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The Police Caught Me Breaking into a Freight Yard in China
By Tom Dyson
September 15, 2008

The fence rattled. I looked around. A man had just come through the gate behind us. I could tell by his light blue overalls he was a railroad worker...

I crouched as low as possible in the shadows and hoped he couldn't see me. I hid behind a pile of old railroad ties and between some pieces of scrap rail. The man walked toward me... peeking around the railroad equipment. I'd been spotted.

"Hoooooyeeeaaa," he yelled when he found me. I pretended he'd woken me up and looked up with a sleepy face.


"Come with me," he said in Chinese.

Last week, I flew to Urumqi [pronounced u-roo-muchi] to ride a freight train.

Urumqi is a city in western China. It's a couple hundred kilometers from the borders of Kazakhstan, Tajikistan, Kyrgyzstan, Pakistan, and Russia. It's 4,000 kilometers from Shanghai and Beijing.

With all these countries so close, Urumqi is a major trading post. It's also a major stop on the modern Silk Road – the overland route connecting Amsterdam to Hong Kong.

Freight trains carry cargo like steel pipes, cement blocks, new autos, and agricultural products. Riding freight trains is fun, if you don't mind sharing a ride with a shipment of coal or some tankers of petrochemicals. There's no better way to see the countryside. You get the wind in your hair and you don't have to bump elbows with the masses.

It's also a great way to understand the local economy. Freight-train networks are the arteries and capillaries of a country. By studying them, you learn a lot about a region's important commodities.

Coming into Urumqi from the west, I saw lots of tank cars carrying gas, and wagons full of coal. So China is importing energy from central Asia and Russia. I also saw wagons full of scrap metal heading for China's manufacturing centers.

In the opposite direction, I saw tractors, diggers, new cars, and even military hardware (like tanks and armed vehicles). China is penetrating Russia and Central Asia with its manufactured products.

To get on a freight train, you go to the classification yard, find the departure track, and wait for a train with a suitable wagon (tank cars and closed box cars are no good but grain wagons and open-top gondolas work fine). Then, when no one's watching, you hop on and hide until the train pulls out.

The railroad through Urumqi is the busiest freight railroad I've ever seen. In the States, you might see a couple of freight trains and the odd Amtrak each day. In Urumqi, 10 or 12 freight trains rumble through every hour... on top of six or seven passenger trains. The trains run every day, all day and all night.

I spent two nights at the freight yard in Urumqi and couldn't get on a train. There were too many workers and security guards around. Plus, the entire yard was circled by private businesses with their own guard dogs and fences. Jumping on a moving train was the only way to do it... But that's dangerous.

So I went to the small town of Hami instead. Hami is a village a few hundred miles east of Urumqi on the mainline. It has a small freight yard.

At 3 a.m., I crawled under the fence and hid behind the railroad ties. I watched the trains coming and going for an hour. There were still too many workers and security guards. To get on one of these trains, I would have to catch it "on the fly."

That's when I heard the fence rattle from behind. The worker took me to the main security compound and woke up the commanding police officer. Two more soldiers came out with him. They looked at me as if I'd just landed from another planet. And they laughed. They couldn't believe a Westerner had been sleeping in their freight yard. "Hotel, hotel," I said and gestured with my hands I wanted to sleep.

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(They had no idea I was trying to catch a freight. It simply never occurred to them. Even the poorest Chinese don't ride freight trains here.)

So the commanding officer walked me out of the freight yard and asked one of his staff to take me to the closest hotel and help me book a room.

Maybe I'll have better luck in India.

Good investing,

Tom

Editor's note: Tom Dyson is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

Sign up today to read more investment ideas from Tom Dyson.

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NEW HIGHS OF NOTE LAST WEEK

Wal-Mart (WMT)... the bull market in cheap
Covidien (COV)... medical devices
Tootsie Roll (TR)... candy
General Mills (GIS)... food
La-Z-Boy (LZB)... furniture
Tanger Factory (SKT)... outlet malls
Foot Locker (FL)... shoes
Steven Madden (SHOO)... shoes
Shoe Carnival (SCVL)... shoes
BioMed Realty (BMR)... biotech and medical REIT
Johnson & Johnson (JNJ)... health care "hedge fund"

NEW LOWS OF NOTE LAST WEEK

Nucor (NUE)... steel
Eni (E)... Big Oil
Total (TOT)... Big Oil
eBay (EBAY)... auctions
Sotheby's (BID)... auctions
Cemex (CX)... cement
Tyson Foods (TSN)... chicken producer
Archer Daniels Midland (ADM)... agribusiness
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U.S. Global (GROW)... asset manager
Lehman Brothers (LEH)... investment banking
Shaw Group (SGR)... infrastructure
Foster Wheeler (FWLT)... . infrastructure
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Joy Global (JOYG)... mining equipment
Goldcorp (GG)... gold mining
Barrick Gold (ABX)... gold mining
Newmont Mining (NEM)... gold mining
Yamana Gold (AUY)... gold mining
Cameco (CCJ)... uranium mining
Silver Wheaton (SLW)... silver royalties
Anglo American (AAUK)... diversified mining
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International Game Tech (IGT)... gambling machines
Platinum, Palladium, Wheat

Morgan Stanley, Deutsche Bank AG and Goldman Sachs Group Inc. strategists recommended that investors buy more Brazilian stocks as equities have become cheap after a 20 percent decline this year.

Brazilian stocks were raised to "major overweight" by Morgan Stanley's emerging-market strategists, who cited the shares' prices and the earnings outlook for South America's largest economy.

Investors should buy raw material and energy stocks such as Cia. Vale do Rio Doce, the world's biggest iron ore miner, and Petroleo Brasileiro SA, Brazil's state-controlled oil company, Morgan Stanley strategists led by Jonathan Garner wrote in a note to clients.

Brazil's Bovespa index trades at 12.93 times earnings, compared with a price-to-earnings ratio of 13.96 on Jan. 1.

– Bloomberg

European legislators said Thursday that government goals for using biofuels should be pared back, prompting the fledgling industry to fire back with a campaign warning that alternatives may be no cleaner.

European governments pledged last year to increase the use of biofuels to 10 percent of all transport fuel by 2020, amid expectations that energy derived from crops would provide a low-carbon alternative.

On Thursday, the European Parliament's influential Industry Committee endorsed the general 10 percent target – but added a number of modifications meant to move away from traditional biofuels made from grains or other crops toward other, renewable energy sources.

By 2015, it called for having 5 percent of transport fuels be from renewable sources, with at least a fifth of that amount from "new alternatives that do not compete with food production."

– New York Times

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