On May 1, 2012, Porter Stansberry and I made a bet. Porter predicted that oil would go below US$40 per barrel within 12 months. I stated that there was no chance that this would happen (my reasons are presented at the link above).
Putting our money where our mouths are, we both agreed to bet 100 ounces of silver on the matter.
I have a lot of respect for Porter, who is a very smart man. When he talks, I listen. But when he discussed the reasons why he thought oil was going below US$40 per barrel, I knew I had him - this was going to be one of the easiest bets I have ever made.
One of Porter's main arguments was that a global shale-oil revolution would push volume way up and prices way down. It is definitely a sensible argument, yet it was missing something very critical: timing.
The shale gas boom that happened in the United States did not occur in a vacuum. Rather, it was built upon decades of experience in new technologies such as hydraulic fracturing and horizontal drilling. This was then based off of more than 150 years in conventional oil and gas exploration. Today in North America, there are thousands of rigs and hundreds of thousands of skilled oil and gas workers to work on the projects.
This simply does not exist in the rest of the world.
For a new shale discovery - however large it may be - it would take years just to prove up its commercial viability, another few years to get the infrastructure running, and even more years before it produces enough to matter.
This means there are tremendous opportunities to profit - for those who are in the know - while we wait for the rest of the world to catch up.
A similar situation is shaping up in the nuclear sector. Many countries rely on nuclear power and are planning to expand its use - the US among them - yet companies involved in the mining and refinement of uranium remain in a slump. We at Casey Research have created a webinar discussing these issues; it's titled The Myth of American Energy Independence: Is Nuclear the Ultimate Contrarian Investment?, and it will premier May 21 at 2 p.m. EDT.
Featured participants include Chairman Emeritus of the UK Atomic Energy Authority Barbara Thomas Judge, former US Energy Secretary Spencer Abraham, and former Canadian Minister of Natural Resources Herb Dhaliwal. We will provide an expert, insider's perspective on the global nuclear power scene, showing you how to leverage its rising importance in your portfolio for potentially life-changing gains. Learn more about the free webinar and reserve your place today.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.