By MoneyMorning.com.au
Energy: Dance Dance Revolution
This one’s a little left field compared to how we usually cover energy stories. Nonetheless it makes a fascinating case for alternative ways of creating energy.
First, let’s get a basic understanding of Piezoelectricity. If you’re wondering what the heck that is, in short, it’s the energy created by stress applied to certain solid materials…it’s electricity from pressure (vibrations).
But if we (Sam) may now digress ever so slightly. The Dutch love a good nightclub (can vouch for this as our family heritage is Dutch). And what does one do when typically at a nightclub? Dance.
Believe it or not, some creative Dutch designers from Studio Roosegaarde have pieced together dancing at a nightclub and piezoelectricity! They call it the sustainable dance floor.
The idea behind it is the dance floor vibrates from the dancing, which in turn creates energy to power the lighting and stage equipment. We think harnessing the power of ‘the boogie’ and the ‘Gangnam Style’ would be the best ways to really get the power pumping.
What this really means though is that everywhere we move we create vibrations and energy. Vibrations and energy when harnessed in the right way can lead to a vast array of power gains and efficiencies. This type of experimental work also shows us that there are people from all different aspects of industry looking at ways of solving some of the world’s big problems.
Maybe the future isn’t about just one way of solving our energy and power problems. But hundreds if not thousands of different ways being used together to be more sustainable and energy efficient.
Gold: Will Gold or Shares Do Best in 2013?
What has gold done since we wrote to you in last week’s Money Weekend? Er, not much.
And quite frankly we’re not convinced it will do much in the near future. Whether that’s days, weeks or months we can’t say. But what we can say is that it’s surely testing the patience of ‘fair weather’ gold investors, i.e. those investors who only bought gold because they expected to make quick gains.
The fate of the gold price has even sparked some discussion around the office. As you’ve probably read over the past couple of weeks, your editor is concerned that gold is behaving just like any other electronically traded asset.
What we mean by that is the vast majority of people who buy and sell the gold exchange traded funds (ETF’s) have no interest in ever taking physical delivery of the gold that underlies the ETF.
Heck, most of them probably aren’t even sound money advocates. Just in the same way that many investors buy and sell shares without really caring about what the company does.
But my old pal, Greg Canavan (editor of Sound Money.Sound Investments) isn’t so sure. He says there are still plenty of people buying gold for wealth preservation…a kind of insurance. In his latest weekly update he showed two charts comparing the performance of the US S&P 500 and the gold price. We’ve reproduced them below:
S&P 500
Source: StockCharts.com
US Dollar Gold Price
Source: StockCharts.com
Greg says about these charts:
‘The world’s largest stock market index has gone nowhere over the past 13 years. And everyone’s talking about a new bull market?
‘In contrast…[the 20 year chart of gold]…looks much more like a bull market (in progress) to me. Yet the perception is that the gold bull market is over and a new one is beginning in equities. That’s market logic and crowd think for you!’
We like Greg’s point. But we also think that markets behave irrationally at times (some would argue they’re always irrational). It’s for that reason we believe stocks will do better than gold this year, next year, and possibly into 2015.
Of course, we could be wrong. And we’re not about to sell any of our gold in order to buy stocks. But we are using new cash flows in order to increase our share exposure – something we’ve advised investors do for more than a year.
That said, we’re keeping a close eye on the market for signs of a sell-off. Our in-house technical trader, Murray Dawes, says the market is approaching a key technical level right now that could have a big impact on the market’s direction for the rest of this year.
Technology: Science, Technology and Innovation at 345kph
We thought that as we hear the sound of 22, 2.4 Litre V8′s humming around near the office at an astonishing 18,000RPM we should give credit to the technical innovation that Formula OneTM (F1) has given us over the years.
Ron Dennis, Executive Chairman of the McLaren Group sums it up well:
‘Intrinsically, at its heart, it (Formula OneTM) is about technology and scientific innovation carried out under the extreme of time pressures, with a relentless fortnightly assessment of progress and performance.’
No matter where you look it’s pretty hard to find industry that brings together aerodynamicists, quantum mechanics, computer scientists, engineers, fluid dynamicists, fabricators, sports scientists and race car drivers.
So it’s no surprise that in an environment like this (‘an Intersection’ as Frans Johansson describes in The Medici Effect) innovative and cutting edge technologies are born.
To outline a couple of the F1 breakthroughs you may have heard of:
- Carbon fibre. In its early days companies such as Rolls-Royce used carbon fibre to create parts and components for their engines. But the first carbon fibre monocoque (structural skin) was raced in 1981 by John Watson in the McLaren MP4/1. This was the first time a monocoque had been constructed from carbon fibre. To see the level of safety this gave drivers, have a look at John’s demonstration at Monza. Because of F1′s advances in the use of carbon fibre we now find it in everyday items like cars, bikes, prosthetics, planes, golf clubs and furniture.
- ‘Green’ Technologies. Surprisingly to some, more recent breakthroughs have been in engine and fuel efficiency. Next year the 2014 season will require all F1 engines be 1.6 litre (less capacity than a Toyota Corolla) V6′s. This is a far cry from 3 litre V10′s in 2005. Not only that, but the Federation Internationale de l’Automobile (FIA) has said along with the Kinetic Energy Recovery Systems (introduced in 2008) teams may now use pioneering Heat Energy Recovery Systems. These together will be a major factor in how the engine produces its total power. Without these ‘green’ systems, team effectively are running with their feet tied together.
So next time someone brings up the subject of how horrible F1 is for the world (these conversations usually pop up around Melbourne Grand Prix time) use those two simple examples. You might find yourself in the midst of a healthy debate on the benefit that F1 technology brings to us.
Further to this if you happen to switch over the TV to watch the race on the weekend, or are trackside enjoying it all first hand, have a look at the pit lane activity. Like a swarm of bees, all those scientist and engineers buzzing about are the true innovators of some of the modern technologies we often take for granted.
Health: Why Something So Bad Could Be Something So Good
There’s no doubt that cigarettes are bad for your health. Even pack a day smokers should agree on that. So what if we told you that there’s actually something good about a cigarette? (We aren’t condoning smoking cigarettes, and neither does the rest of this article provide sufficient reason to keep puffing away, or start. We hope you get that distinction.)
Over the last few years a number of studies (‘Smoking, nicotine and Parkinson’s disease’, by Maryka Quick at the Parkinson’s Institute is one example) have repeatedly found that smoking over a period of time significantly lowers the risk of developing Parkinson’s disease (PD). Compared with those who have never smoked, or smoked for shorter periods of time, the results are conclusive.
So is there something in a cigarette that provides the answer to slowing down, or even reducing the effect of PD in those diagnosed?
Scientists don’t know the answer to that yet. But thanks to the Michael J. Fox Foundation (MJFF), researchers at The Philipps University and University of Rochester Medical Center are having a really good crack at finding out. The suspicion is nicotine is the key to the PD problem. So with the backing of the MJFF a new clinical trial has been set up in the US and Germany. You can check out the podcast about it here.
What the trial is planning to do is test the impact of a simple nicotine patch on those in the early stages of PD. We won’t know the results of the trial for 12 months, but seeing as there is no current drug to hinder or decrease the impact of PD this is one to keep an eye on.
Mining: Welcome the New Breed of Tech Entrepreneurs
[Ed note: The following is adapted from the latest weekly update sent to Australian Small-Cap Investigator subscribers.]
Today we find ourselves at the beginning of another Space Race. But this time round it’s not governments, it’s private industry. It’s the commercialisation of space.
The real financial opportunities they see are chasing the abundance of resources and mineral deposits contained in the asteroids flying around the planet.
To give you an idea of exactly how big a resource is out there, in 1997 there were 33,000 known asteroids orbiting the sun within reach of earth. Today it’s over 610,000, as astronomers find more of these flying rocks.
Why does this matter? For a start, the team from Planetary Resources, where John S. Lewis, Professor of Planetary Science at the University of Arizona, has been consulting, claim one asteroid (only a few hundred metres wide) could contain more than 1.5 times the known world-reserves of the platinum group of metals.
Still it’s seen as the realms of science fiction. Some doubters say it’s crazy to think we could mine an asteroid for its resources. The doubters don’t see an economically viable reason to do it at all and they say the cost outweighs the benefit.
For instance, if a solid gold asteroid the size of the Melbourne Cricket Ground passed by the earth, even the possibility of someone ‘mining’ this gold would have a drastic impact on the gold price. This could make the prospect of mining the Asteroid’s gold a marginal business and therefore not worthwhile.
Now, this may still sound a bit ‘Star Trek’, but history confirms the speed with which crazy ideas become reality. The dedication is there and there are a number of competing firms. They all want to be the first to make space a commercial reality.
And it’s not just space. The idea of deep-sea mining is starting to gain traction too, and will probably happen before ‘asteroid mining’.
But anyway, what this means is you can expect the new Space Race to move just as quickly as the last. In the years ahead you’ll likely see space tourism lead to hotels in space (one company is already working on this) and from mining asteroids to mining and populating Mars.
Sound crazy? Maybe. But as we said above, sometimes the craziest ideas become the most successful.
Kris Sayce and Sam Volkering
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From the Archives…
Why the Stock Market Boom is on Pause
8-03-2013 – Kris Sayce
Why the Dow Jones Record High Doesn’t Matter
7-03-2013 – Murray Dawes
Taking China’s Economic Pulse from Hong Kong
6-03-2013 – Dr Alex Cowie
Buy Gold When They’re Crying…Sell Gold When They’re Yelling
5-03-2013 – Dr Alex Cowie
Do You Want to Be Right About Investing, or Do You Want to Make Money?
4-03-2013 – Kris Sayce
The delicious irony is that this creates an environment where large cap active fund managers can no longer harvest their expected returns from value situations. We’ve seen many great investors, even legends like Bill Miller, lose their way in recent years. Could it be that passive investors are slowly killing the hand that fed them in the first place? That active investors actually underperform due to the growing load on their back? I can’t help but hear the echo of Aesop’s fables in this story – that index investors are killing the goose that laid their golden egg.