Blog : The Goldfinger Syndrome

by Ed Zwirn on July 3rd, 2013

With yet another country in the Middle East on the verge of civil war, penny stock companies with a stake in the energy sector stand poised to make tremendous gains. According to the latest reports, at least 39 people have been killed since the latest round of protests began in Egypt, and the chances are that this toll could become much worse as events unfold.

With oil supplies up and demand decreasing, the world ought to be poised for more turmoil in the Middle East, as the laws of commodity supply and demand take hold, with tragic consequences for the people stuck there but with profits skyrocketing for penny stocks linked to marginal oil ventures.

A prophetic illustration of how this plays out was provided in 1959, when Ian Fleming published Goldfinger, the James Bond novel in which arch villain Auric Goldfinger, who probably knew a thing or two about penny stocks, planned, with the aid of the Chinese, to take control of the U.S. gold reserves at Fort Knox.

At one point in the action, Bond, having been captured by Goldfinger, points out the madness and impracticality of the villainous scheme, saying that it would take 500 men a month to move the gold at the repository. Auric, giving Bond a kind of "you stupid idiot" look, responds that all he has to do is render the gold supply unusable (the 1964 film version has the conspirators planning to set off a nuclear device at the fort) and the value of his own holdings would increase "conservatively by 10 times."

However the Egyptian scenario plays out, the signs point to an increasing danger of more turmoil in one of the world's largest oil-producing regions. This can only help energy producers (including small-cap penny stocks) in other regions (particularly the U.S., one of the world's largest oil producers and exporters) as they yearn for better prices for their commodities. Similar to the way in which an irradiated Fort Knox would undoubtedly mean higher gold prices, the outlook energy-sector penny stocks can only improve with each drop of blood shed in the land of the pharaohs.

The upshot is that penny stocks and other investment vehicles dependent upon high energy prices are poised to make great gains. And with the price of gasoline at the pump remaining dangerously low despite the advent of the Memorial Day to Labor Day consumption period in the U.S., we can expect to see more turmoil in oil-producing countries. If the energy-sector portion of your penny stock portfolio has been languishing lately, this ought to prove good news.