The greatest contrarian opportunity today...

 Porter called it "the single greatest contrarian opportunity today" in June. And the opportunity has only gotten better since then.

 

 Commodity prices, as measured by the Bloomberg Commodity Index – which tracks 20 commodities – hit a five-year low on Monday. A rising dollar and disappointing economic data from China (the world's largest consumer of raw materials) have crushed commodities.

 

It has been especially rough on coal – the "contrarian opportunity" we mentioned above.

 

 The Market Vectors Coal Fund (KOL) – which holds a basket of 33 international coal producers, shippers, and equipment makers – is down nearly 70% from its 2008 peak.

 

 In addition to pressure from a rising dollar and a weakening Chinese economy, coal is facing competition from cheap natural gas – an abundant and much cleaner energy source.

 

But as Porter explained in the June issue of Stansberry's Investment Advisory, coal is here to stay...

 

Coal remains the world's leading energy source, and its consumption continues to grow by about 2% annually. Politicians can (and will) say whatever they like about global warming and reducing emissions. But if they want the lights to stay on, then the coal trains had better run. We view the current divergence between the obvious and critical role coal plays in the global economy and the nearly universally negative outlook people have for it as the single greatest contrarian opportunity today.

 

 While some people believe fuels like uranium and natural gas will replace the need for coal, the truth is that the dirty fuel is here to stay. Last year, coal produced 39% of net U.S. power generation. Meanwhile, solar accounted for just 0.2%.

 

The reason is that coal is much, much cheaper than alternative energy sources. A megawatt/hour (MWh) of coal energy costs around $82. Offshore wind and heliostat solar cost $189 and $254, respectively.

 

 Things can't get much worse for coal right now. The commodity is down from around $85 per short ton in late 2010 to around $54.50 today.

 

As regular Digest readers know, when it comes to commodities, the cure for low prices is low prices. As we wrote in Monday's Digest, natural resources are inherently cyclical. As prices for a certain commodity drop, production follows. Eventually, low prices attract more demand... Prices and production rise... And the cycle continues.

 

 One catalyst for higher coal prices is an increase in natural gas prices... Porter says the "magic number" for the next coal rally could be when natural gas breaks above $5 per mmBtu. (It's $3.84 today.) At that price, it would be economical for coal-fired power plants to come back online.

 

 And coal isn't the only commodity in the dumps. Yesterday in DailyWealth Market Notes, we highlighted the bleak situation in corn – a major part of the U.S. food supply, used in everything from drinks and snacks to livestock feed...

 

In late 2012, tough weather conditions produced lower corn supplies and spiking prices. But since then, favorable weather has produced huge corn crops around the world. The price of corn has responded by falling more than 50%. It's at its lowest price in four years.

 

 And in today's Growth Stock Wire, S&A Resource Report research analyst Brian Weepie further explained the rout in the corn market... And why we could soon see a rally...

 

From mid-2010 to mid-2012, corn prices rose more than 120%.   Demand for corn was rising, thanks in part to the increased use of ethanol in gasoline. And poor weather in 2011 and 2012 meant demand was outpacing supply. As a result, corn prices soared to their highest levels ever in 2012... to more than $8.40 per bushel.   To take advantage of higher prices, farmers started planting more and more corn. So much that now, supply is outpacing demand... causing corn to enter "bust" mode. At around $3.30 per bushel today, the price of corn has fallen more than 60% since its 2012 high.

 

 Corn has gotten so cheap, it now costs farmers more to grow corn than it's worth. When farmers are losing money on every bushel they produce, prices simply can't fall much lower. They'll stop growing corn altogether... or switch to another commodity. As Brian wrote...

 

According to Brent Baker, a corn farmer and commodity broker at John Stewart and Associates, the breakeven cost for growing corn right now is $4.25 per bushel. At below $4 per bushel today, farmers are losing money.   That's why Brent says there will be a major shift from growing corn to growing soybeans next year.

 

 In yesterday's Growth Stock Wire, S&A Short Report editor Jeff Clark explained why he thinks gold is set to bounce higher...

 

After a strong rally in June, and two months consolidating and building up energy for its next move... gold tumbled last week.   The price of gold fell more than 1%. And the benchmark gold-stocks fund, the Market Vectors Gold Miners Fund (GDX), pulled back more than 5%.     On Friday, GDX closed 12.3% below its 50-day moving average (DMA). That's an extreme move. GDX rarely strays more than 10% from its 50-DMA before reversing and then coming back toward its 50-DMA. Extreme moves, like we're seeing right now, often mark significant bottoms.

 

 Buying commodities today is a great contrarian opportunity... Sentiment toward the sector is horrid. Prices have gotten clobbered. Meanwhile, we still need coal and uranium to fuel the world, and copper to build and maintain our infrastructure. Simply put, prices eventually have to go up.

 

In today's overheated markets, natural resources present some of the only bargains around. And we've told you more than once about our favorite way to play it...

 

It's a small, little-known company that profits from gold, coal, uranium, and potash (a resource used in fertilizer). The company just closed a deal that will cause its revenues to soar 10-fold... And Dan Ferris – who holds shares in the Extreme Value portfolio – is 100% certain the company will start paying a "substantial" dividend in the next couple years... potentially a double-digit yield based on today's share price.

 

The stock is a screaming buy right now... But these shares can move higher quickly. It could easily jump 50% or 100% on any good news or a rebound in commodity prices. In short, we think it's one of the best ways you can play commodities today. You can learn more about this opportunity by clicking here.

 

 

 New 52-week highs (as of 9/23/14): CF Industries Holdings (CF).

 

 Two subscribers are fans of former presidential candidate Ron Paul, who is our keynote speaker for our Stansberry Conference event in Nashville, Tennessee next month. Learn more about our Nashville event here. And as always, be sure to send your e-mails to feedback@stansberryresearch.com.

 

 "Wow! That guy is wise, brilliant, articulate, honest, genuine! We should elect him President. Oh wait, the 'bad guys' (politicians and business interests) saw to it that he wouldn't make it. Thank you for the platform you give to guys who deserve it. Ron Paul is clearly one of your best ever. And thank you for promoting sound economics, foreign policy, and social integrity. Part of me wants your research for just a few of us (selfish), but the biggest part of me wants your company's work required reading for students, board members, parents... you get the point.

 

"Because of you, I read guys like Richard Mayberry and Bill Bonner. I share this stuff with my friends and loved ones because I want them informed, and I want a revival of Constitutional patriots. YOU are a catalyst to make that happen. My previous letter slammed a bit, but my love for your work, and most all of those you recommend and employ is a treasure for me. It constantly stimulates my brain." – Paid-up subscriber Howie Christensen

 

 "Porter, enjoyed the interview with my neighbor Ron Paul. You know, at his age he rides his bike every day in front of my house when he is in town. and for miles! Seriously your co-host 'Country club guy' sound just like Aaron! Maybe with a cold. Are they twins?

 

"Now to the meat! I absolutely think you should take the transcript from your rant and published the material, word for word! I really thought I was the only one left in America that felt exactly like you described in your rant! I am going to make my 20 year old 'sports nut' son listen to this because we have had years of discussions where I have tried to take every opportunity to teach him to work hard, be honorable, respectful, a true sportsman and be a decent human being and all the while fighting what these pro sports players seem to contradict on a daily basis. It makes it tough on parents when the kids perceive these guys as role models. Mostly because of the money, fame, cars, and women.

 

"The sheer number of these grossly overpaid 'hood rats' who had a free ride all through school and now in pro sports life, regardless of their on and off the field conduct is appalling!!! Most of them could not hold a real job or even balance a checking account! You sounded like a recording of one of my rants to him as we discussed the sports news on any given day. I too have found it to be of little interest anymore to watch the crap, much less feed there bloated salary's and egos by pissing off $250 to go to one of those games or to go into an overcrowded stadium full of society's moral handicapped who can least afford to be there in the first place." – Paid-up subscriber O'Brien

 

Regards,

 

Sean Goldsmith

Baltimore, Maryland

September 24, 2014