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Why Dirty Coal Is Making Investors Like You Filthy Rich

Written by Keith Kohl
Posted April 17, 2019

“The Aussies are scared, and they should be.”

Those words floated over to me earlier this morning. At first, I thought my colleague Christian DeHaemer was talking to himself. The sun was just barely peeking out over Baltimore’s harbor, and the first drops of coffee were still dripping into the pot.

When Trump closes that deal, Keith, just watch them panic,” he continued, “and we’re gonna get nice fat dividends for their troubles.”

I immediately knew what he was talking about.

Now, we’ve been on opposites sides before when it comes to coal, so I can understand why he was a little combative.

Today, however, we were on the same side.

Here’s the thing...

Chris’ point regarding those hefty payouts wasn’t only spot on, but there’s also no question that individual investors will mint a fortune from U.S. coal.

And the best part is that it’s China that will foot the bill on these profits.

Deals, Divvys, and Dirty, Dirty Coal

Look, let’s be absolutely clear here.

Coal is one of the dirtiest sources of energy on the planet.

There’s simply no getting around that point.

But two very different stories are taking shape in China and the United States, which together account for about 40% of the world’s greenhouse gas emissions.

The veteran members of our investment community here know all too well that the development of shale gas resources in the U.S. have pushed our coal industry into a downward spiral.

In 2018, the U.S. consumed more energy then ever before. Our thirst for energy topped a record 101.3 quadrillion British thermal units.

Last year also marked the fifth consecutive year that our coal demand declined. U.S. coal demand, which has been rising steadily since the 1950s, hit a brick wall around 2007.

It’s been falling ever since.

That brick wall was natural gas.

A decade ago, I told you that cheap, abundant natural gas would be the death of coal.

That couldn’t be truer today.

Since 2008, roughly half of U.S. coal mines have closed, and nearly all of the new power plants that have been coming on-line are fueled by solar, wind, and natural gas:

Point is, it’s getting ugly out there for the coal industry.

But as Christian is fond of reminding me, crisis breeds opportunity.

And you have to wonder, if we’re not using our coal... who is?

I’d give you three guesses, but you’ll only need one.

Dirty Coal, Filthy Profits

Last year, Australia’s coal exports were incredibly valuable for them. The country exported approximately $50 billion worth of it in 2018.

Trust me, it didn’t hurt having China right next door. China not only consumes more coal than anyone else but also doesn’t care about who knows it.

Even though China added its name to the Paris Accord, the country already announced that it was expanding its coal production capacity.

China’s demand for coal is also rising, with consumption growing by 1% compared to the previous year — for a total of about 4 billion tons of coal!

And make no mistake: The Aussies could very well start panicking as they lose market share to the United States.

China wants our coal; that much is obvious. Since 2016, our steam coal exports to Asia quadrupled from 5 million short tons to 20 million short tons last year.

In total, the United States exported a five-year high of 116 million short tons of coal.

And that, dear reader, is where the opportunity lies.

This morning, Christian laid out all the details to me. You see, his readers are banking cold, hard cash from China’s coal crisis as you read this.

But things could easily go parabolic from here because President Trump is about to close a deal with China that will give U.S. companies a clear-cut advantage.

I strongly recommend you take a few minutes and let Christian give you the details himself.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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