ENERGY
Our old pal, Dr Alex Cowie posted the following comment on his Google+ page:
‘US shale oil production has gone parabolic. Quite incredible, and puts the US on track to becoming the world’s largest oil producer. A secure source of energy will be one of the factors driving US economic growth this decade.’
The Doc was referring to the production of shale gas in the US. Particularly in Dakota, which some have renamed ‘Saudi Dakota’. You can see the impact of shale oil production on US oil production below:
Thanks to shale oil, North Dakota oil production has taken off since 2009. And according to BP, the shale revolution means the US could be energy self-sufficient and a net exporter by 2030.
But it’s not just in the US where shale is having a big impact on energy. Australian explorers are looking to exploit the potentially vast reserves of shale gas in central Australia and Queensland. If things go to plan, shale could have just as big an impact on the Aussie energy scene as it has in the US.
GOLD
Gold has become one of the most unloved assets so far this year.
It started the year at USD$1,675 and has this week broken through what could be a key level as the price slides:
In the overall picture, the price move isn’t that big a deal. It has fallen about USD$40. That’s the equivalent of BHP Billiton falling 88 cents.
The difference with gold is that it has traded sideways for a long time. And just like share investors and house buyers became bored with a sideways market, leading to price falls, the same story could play out with gold.
That’s why we’d recommending topping up on gold. If you’ve got fresh cash flow coming in we’d suggest diverting it towards gold rather than shares which have already rallied hard. Remember the first rule of investing: buy low, sell high (or at least hang on if you’re investing for the long term).
TECHNOLOGY
Smart beer? Not quite. But one home brewer has devised a way to smarten-up his home-brewing operation: using a Sony touchscreen tablet, a Raspberry Pi microprocessor…and beer.
According to Wired.com:
‘The Raspberry Pi has a reputation for being beginner-friendly, but even slightly buzzed hackers have been able [to] use the mini microprocessor to improve their microbrews. Now one tinkerer is using his board, plus a 7-inch Sony touchscreen and a little PHP coding as the perfect high-tech setup for for [sic] his home-brew tap list.’
If you’re not familiar with the Raspberry Pi, it’s basically a ‘naked computer’. You get the motherboard and nothing else. Don’t ask for a mouse or a monitor, because you won’t get one, but you can buy them separately and plug them in.
You can see a diagram and photo of the Raspberry Pi below:
To give you an idea of the size, it’s about the length and breadth of a credit card.
So, what can you use it for? One guy known as SchrodingersDrunk has built an electronic system that monitors the production level of his home-brewed beers:
But how else can you use a Raspberry Pi? ARS Technica says:
‘One enterprising Pi user revealed this month that he’s using Siri to open and close his garage door, thanks to a Raspberry Pi hooked up to an automatic garage door system.’
You can see the video here.
Or how about building your own super computer or making music with beetroot? Click here for 10 ‘practical’ uses for a Raspberry Pi.
What we like about this is the individualistic nature of the Raspberry Pi. The manufacturers sell the ‘naked computer’. It’s then up to the end user to decide what to do with it…unlike Apple, which controls what you can or can’t do with its machines.
HEALTH
The European horsemeat scandal reminds us why we rarely ever buy processed meat (a cheeseburger once a month is pretty much our only exception).
But what’s the big deal? It’s just horse meat right? Few people choose to eat horsemeat. And if they did they probably wouldn’t choose to eat 30-year old nags or broken-down racehorses. But there’s an even more important health consideration. As the New Scientist notes:
‘Difficulties in pinning down the exact source of the horsemeat make it difficult to say how safe it is to eat. The FSA [Food Standards Authority] says there are no known safety issues at present, but have ordered tests for the anti-inflammatory drug phenylbutazone, or “bute”.‘”We consume foods with low levels of drug residues all the time,” says Christopher Elliott, director of the Institute for Global Food Security at Queen’s University Belfast, UK. Bute is an exception. It is banned in food for human consumption in Europe and the US because of a rare but nasty side effect that can cause a bone marrow disorder called aplastic anaemia. “This drug cannot be used in food-producing animals as there is a risk, albeit very small, of severe adverse reactions,” says Elliott.
‘As New Scientist went to press, the FSA had not ordered tests for any other drug. But with allegations flying around that meat may have come from retired racehorses, tests for drugs like steroids – used illegally to boost growth – could be around the corner.’
As we say, some would say ‘so what?’ But horses generally aren’t bred for eating, so it boggles the mind to think what goes into those horses to make them run faster and maintain stamina. Most likely it’s not the kind of thing you want going into your body.
‘Rio Tinto’s shares have fallen by more than 2 per cent in early trade after it posted its first ever loss, but analysts say the drop is mainly due to profit-taking.’ – The Age
Ah, profit taking. The perennial excuse for when a share falls. Investors are taking profits.
Of course, the idea of profit taking is nonsense. Investors buy shares at all sorts of prices. There is no single point at which investors take profits. Besides, who says investors are taking profits? Some of those who sold Rio may have bought them for $140 in 2008.
Others may have bought them for $70 a year ago and they’re now happy to break even.
But anyway, we’re being picky. It has been a great few months for big resources stocks. Rio Tinto [ASX: RIO] has climbed 40% since last September. And the Metals & Mining Index [ASX: XMM] is up about 20% over the same time:
But if you look at the long-term picture, mining stocks are still 37% down from the 2008 peak. With China appearing to be on the rebound (according to Doc Cowie) it tells you there’s still plenty of room for resources stocks to go higher.
As always, nothing moves in a straight line up or down, so don’t expect it to be a smooth ride.
Cheers,
Kris
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From the Archives…
Two Questions to Ask Before You Buy Another Stock
8-02-2013 – Kris Sayce
Are These 5 Blue-Chip Stocks Still a Good Buy?
7-02-2013 – Kris Sayce
Don’t be Long and Wrong on this Stock Market Rally
6-02-2013 – Kris Sayce
Perceptions of Beauty and Stock Valuations
5-02-2013 – Satyajit Das
This Share Market Rally Has Angered Some Investors
4-02-2013 – Kris Sayce
