From the ground in Iran...

Our friend the oil tycoon shares one of his favorite names in the sector...

This year's brutal winter has caused a spike in natural gas prices.

In today's Digest Premium, our friend and Texas oilman Cactus Schroeder explains why prices will head higher over the long term... but not before a pullback. And he shares one company that should profit from the U.S. natural gas boom...

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.

 In today's Digest, we're featuring some special commentary from our globetrotting correspondent Kim Iskyan. Last week, Kim, who writes the S&A Global Contrarian, filled Digest Premium subscribers in on the political unrest in the Ukraine and what it means for investors.

Last night, Kim touched down in the capital city of Iran and sent us an update from the ground...

 I (Kim) arrived in Tehran, Iran last night. In much of the Western world, almost no other country is viewed more darkly than Iran... It's the enemy. From the 1979 hostage crisis... to President George W. Bush naming it a part of his "Axis of Evil"... to its dogged efforts to develop a nuclear program (and many say the bomb)... no country gets worse press than Iran.

At the S&A Global Contrarian, I'm interested in countries and markets detested and cast off by the rest of world... So, of course, I came to Iran.

 The big picture of Iran is this... It has been a political pariah in much of the developed world since 1979 (when Iran's revolution made it an Islamic republic). The country has for years suffered under the boot of economic sanctions – and these sanctions were ratcheted up a few notches several years ago when Iran didn't succumb to global pressure to ease up on its alleged nuclear-development program.

My flight from Dubai to Tehran was packed. The flight had no alcoholic beverages of any kind available... Notable, but not surprising. (We're in the Islamic Republic, after all.) Similarly, I saw very few women onboard. Upon landing, every woman – without fail – pulled out a headscarf and covered her hair.

Passport control was no big deal... although my friend Sam – an Australian who had not arranged a visa beforehand – was hassled a bit at the visa window, and had to pay more than the Iranian visa website specified. (Sam and I are former colleagues from our days in Moscow. He traded Russian stocks for one of Moscow's big brokers.) Since the other option was for him to raise a fuss and take the next flight out of the country, he paid up.

 Shortly after arriving at the hotel, Sam's "man" in Tehran, a former senior energy industry executive whom I'll call K, came to visit around 11 p.m. (There's a certain sense of urgency here.) He and Sam have worked together a lot in the past, but I'm new to him. He had clearly done his research on me, though... "I receive DailyWealth in my inbox every day," he told me, as way of introduction.

Two minutes later, after quizzing me about my nationality, what passports I hold, where I live and work, and where I flew in from, he smiled and said (as if to reassure me), "Everyone here thinks everyone else, both Iranian and non-Iranian, is a spy." That's the second time in a month, two continents apart, that someone has fingered me as a spy within the first five minutes of meeting me.

 On another front... sometimes people ask me how I make contacts in a new country. I usually respond that it's different every time. Before I visit a new market and country, I spend a lot of time back at home trying to set up meetings on the ground... you can learn a lot about an area by just being there. But of course, you can learn a whole lot more if you're able to talk to people who have their fingers on the pulse of the place.

Finding people to talk to in Iran has been a particular challenge... after all, as I mentioned, it has been the sworn enemy of the West (with a particular hatred for the U.S.) for the past two generations. You can count the number of friends Iran has around the world on your hands. So making connections from afar has been a trickier assignment than usual.

That's why I have had to be a bit more creative than usual here. An old journalist friend from Moscow – now the energy editor in London for his paper – introduced me to a local Tehranian reporter who works for a major international newspaper. I also scanned the list of alums of where I went to college for people who live in Iran... and found a guy who works for one of the big (and one of the few) investment houses in Tehran... So calling on him was easy.

 On another front, the guy who heads up the contracting firm that fixed my basement in Virginia after a recent pipe burst is of Armenian-Iranian descent. My last name is Armenian... and we Armenians stick together... so he gave me the name of a few members of his family.

 My friend Sam moved to Dubai a number of years ago to launch an oil-trading firm... And during that time, he made a lot of contacts in Tehran, in anticipation of being able to help Iran unload its oil on international markets. He and I tried to do some oil-transit deals while I was in Sri Lanka, and have kept in touch... Sam lives in Melbourne now, but we met up in Dubai to travel here to Tehran, where he's refreshing his contacts, showing me around, and trying to figure out how to get well-positioned.

 Last but not least, on my flight to Dubai, I happened to sit next to a woman from Iran... She saw me reading a book about Iran, and three minutes later gave me the name and contact details of her brother in Tehran. "Just tell him I gave you his number," she told me.

More soon...

 I shared some thoughts on the Ukrainian crisis in last week's Digest Premium. And there were some major developments over the weekend...

Ukrainian president Viktor Yanukovych fled the country... Parliament voted him out of office after accepting a controversial economic-aid package from neighboring Russia. Now, there's a warrant for his arrest for the 82 civilians who died over the past week. But he's in hiding. Rumor has it that he flew to somewhere in the United Arab Emirates. Protestors have taken control of the country. Parliament speaker Oleksandr Turchynov will assume Yanukovych's duties until the country's election on May 25.

Folks think opposition leader and former Prime Minister Yulia Tymoshenko is the front-runner for the presidency. She lost to Yanukovych in the 2010 election. One year later, she was sentenced to seven years in prison over a natural gas deal she negotiated with Russia. She was released from prison Saturday and has already started rallying support. The trial was a political setup... Yanukovych wanted her out of the picture. The charges were absurd. He resisted massive international pressure to free her.

 The new government said Ukraine needs $35 billion to avoid default... The U.S., U.K., European Union, and the International Monetary Fund have already pledged support for the new government. Meanwhile, Russia halted payments on its $15 billion bailout.

"The new government's task is to stop the country's slide, to stabilize the currency rate, to ensure timely salary and pension payments, to win back investors' trust, and to create new jobs," Turchynov said in an announcement on the Parliament's website. "Another priority is to return to the European integration path."

 And according to Russian Prime Minister Dmitry Medvedev, Russia will honor the agreement it signed in December with Yanukovych to cut gas prices for Ukraine... though Russia is worried about the legitimacy of Ukraine's new government.

 Markets hate uncertainty... And the latest news from Ukraine put the markets more at ease... The yield on Ukrainian bonds maturing in 2023 fell to 9.16% – its lowest level since January 28.

Ukraine's bellwether index – the UX Index of stocks – soared 12%, the biggest jump since May 2010.

 Here's what we wrote in Friday's Digest Premium...

 As the editor of the S&A Global Contrarian, Kim's travels take him all over the world – sometimes to places no one wants to go (like Iran) – to find investment opportunities that offer big returns. To date, he has visited or lived in more than 70 countries, and has worked as a stock analyst, hedge-fund manager, consultant, and even a political analyst.

To learn more about the S&A Global Contrarian – and to gain access to this month's issue, which hits inboxes this evening – click here.

 Natural gas futures hit a five-year high of $6.493 per British thermal unit (btu) today – the highest since December 2, 2008. Prices have since fallen below $6 per btu following predictions for milder weather. But natural gas futures are still up 42% this year... The reason for the rise is the "Polar Vortex" – the harsh winter weather we've experienced this year.

Increased demand sent gas supplies down to 1.443 trillion cubic feet in the seven days ended February 14 – the lowest level for this time of year since 2004... and a record 34% below the five-year average.

In an internal e-mail, S&A's in-house resource expert Matt Badiali offered two thoughts about what's going on...

 Hedge funds increased bullish bets on natural gas for the fifth time in six weeks. Asset managers' net-long positions were up 5% in the seven days ended February 18 to the highest level since May, according to U.S. Commodity Futures Trading Commission data. Bearish bets fell 7.3% to the lowest level in more than two years.

 We're featuring commentary from oil and gas expert Cactus Schroeder in today's Digest Premium. We spoke with Cactus about the current state of the natural gas market, his prediction for gas prices, and some of his favorite companies operating in Texas' Cline Shale. Premium subscribers can read the piece below.

 Owning foreign real estate is one of the very few things you can do that's totally off the books... You don't have to report it to the IRS. And its value can appreciate overseas, without any tax consequence.

Porter thinks foreign real estate is a key piece to any serious investor's asset-protection plan... It's also good to own as a global chaos hedge.

That's why he owns two pieces of land in Nicaragua. We've been writing about (and visiting) Nicaragua for a decade. The founders of Agora, our parent company, purchased 3,000 acres with five private beaches when Nicaragua wasn't on anybody's radar... When they first arrived, they rode to the beach on horseback, cutting their way through dense jungle with machetes... Now, their development, Rancho Santana, is one of the country's premier resorts.

You can still ride horses on the beach today, but it's purely recreational... The country's development is almost unimaginable. The golf resorts and beaches of Nicaragua are being featured in the Wall Street Journal and the New York Times. The country's richest man, Carlos Pellas, built a five-star resort just miles from our property. He's bringing an airport and paved roads with him. His involvement has already attracted some of the biggest names in government, finance, and Hollywood to the area.

Nicaragua is gaining popularity, but it's still far from being "on the map."

 Recently, Porter invited Rancho Santana Director of Sales Marc Brown to his weekly Stansberry Radio podcast to share some of his experiences in the country and what makes Nicaraguan real estate so attractive.

Marc moved his entire family from California to Nicaragua to pursue his career as an independent real-estate professional... After looking up and down the coast, he found Rancho Santana and joined the team. On the program, Marc explains that while property prices have gone up, there's "still a lot of room to go."

To listen to Porter's interview with Marc and learn more about beachfront property in Nicaragua, click here to tune in to Stansberry Radio.

 New 52-week highs (as of 2/21/14): Advent Claymore Convertible Securities Fund (AVK), ProShares Ultra Biotechnology Fund (BIB), iShares Nasdaq Biotechnology Fund (IBB), SPDR International Health Care Fund (IRY), Penn Virginia (PVA), ProShares Ultra Utilities Fund (UPW), and Vanguard Natural Resources (VNR).

 We received some good feedback about Porter's latest letter from the "Chairman" of GM. You can read it here. And let us know what you think at feedback@stansberryresearch.com.

 "The Flex subscription paid for itself the first week and 5x ROI in the first 30 days... keep the great ideas coming!" – Paid-up subscriber RG

 "Porter, I always enjoy reading your GM Chairman letters, but I especially enjoyed reading this one. It reminded me of a case study I had years ago when studying for my MBA. It taught us to look at cash flow and ignore sales numbers. It involved the Scott seed and fertilizer company. I believe it happened back in the 1970's some time. Scott kept shipping products to their distributors without accepting payment until sold to the end customer, but Scott took credit for the sale as soon as the product left the factory. Distributors had Scott products stored up to the ceiling because they were getting deliveries faster than they could sell to customers.

"The result was great corporate financial sales numbers, but the cash flow couldn't support the high production rate. Once the bubble burst Scott shares cratered. Back then I couldn't believe a company could be so brazen in their 'creative' accounting, and thought no company would ever attempt anything like that again. Guess I was wrong." – Paid-up subscriber Ron Mueller

Regards,

Kim Iskyan and Sean Goldsmith
Tehran, Iran, and Miami Beach, Florida
February 24, 2014

Our friend the oil tycoon shares one of his favorite names in the sector...

Editor's note: This year's brutal winter has made natural gas prices jump much higher. Texas oilman and friend of S&A Cactus Schroeder believes it may still head higher over the long term. But in the short term, he's keeping his eye on a pullback. In today's Digest Premium, he explains why... and offers one of his favorite ways to profit from the long-term boom in natural gas.

 There is an awful lot of gas being used to heat homes around the country right now. And I (Cactus Schroeder) think you're going to see more gas used in transportation.

Besides the rough winter, some other demands are coming onboard. But you're going to see those prices shrink back pretty quick. Where it bottoms out I don't know, but I'm going to guess somewhere in the $4-$4.25 range.

I'm not an expert at picking bottoms, but that's what I would plan for if natural gas was going to be a big part of my portfolio.

 Also, gas producers have already been pumping out more gas to take advantage of these high prices. They're producing as much as they can right now. With companies that are strictly gas plays (like in the Marcellus and Barnett shales), or some that are primarily natural gas, you're seeing people drilling just to hold acreage. They see that it has been very slow, but once they start exporting natural gas in 2015-2016, that's when you're really going to see a big bump where we can put it all on the world market.

 You can't really count on a winter as rough as the one we've had. This is probably one of the toughest winters in the last 10 or 20 years. And still, gas just broke $6 per btu.

When we start to see the exports take off, you're going to see the difference between what Japan pays and what the U.S. pays start to shrink. (Currently, Japan pays more than double what the U.S. pays for natural gas.)

 We're already starting to see that in oil...

The gap between Brent Crude – the international benchmark for oil prices – and West Texas Crude – the U.S. benchmark for oil prices – has already shrunk to $8 (from nearly $20). I've been reading some things that by year-end, they may be on par again.

 With all the stuff going on domestically in the Permian Basin, the Williston Basin, and the Bakken Shale – and all the unconventional horizontal fracking-type plays – one company that should do extremely well is Halliburton (HAL).

Halliburton is a hometown service company. The only service company similar to it is Schlumberger. But Halliburton is a U.S. company. And when Texas' Eagle Ford Shale pushes down into Mexico, Halliburton is going to be a key player in helping Mexico get everything set up on the Eagle Ford. Mexico is essentially where the U.S. was in 2008 when we first started drilling the Eagle Ford. So Halliburton is probably going to be the 800-pound gorilla when it comes to things happening there.

– Cactus Schroeder

Our friend the oil tycoon shares one of his favorite names in the sector...

This year's brutal winter has caused a spike in natural gas prices.

In today's Digest Premium, our friend and Texas oilman Cactus Schroeder explains why prices will head higher over the long term... but not before a pullback. And he shares one company that should profit from the U.S. natural gas boom...

To continue reading, scroll down or click here.

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