Crisis Investing

Issue 3 / April 2024

Dear Reader,

The cheapest and most intriguing asset out there, with the highest potential for growth?

Natural gas.

It's hovering around US$1.90 per million British thermal units (MMBtu). That's close to its lowest level in history in real, inflation-adjusted, terms. And this comes at a time when its potential for explosive growth has never been greater.

Typically, natural gas trades around US$3 per MMBtu over the span of a decade or two. But, in other parts of the world, especially in Europe, it sells for much higher, usually around US$12. Just a few years ago, it was around US$40. And given the challenges the EU is facing, with things like the state-sponsored terrorist destruction of the Nord Stream pipeline in the Baltic between Russia and Germany, it will likely reach that level again.

Of course, because of difficulties transporting natural gas, it has previously been a local market, with local pricing. But that's changing with the mass advent of Liquified Natural Gas (LNG). All things considered, the risk-reward ratio looks pretty favorable with natural gas. The U.S. is now the top LNG producer and exporter. Prices will almost inevitably equalize with the cleanest burning of all hydrocarbon fuels.

The best way to play natural gas is with North American producers. You can collect fat dividends, while awaiting much higher share prices.

This month’s issue is all about energy with a new natural gas pick and a review of the energy stocks already in the portfolio.

Regards,

Doug Casey