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8:30 AM EST, Wednesday, August 1, 2007: The best news is my Australian mining stocks -- the ones I've talked about. They've gone through the roof. One is up threefold -- Apex Minerals. The ones I own are:

Apex Minerals (AXM), BHP, Kagara Zinc (KZL), Metex Resources (MEE), Minara Resources (MRE), Oxiana (OXR), Rio Tinto (RIO), Western Areas (WSA) and Zinifex (ZFX). Metex is the only one I'm down on. All have pulled back, thus representing a good time to jump in. I bought more Apex last night.

The easiest way way to buy more shares is simply to ask your U.S. human broker to buy them for you. The problem is that it takes overnight and it's hard to fine tune your price. You can easily open an Australian brokerage account. They do things like we do. And they speak English -- well, a form of it.

My nine-step plan: Last Friday I laid out a nine-step plan for dealing with this volatility -- yesterday was up 1% and then down 1% all in one day, the first time since 2003. If you missed my plan, read it now.

As I've said, I'm not panicking. All this will pass. I remain optimistic. Today's good news: From Bloomberg:

U.S. Consumer Confidence Climbs to Highest in 6 Years by Bob Willis.

July 31 (Bloomberg) -- Consumer confidence in the U.S. climbed more than forecast in July to the highest in almost six years, spurred by job and income growth and lower gasoline prices.

The New York-based Conference Board's index of consumer confidence rose to 112.6 in July from a revised 105.3 the prior month. The index averaged 105.9 in 2006.

Robust confidence would help consumer spending, which accounts for more than two-thirds of the economy, pick up from a second-quarter slump. Greater job stability, cheaper gasoline and rising stock prices through most of the month outweighed concerns about falling home values.

"The consumer economy, once again, remains on a firmer footing than it has generally been given credit for,'' said Richard DeKaser, chief economist at National City Corp. in Cleveland, whose forecast of 111 was the most accurate. ``There is a generally healthy disposition among consumers. Even in spite of the pause in spending, we will see them come back.'' ...

The share of consumers who said jobs are plentiful increased to 30.5 percent, the highest since August 2001, from 27.6 percent. The proportion who said jobs are hard to get fell to 18.4 percent from 20.5 percent. ...

The number of Americans filing for jobless benefits last week unexpectedly fell to the lowest in two months, a sign the job market remains resilient. Unemployment is at 4.5 percent, close to a six-year low. ...

Wage gains are also helping soften the effects of high gas prices and declining home values for the consumer. Average hourly earnings were up 3.9 percent in June from the prior year, the government said June 6.

Sanity from my friend Jim Kingsdale. Jim is a very savvy energy investor. He writes the new, excellent blog, "Energy Investment Strategies," He has just posted:

Contagions: Sub-Prime is Hard to Figure…But Mexico Is a Clear and Present Danger

Nobody can know the impact that sub-prime mortgage defaults will have on the broader stock market and the economy. It’s clearly a negative vector for U.S. economic growth, but the question is whether it is a strong enough vector to outweigh such positive vectors such as excellent foreign growth, especially for Chindia. I doubt that and I also think any U.S. recessionary evidence (of which we have seen none thus far) would likely be rapidly met by the Fed lowering interest rates since we are headed into a Presidential election cycle.

The most likely future, therefore, continues to be mild economic growth, benign interest rates and an upwardly biased stock market. Thus, my investment strategy has not changed; I am staying long. I could be long and wrong, but I think the major impacts of the sub-prime fallout will be better lending discipline and less LBO activity, both of which could help to keep interest rates low and therefore be a good thing for both stocks and for the economy longer term. While the current correction in stocks could certainly last longer I am very confident that in three years few people will remember this event.

Nonetheless, we should keep in mind that a U.S. recession would likely cause the price of oil to fall, thus potentially causing a “double-whammy” for the now popular energy stock sector. So with oil prices approaching historical highs, this is a time of heightened risk to the energy investor. On the other hand, the global supply/demand relationship for oil, which seems fairly tight now, looks to tighten further based on rapid decline levels that are occurring in places like…

Mexico is a highly predictable vector for higher oil prices, particularly because of its critical role in supplying the U.S. market. The short story is this: The U.S. currently imports about 1.5 million barrels of oil from Mexico every single day, our third largest source of oil after Canada and Saudi Arabia and fully 7% of all the oil used in the U.S. Within a period of five years, Mexico may not be able to export a single barrel of oil to anyone.

The full story is that Mexico faces increasingly higher probabilities of rapidly declining oil production, financial collapse, and political upheaval. The indisputable facts are stark and nearly self explanatory:

• Mexico’s primary oil field, Cantarell, which produces 60% of all Mexican oil, has entered into a very rapid state of decline, a prime example of the rapid decline of oil fields that have been subjected to many years of Enhanced Oil Recovery. Production from Cantarell is declining at about 15% per year. At the same time domestic Mexican oil consumption is increasing at about 2% per year.

• The decline of Cantarell is behind a recent news release that starts as follows:

Mexico, Jul 27 (Prensa Latina) Petroleos Mexicanos (PEMEX) announced that oil reserves may run out in seven years.

“Supplies of this economically exploitable resource are running out,” informed a report sent by the state owned company to the United States stock market.

• The Mexican Constitution gives PEMEX, the national oil company, the monopoly on Mexican oil production and prohibits it from sharing ownership of its oil reserves with either private Mexican companies or foreign entities. This severely limits the incentives Mexico can offer to attract outside capital and skills to the very difficult and time consuming project of exploring for and developing new oil fields in the Gulf of Mexico.

• Tax revenue from oil exports provide 40% of the funds spent by the Mexican government. Clearly, to the extent that oil exports decline (at a rate greater than the increase in the price of oil), the Mexican budget will have less funds to spend. This is likely to reduce Mexico’s ability to provide both police security and social services, thus increasing social unrest.

• The Mexican government is currently fighting a two-front war for social calm. One front is the drug dealers’ corruption of the regional police. Since taking office and through June of 2007, President Calderon has replaced 284 officers of high rank in the regionally-based federal police forces. The other front is against the socialist and largely Indian (Mexicans of native and mestizo descent) political forces led by the former Mayor of Mexico City who was very narrowly defeated in the 2006 Presidential election, which was disputed in much the way Bush-Gore was in the U.S. Recently, Mexican terrorists blew up oil and gas pipelines in three explosions, so it seems that the government is already being challenged militarily. Any significant diminution of the federal government’s financial capabilities from reduced oil income will hurt their ability to pursue this war on both fronts and thereby increase the likelihood of social unrest throughout the country.

• If Mexico enters a period of increased social unrest and civil strife, the job of developing additional Mexican oil reserves will be made that much more difficult.

One cannot review these facts, it seems to me, without concluding two things:

1. Mexico faces an extremely difficult near term economic and political future, and

2. U.S. oil supplies will be made increasingly tight over the next five years by reduced Mexican imports which will require the U.S to import more from other countries. Such substitution can only occur by means of the U.S. bidding more aggressively in the global oil auction process. That will substantially increase the pressure for higher oil prices.

Yesterday oil moved over $78 a barrel --the highest ever, I believe.

Businesses having second thoughts about Vista
: I remain unimpressed with Microsoft's new Vista. I still looking for its BIG pluses. I'm not thrilled about having to re-learn how to do things. And my Windows XP machines are working just fine. In fact, remarkably fine. (Though I'm reluctant to write this for fear of jinxing them.) There's an old rule among old IT (Information Technology) managers: "If it works, don't mess with it." From the computer trade press:

July 30, 2007 (Computerworld) -- Fewer businesses are now planning to move to Windows Vista than seven months ago, according to a survey by patch management vendor PatchLink Corp., while more said they will either stick with the Windows they have, or turn to Linux or Mac OS X.

In a just-released poll of more than 250 of its clients, PatchLink noted that only 2% said they are already running Vista, while another 9% said they planned to roll out Vista in the next three months. A landslide majority, 87%, said they would stay with their existing version(s) of Windows.

Those numbers contrasted with a similar survey the Scottsdale, Ariz.-based vendor published in December 2006. At the time, 43% said they had plans to move to Vista while just 53% planned to keep what Windows they had. ...

Their change of heart may be because of a changed perception of Vista's security skills. Seven months ago -- within weeks of Vista's official launch to business, but before the operating system started selling in retail -- 50% of the CIOs, CSOs, IT and network administrators surveyed by PatchLink said they believe Vista to be more secure than Windows XP. The poll put the security skeptical at 15% and pegged those who weren't sure yet at 35%.

Today, said PatchLink, only 28% agreed that Vista is more secure than XP. Meanwhile, the no votes increased to 24% and the unsure climbed to 49%.

Buying a new laptop: If I visit Starbucks, everyone is using a Mac. That's point one. If I look at the new laptop, Toshiba sent me yesterday to play with -- the Toshiba Tecra M9 -- I yawn. Some moron changed the keyboard layout, putting the Ins and Del keys in a different (and virtually inaccessible) place. The screen is smaller and harder to read than the previous model (the one I'm writing this column on), the M5. Why mess with a good thing?

For now, the best strategy is:
Buy more memory, a new keyboard and a new screen for your existing laptop. It'll feel like a new laptop.

How one idiot ruined a great country:
Zimbabwe's annual inflation rate could exceed 100,000 percent by the end of 2007 if current trends continue, Reuters reported, citing Abdoulaye Bio Tchane, director of the International Monetary Fund's Africa department. Tchane said bleak economic prospects and price controls are likely to fuel the inflation increase.

Unemployment must now be over 90%. Many people in Zimbabwe are now starving. This is seriously sad.

What awaits us -- part 3
A very "self-important" college freshman attending a recent football game, took it upon himself to explain to a senior citizen sitting next to him why it was impossible for the older generation to understand his generation. "You grew up in a different world, actually an almost primitive one."

The student said, loud enough for many of those nearby to hear. "We, the young people of today, grew up with television, jet planes, space travel, men walking on the moon, our spaceships have visited Mars. We have nuclear energy, electric and hydrogen cars, computers with light-speed processing and...," pausing to take another drink of beer.

The Senior took advantage of the break in the student's litany and said, "You're right, son. We didn't have those things when we were young, so we invented them.

Now, you arrogant little man, what are you doing for the next generation?"

The applause was resounding.


This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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