw on the most support (energy) of their subject peoples. That is why the Roman policy of conquest was so successful. They were able to turn the conquered peoples into supporters of the regime, with most of the army eventually comprised of non-Roman soldiers. The British Empire was good at this too. The empire began by subduing the Scots, who became the backbone of the British Army. Today’s American army, too, depends heavily on soldiers from the southern states, who were conquered by Abraham Lincoln’s armies in the 1860s.

The energy available to a society depends on many things, probably the least important of which is beneath the ground. More important is the organizational system and its stage of development. In an early stage, the system tends to be robust and efficient — or ‘simple,’ in Tainter’s terms. Later, additional complexity degrades returns on energy investments. While this complexity may be described as a form of problem solving, it is better understood as an attempt by elite groups to hold onto their wealth and power.

But to fully understand this, we need to back up and look at how government really works and how it too is subject to the Rule of the Downside. That subject, we shall undertake tomorrow…

Regards,

Bill Bonner
for The Daily Reckoning

The Rule of the Downside appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

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One Coal Company Worth A Look: Consol Energy

“I’m about to blow your mind…” I warned Addison Wiggin, Agora Financial’s executive publisher.

I had just found out a stunning fact about U.S. energy – and couldn’t help but share it when Addison walked past my desk.

Today I want to share the same info with you – and although you may not have the same affinity for this information, there’s a profitable twist that I’m sure you’ll like….

First, let’s recap what we covered yesterday…

With the bad news that’s been flooding the coal industry over the past few years, sentiment in the market for U.S. coal producers couldn’t be worse.

Point is, there’s a stunning “buy low” opportunity in U.S. coal producers. There’s a lot of reason to like coal right now, too.

You see, although coal use in the U.S. may be gearing down, the rest of the world is ratcheting up.

As we covered yesterday, coal is easy to transport. So while the U.S. begins using more natural gas (from booming shale fields), more seaborne coal will head to Europe and Asian markets.

Here’s the kicker, burning coal is still a fraction of the cost of renewable energy. So if debt-stricken Europe and energy-hungry Asia want to keep the lights on, increasingly they’ll be turning to king coal. That bodes well for the U.S. export numbers.

And you won’t believe where that coal is coming from…

The Answer Was Hiding Within A Stone’s Throw From My Office!

Getting back to my conversation with Addison, “Here’s a little resource trivia for you…” I commented to him.

“The No. #1 exporter…. of U.S. coal…. to Asia…Is…..”

Drumroll please…. Baltimore, Maryland!

Whaaaaaaaaat!?!? Who’da known! When I first found out that little tidbit my mind started spinning. I instantly wanted to know how this was possible. My hometown of Baltimore couldn’t possibly be the biggest supplier of coal to Asia, could it? Where was all of this coal hidden?

In plain sight, take a look…

According to the U.S. Energy Information Administration, “Exports to Asia originate mostly from the East Coast […] primarily out of Baltimore. Somewhat counter intuitively, most coal out of Baltimore — almost double the port’s European volume—is destined for Asia, the world’s largest coal consuming region.”

As I said above, if you’re not from Baltimore you may not have the same affinity for this wild information. But the coal trail leads us to one company that you’ll want to add on your radar.

And as you’ll see, it’s not just this company’s affiliation to Baltimore that could set it apart in the coal game…

One Way To Play Coal’s Rebound…

The owner of the Baltimore coal-exporting facility pictured above is Consol Energy (CNX.)

Consol is in the sweet spot of this energy situation. Once a primary coal supplier in the U.S., Consol is now a hybrid company that produces natural gas (from shale) and exports loads of coal to Asian markets.

The Asian exports come from its wholly-owned Baltimore export facility, which is set for a handsome upgrade this quarter. Consol plans to increase the facility’s capacity from 14 million tons per year to 16, all in an effort to accommodate a growing world market.

If you’re wondering, the seaborne coal hits the Atlantic and heads east. The majority then travels south, below the tip of South Africa, and eventually ends up in India, China or other Asian locales. U.S. coal, headed east…that’s the trend.

And did I mention the stock is on sale? Since its 5-year high near $70, Consol’s shareprice sits at just half that price today. With continued strength in the global coal market, Consol’s East Coast facility could be the harbinger of a substantial payout.

But don’t just take my word for it. With Consol, there are a lot bigger names on board, one of which I’m sure you’re familiar…

Legendary oilman T. Boone Pickens just added Consol to his BP Capital fund in the third quarter. Pickens played Consol before for a timing trade, so when it comes to timing this energy player he knows a thing or two. Right now you can get in right alongside him.

Add it all up and the next 12 months could be turnaround time for U.S. coal. And with more output headed to Asia, Consol could be the darling of the bunch.

Keep your boots muddy,

Matt Insley

Original article posted on Daily Resource Hunter

One Coal Company Worth A Look: Consol Energy appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

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avatarThe Daily Reckoning - The Daily Reckoning posted Tuesday, November 20th, 2012.

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