Heading to Belize

Jim Chanos now has his next "trust me" story: China. Chanos and other China bears are finding inconsistencies throughout the country's economic data, leading them to believe a massive bubble is forming.

For example, official Chinese statistics show local car sales are surging, but gasoline demand is flat. Fellow China bear Gordon Chang believes Chinese state-run companies are buying fleets of cars and storing them.

The bears also cite overcapacity in the construction sector... China already consumes the most cement of any country in the world at 1.4 billion tons a year. But the country has ramped up its production capacity in recent years, leading to an estimated spare capacity of 340 million tons – more than the combined consumption in the U.S., India, and Japan.

"I believe deeply that it's very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar," he said at a roundtable discussion with Japanese reporters.

"We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors and... savers but investors around the world" that the U.S. will fix its budgetary problems as its economy improves.

Great job so far, Tim... Your comments really instilled confidence in the American people. The dollar touched a 15-month low and gold went as high as $1,119.10 an ounce today (up 26% this year).

At the Alliance Conference, I got to talking with a friend of mine – a retired petroleum engineer. This guy worked in South America for decades, so I brought up Brazil's offshore oil...

The country has enormous oil reserves. The most visible is Tupi, which has around 10 billion barrels of oil... And they keep finding more and more. In September, BG Group, a $59 billion London-listed oil producer, announced its Guara field has as much as 2 billion recoverable barrels of oil (worth about $160 billion at today's prices).

The thing is, my friend says that oil will cost at least $60 per barrel to produce. No company has ever drilled that deep before.

So that makes Brazil's oil 30% pricier than the "roofing tar" in Canada's oil sands – previously the world's most expensive oil to produce.

It used to be you could stick a straw in the sand in the Middle East and suck oil out for $3 a barrel. That's just not true anymore. Oil prices are headed higher. If they dip, they won't stay low for long.

Matt's loaded up his Resource Report portfolio with some of the cheapest, easiest oil you can drill today, and the strategy is working. Three of his picks are up more than 90% since June. But his latest recommendation could be his biggest winner yet...

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