Month: October 2013

By MoneyMorning.com.au

US$3.6 trillion can buy you a lot of things – planes, boats, penthouses, a lot of useless mortgages, etc. But one thing it hasn’t bought is inflation (at least not officially).

The Fed wants higher inflation and lower unemployment before it dials back the printing presses.

In spite of the Fed’s concerted efforts, inflation is struggling to get off the mat. It has had its post-GFC surges, but cannot sustain the momentum.

The most recent data has inflation around 1.5%. Personally, my view is the lower the inflation the better. Who the heck wants rising prices? Only a government in need of higher levels of tax revenue collected on the higher ticket price, that’s who.

Give me deflation any day of the week. Falling prices would be a welcome change.

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The modern economy has been built on inflation. None of us know any different.

However inflation is a relatively modern invention, courtesy of central bankers.

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The above graph tracks US inflation since 1800. Inflation was largely non-existent until 1915 (the US Federal Reserve was created in 1913).

The reason for the benign inflation reading prior to 1915 was the economy moved in and out of inflation and deflation. The economy’s own mechanisms for dealing with boom and bust periods corrected the imbalances in both directions. This worked perfectly without any central bank intervention.

Since 1913, the impact of 100 years of Fed meddling in the economy is evident for all to see.

Given this well-established track record it is easy to understand that central bankers are hard wired for inflation and view deflation as the devil incarnate.

In 2002 (prior to becoming Fed Chairman) Ben Bernanke said, ‘Prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation. Deflation is always reversible under a fiat money system.‘

This little speech would have earned Bernanke, at the time, huge brownie points in Washington – the perfect guy to succeed Greenspan.

Since discovering sustained inflation, politicians of all stripes have embraced the concept. Constantly increasing tax revenues made pork-barreling a whole lot easier.

Compare the list of welfare entitlements today with those that existed a century ago. The age pension is about the only one from that bygone era that comes to mind.

It is not just the US that is seeking inflation here, there and everywhere. The Japanese are so desperate to launch out of their two decade long deflationary funk, they have committed to doubling – yes doubling – their money supply in the next two years.

And then there is headline on CNN Money:

Europe’s recovery is weak, warns ECB

This is an extract from the article (emphasis mine):

‘The ECB kept its main interest rate unchanged at a record low of 0.5%. But the central bankers also discussed the possibility of a cut, given a range of threats: weak lending to households and firms, low inflation, and a strong euro exchange rate, which could weigh on exports.‘

The Great Credit Contraction continues to exert its influence. The repudiation of debt (the primary economic driver for the past thirty years) has central bankers in a state of flux.

A decade ago Bernanke thought creating inflation with the printing press would be a snap. What he didn’t figure on is people not being interested in his money – this had never happened before.

Where to from here?

The following is an extract from the Gowdie Family Wealth Newsletter for October 2013 that may give you an insight into what the Fed has in store for us.

Why Yellen has negative interest in savers

When the GFC hit, Bernanke read straight from Greenspan’s recipe book – a pinch of lower interest rates, a dash of easy credit, heat for a few months and hey presto, the ‘wealth effect’ is served.

Ben keeps looking in the economic oven and scratching his head wondering why the wealth effect is failing to rise. Simple Ben, the temperature in the oven is way too low.

The heat has gone from the lending market. Consumers are tapped out.

The following chart compares the loan growth after each US recession since 1973. The current loan growth is tepid to say the least – even with the lowest interest rates in history. Banks and consumers are gun shy.

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Recession after recession consumers were enticed further into debt to kickstart an ailing economy. Each time the enticements had to be greater to create the same stimulatory effect.

This time around the central bankers seriously miscalculated the level of debt fatigue in the system. ‘We’ve had enough,’ was the collective cry.

The much touted wealth effect has been isolated to a privileged few. So how does the Fed create the spark to heat up the lending market?

With Bernanke’s tenure at the Fed coming to an end, his likely successor is Janet Yellen – another career academic who happens to be married to a Nobel Prize winning economist. From as near as I can tell, anyone with real life experience is automatically disqualified from applying for the Fed Chairman’s role.

Anyway Ms. Yellen is a Bernanke clone – consistently arguing for lower interest rates to promote economic growth and reduce unemployment. None of this has actually worked, but how wonderful it must be to pontificate from on high about this or that theory.

When Yellen talks about lower interest rates, she means it.  On February 22, 2010, she said, ‘If it were possible to take interest rates into negative territory, I would be voting for that.’

Negative interest rates – this means you pay the bank to keep your money.

Just so you are with me on this – invest $100,000 at minus 1% and at the end of the year your investment is worth $99,000.

Sounds preposterous doesn’t it? Well I think it is distinct possibility.

Let’s say we have GFC Mk 2 and it exposes the instability in the global financial system. What has the Fed or any other central bank got left in their arsenal?

When the subprime crisis started to unfold in late 2007, the US cash rate was 5.25%. There was enough ‘fat’ in the cash rate to cut during the course of 2008.

With the US cash rate at 0.25% where do they go from here?

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And, if printing $85 billion per month is not doing the trick (and it can be argued it is only making matters worse) then how much more money can they print and still retain the confidence of the markets?

The Fed has clearly demonstrated how desperate it is to keep the debt dependent economy afloat. GFC Mk 2 would only send their anxiety levels through the roof.

Desperate people resort to desperate measures – so perhaps if the conditions became dire enough, negative interest rates are not out of the question.

Compared to our European, Japanese and US counterparts, Australian savers have indeed been fortunate over the past four to five years. However our days of relatively higher interest rates are coming to an end.

As The Great Credit Contraction grinds on, expect our rates to more closely resemble those in the Northern Hemisphere.

If rates do go negative, a chorus of global savers will be begging for an end to this stupidity. Save your breath.

Yellen lives in another universe called Academia. I can assure you the noise from the masses does not carry that far.

Vern Gowdie+
Chairman, Gowdie Family Wealth

Publisher’s Note: This article originally appeared in The Daily Reckoning Australia

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GBPUSD remains in uptrend from 1.4813 (Jul 9 low), the price action from 1.6162 is likely consolidation of the uptrend. Range trading between 1.5900 and 1.6259 would likely be seen in a couple of days. Key support is at 1.5850, as long as this level holds, the uptrend could be expected to resume, and one more rise towards 1.6500 is still possible. On the downside, a breakdown below 1.5850 support will indicate that the uptrend from 1.4813 had completed at 1.6259 already, then the following downward movement could bring price back to 1.4500 zone.

Provided by ForexCycle.com

Source: Special to The Energy Report (10/8/13)

http://www.theenergyreport.com/pub/na/technical-analysis-toolkit-for-energy-investors-clive-maund

Candlestick, head-and-shoulders, ascending triangle: If these phrases aren’t familiar to you, you’re missing out on major profit opportunities. Clive Maund, technical trader and editor of CliveMaund.com, shares the tricks of his trade in this interview with The Energy Report. Find out how to recognize potential price swings in commodities and stocks, and discover junior energy companies and ETFs with charts that scream “upside!”

The Energy Report: Energy prices are very sensitive to international events, especially conflicts in the Middle East. Do your charts factor in the periodic crises that impact oil and gas prices as buy and sell moments? How do you factor in inflation and interest rate movements into your calculations about which energy juniors look like good buys at any given time?

Clive Maund: The charts do factor in periodic crises that impact oil and gas prices as buy and sell moments, but often in a contrary way. The trick is to gauge when a crisis is at its moment of greatest tension, and while this is not at all easy, the charts can often be a great help in defining such a moment. I will give you an example using a recent call on CliveMaund.com, where the top in oil was pinpointed a day after its occurrence. Some readers may remember an old saying used on the London market many years ago, “Buy on a strike.” This refers to a strike by labor, not an oil strike. The underlying psychology of this was that the time of maximum tension and uncertainty, which was when labor unions called the workers out on strike, was the best time to buy stocks, because they would have been falling in anticipation of this, and as tensions later eased as the situation headed to resolution, they would rise again. So it is with conflict and tension situations in the Middle East and their impact on the oil markets.

Some weeks ago, before the surprise announcement by Putin and Syria that chemical weapons would be turned over to international regulatory bodies, the oil price suddenly put in a large prominent “shooting star” candlestick as it made a new high for its uptrend, which we read correctly as a topping signal and a sign that the crisis was about to ease. Once it did, as we know, the oil price dropped away. The fact that it put in such a signal before the announcement is an indication that powerful, well-connected people knew that such an announcement was imminent, and traded on it to their advantage, as is so often the case. We observed their boot prints in the sand and judged the situation accordingly—and correctly, as it turned out.

Inflation is not much of a consideration, as it is built into the prices of just about everything. It really only needs to be taken into account when you are looking at long-term charts. For example, if a stock is priced at $30, and it was at the same price 10 years ago, it is clearly worth less in real terms now than it was back then. With regard to junior energy stocks, I do not pay much attention to inflation in making picks, because as I said above, it is a background factor that is already built into their prices. What matters with interest rates is not so much their actual level but their direction—their trend, and their rate of change. Right now we are at a dangerous juncture, with the Fed fumbling its way forward, trying to keep interest rates low and retain what shreds of credibility it has left.

TER: Please explain how quants like yourself use chart patterns to analyze a stock’s trajectory over time. Can you talk about the meaning of some of the basic chart movement metaphors, such as “head and shoulders” and “candlestick”?

CM: Most of the technical indicators that we use to identify good entry or exit points for stocks are based on plain common sense. Thus, a stock that has been sold into the ground, and has then formed a base pattern, is likely to start a new uptrend and recover as the company’s fundamental situation improves. On the other hand, an overvalued stock that is racing away to the upside and way ahead of its moving averages is much more risky and prone to correct.

Support and resistance zones on a chart are related to “congestion zones” where a large amount of stock has traded close to a particular price in the past. The way it works is this: After a run-up in a stock, a large number of traders take profits, believing the stock has done its thing and could reverse. Then, to their chagrin, it breaks out and rallies to a new high. Having missed the move, they resolve to buy it back if it should come back near to the price at which they sold. Their buying potential puts a floor under the price on the next dip, providing support, which can be identified on charts in advance and utilized for timing purchases. It works the same in the other direction: Traders buy a stock in a trading range, expecting it to break out upside and continue higher, but it does the opposite and breaks down. Rattled by this, they resolve to “get out even” if it should rally near the price at which they bought it. Their selling potential caps the next rally, creating resistance, which again can be identified and used for timing purposes by the technical trader.

It usually takes time for a major uptrend in a stock to reverse into a major downtrend. Think of a stock as a heavy locomotive that needs time to stop and reverse direction. This is why after major uptrends, top areas form, which allow time for the so-called smart money to offload their holdings to the “dumb money.” The duration of the top area is of course also related to the fact that a company’s fortune does not usually change from improving to deteriorating overnight; it is generally a slow process. The smart money uses the cover of glowing news reports and company statements to offload their holdings at top dollar, aware that the good times are going to come to an end.

Such large top patterns can take various forms. One classic form is the dome, where the uptrend decelerates steadily, finally peaks and then starts down again, slowly at first but then accelerating to the downside. These domes are generally parabolic, reflecting the ebb and flow of sentiment. The head-and-shoulders, which is very common, is actually an irregular form of dome top. The rising wedge can be very treacherous for novice traders, who do not recognize that an uptrend channel that is converging is actually petering out—losing upside momentum as buying power fizzles out. When these patterns break down, the result is often a vicious plunge that can devastate investors who don’t see it coming. We spotted this pattern before silver crashed in September 2011 and positioned ourselves accordingly.

Triangles can take three forms: symmetrical, ascending or descending. With a symmetrical triangle, the top line is falling and the bottom line is rising, usually at about the same rate. The symmetrical triangle indicates a market in a state of indecision, and while it is impossible to accurately predict the direction of breakout, it is usually in the direction of the trend preceding the triangle. The “fish head,” a term I invented, is a type of symmetrical triangle, where the oscillations decrease more rapidly than usual, resulting in a curved top and bottom line—its meaning is similar to the normal symmetrical triangle, the chief difference being that the point of indecision is arrived at more quickly, leading to a more rapid breakout.

[Below: Symmetrical triangle formation]

An ascending triangle has a flat top line, with the bottom line rising. [See chart below] A flat bottom line with the top line falling characterizes a descending triangle. The ascending triangle is bullish as it indicates a situation where buyers are raising their bids. The descending triangle is bearish as is shows that sellers are dropping the price at which they are willing to bail out.

Below: Ascending triangle formation.

Candlestick charting is a fascinating and rewarding aspect of technical analysis, which is based on the fact that price action during an individual day, or a small number of days together, can provide valuable insight into the probable impending direction of a stock. As I said earlier, we used candlestick charting to predict the direction of the oil price before the chemical weapons announcement a few weeks back [see below chart]. In candlestick charting, the relative positions of the open, close and intraday highs and lows of a stock or security on a given day or cluster of days are important factors in determining what is likely to happen next.

[Below: Candlestick formation indicated likely oil price topping point in late September of this year.]

All these charting techniques enable careful investors to stack the odds in their favor and assist investors in determining when a commodity or stock is at or close to the extreme end of a move and likely to reverse direction or embark on a new trend.

Chart interpretation is an art, not a science, and partly subjective, being based on experience. The emphasis is on being right most of the time, not all of the time (that is impossible), and on limiting damage where judgement proves to be incorrect. The effective use of charts involves determining the probability of envisaged scenarios coming to pass. This does not, however, prevent it from being highly efficacious in many instances. A good example is shown below, where it was determined in July 2008 that oil was set up for a brutal take down, as subsequently proved to be the case:

[Below: Before and after charts of the July 2008 oil price drop, which Maund foresaw through his analysis of 50- and 200-day moving averages.]

TER: How does the domination of the Middle East by a handful of countries and corporations affect the movement of energy prices?

CM: While big energy companies may be behind wars of acquisition so that they can gain control of oil-rich regions, once they are in and established they generally want stability so that they can get on and pump the oil without interruption to maximize their profits. While price spikes caused by the threats of unrest and war may produce a welcome boost to profits, actual wars that cause destruction of their facilities and disruption of production are not beneficial.

The control of large areas by the majors results in stability, the sort that we have seen in Saudi Arabia for many decades, for example. But the danger with these mega corporations controlling countries and regions, often in bi-lateral arrangements with local governments, is that giant cartels are created that result in price fixing. So we can say that the advantage of the Middle East being in effect controlled by a handful of western mega corporations is price stability and a tendency to political stability, while the disadvantage is the potential for these stable prices to be on the high side, which is of benefit to the junior companies as well. The junior companies might find it hard to get a foothold in such areas, however, because of the dominance of the majors, and are probably better off exploring elsewhere, the exception perhaps being newly opened-up areas like Iraq.

TER: What has been the effect this year of large investment firms covering shorts in the energy markets? Do you have any picks of junior energy firms that might be rebounding?

CM: This has caused a sizeable spike in the price of oil relative to other commodities, and there can be no doubt that Syria had an important role to play in this. However, with Syria apparently cooling, this has opened up downside risk for the sector, because a lot of these large investment firms are now all on one side of the boat. On the other side are the commercials, which are now heavily shorting crude—and they are not renowned for being on the wrong side of the trade. The latestCommitments of Traders (COT) charts for natural gas, on the other hand, look bullish.

There are a few junior energy stocks that look attractive to me at this time, based on their technical picture. The charts indicate that there’s something going on in Anderson Energy Ltd. (AXL:TSX). This stock has been pulverized, dropping from a high at about CA$9 eight years ago to the current very low price of CA$0.15. Aggressive buying caused the price to spike in the middle of the month, but it has since drifted right back again almost to where the spike started. A large bull hammer appeared on September 27, suggesting that it will now start up again. The number of shares in issue is rather large but this is well-factored into the price.

Arcan Resources Ltd. (ARN:TSX.V) staged a powerful, high-volume breakout earlier this month but has since drifted back on declining volume to an attractive entry point, although it could drift a few cents more before turning up. It will need to get above its 200-day moving average before an uptrend can get established, but this could happen quite quickly now. Arcan was trading at more than CA$13/share less than eight years ago, so it’s picking up from a very low level now. The number of shares in issue is an acceptable 97 million (97M).

There’s strong upside volume in Artek Exploration Ltd. (RTK:TSX), which appears to have been consolidating for the past year to date. This strong upside volume has already driven volume indicators sharply to new highs, suggesting that an upside breakout is approaching, which will lead to another significant upleg. Shares in issue are a relatively modest 62M.

Cequence Energy Ltd. (CQE:TSX) appears to be bubbling under before making a move higher. We saw aggressive and persistent buying of the stock during the first half of September on high volume, which drove volume indicators sharply higher, but it has since obligingly drifted back to a very good entry point at the support level on much lighter volume. It has been pretty much downhill all the way for Cequence since it started life back in 2007 at the lofty price of CA$14, but the latest technicals show that it is firing up for a significant rally. The number of shares is on the high side at 210M, but again this is already built into the price

TORC Oil & Gas Ltd. (TOG:TSX) is at a good price here, especially as the volume pattern and volume indicators suggest that it is likely to start an uptrend before much longer. The price has been depressed for several years after falling back from a high over CA$56 in 2008, but recent heavy volume, most of which is upside volume, is a sign that interest is building in this stock. It looks like there is good value here, and the number of shares in issue is an acceptable 91M.

TER: How is the short-term life span of fracked wells affecting stock prices? What is the overall situation for supply and demand in energy markets, worldwide?

CM: We would expect the short-term life span of fracked wells to create a more rapid boom and bust cycle in junior energy stocks, unless a more or less continuous stream of producing wells can be maintained.

The overall supply and demand situation for oil and gas appears to be pretty much in balance, which is why the oil price has been in a trading range for the past two years. We have seen peak oil and the depletion of existing oilfields, but, necessity being the mother of invention as they say, we have also seen ingenious responses to the situation in new ways of looking for oil—for example, a massive field has been found in the Gulf of Mexico using special deep drilling techniques, and we have the polar ice cap melting at the perfect time for exploration to expand there in a big way, although this is not such good news for polar bears, of course.

Oil found in more difficult-to-access places is more expensive, and this is what has encouraged the search for cheaper supplies, resulting in massive discoveries in the U.S. These new supplies look set to take the U.S. toward energy self-sufficiency, which would have been unthinkable just a few short years ago. However, this may also lead to a supply shock that drives prices lower. This is another reason that the bearish-looking oil COT charts are thought to presage a lower price trend, and it is thought that the oil price was given a reprieve in recent months by the Syria crisis. Over a shorter time horizon, traders need to watch out for a slump engendered by rapid economic contraction due to rising interest rates. As we saw in 2008, sometimes macro factors render the fundamentals of the oil industry irrelevant. This might be what the COTs are warning of.

TER: Are energy ETFs a good bet? If so, what kinds?

CM: Energy ETFs are an excellent way to play the energy market. They have three great advantages. One is that the ordinary investor can avoid the possibly cumbersome details involved in trading the actual commodity. The second is that you can also avoid the risk inherent in individual stocks, and the third is that you can make money on the downside, too, by using the inverse ETFs available.

Investors have a choice of leverage with these ETFs. There are straight unleveraged ETFs, which move one-to-one with the underlying commodity or index; twice leveraged, which double your gains if you get the move you are expecting (these are the ones we generally go for); and triple leveraged, which have a high decay factor, due to being “juiced” by options, etc., and therefore should generally only be used by professionals, and even then mainly for hedging, or in rare situations where investors are expecting a big move in a short timeframe.

The following (long) ETFs and ETNs provide a broad choice: First Trust Energy AlphaDEX Fund (FXN:NYSE), Vanguard Energy ETF (VDE:NYSE), iShares S&P Global Energy ETF (IXC:NYSE),iShares Dow Jones U.S. Energy ETF (IYE:NYSE), SPDR S&P Oil & Gas ETF (XOP:NYSE) andPowerShares Dynamic Energy ETF (PXI:NYSE).

In addition, we have the First Trust ISE Revere Natural Gas ETF (FCG:NYSE) and iShares Dow Jones US Oil Equipment & Services ETF (IEZ:NYSE).

Short ETFs and ETNs of note include PowerShares DB Crude Oil Short ETN (SZO:NYSE),PowerShares DB Crude Oil Double Short ETN (DTO:NYSE), ProShares Short Oil & Gas (DDG:NYSE), United States Short Oil Fund (DNO:NYSE) and ProShares Ultrashort DJ-AIG Crude Oil (SCO:NYSE).

TER: Is there an optimum entry point for energy stocks in the foreseeable future?

CM: Although technically still in an uptrend, oil stocks as a group have just stalled at resistance and look vulnerable to reversing to the downside soon, especially if the key support for Texas Light at $102 breaks soon, as looks likely. Light crude looks set to drop further back to the high $90-range soon, especially as its latest COT charts look bearish. Military action against Syria looks to have been put on the back burner for now. While there is some support in the 1350 area on the Amex Oil Index, there exists the risk of a deeper reaction back to the 1200–1230 area, where there is significant support, and this reaction could carry considerably further if we see a sharp rise in interest rates. Here we should note that rising rates would likely be accompanied by rising gold and silver prices, as in the late 1970s.

Having said this, many junior energy plays look strong here and set to rise on their own merits, pretty much regardless of what happens to the sector indices and larger oil stocks.

TER: How do currency fluctuations affect oil and gas prices?

CM: Because oil is priced in petrodollars, the key currency to watch in energy pricing is of course the U.S. dollar. Countries that have threatened to cease selling oil and gas in petrodollars, like Iraq and Libya, have paid a heavy price, so we can assume that the U.S. dollar will remain dominant into the foreseeable future, although some countries, like China, are looking for ways to circumvent it. With the Fed maintaining quantitative easing, the dollar is under increasing threat of losing its value, which means that oil and gas prices must move to compensate for a falling dollar.

TER: Thanks you for speaking with us today, Clive.

CM: My pleasure.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts. He lives in southern Chile.

Find out how Maund has used technical analysis to make successful precious metals trades in his interview with The Gold Report.

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By OilPrice.com

From Kurdistan to Somaliland, for independent oil companies, getting your hands on new exploration acreage where both technical risk and political risk are low is impossible. Exploring for oil and gas in new frontiers is all about striking the right balance between geological potential and political risk. Take it from Anglo-Turkish Genel Energy, the largest producer in the Kurdistan Region of Iraq (KRI), where it seems nothing can shake investor confidence right now.

In an exclusive interview with Oilprice.com, former BP chief and current CEO of Genel Energy , Tony Hayward, discusses:

• Why Kurdistan is a great place to be right now
• Why the attacks in Erbil won’t shake investor confidence
• What the next milestone will be—and when
• How the relationship with Turkey is helping Kurdistan forge oil and gas independence
• How Kurdistan’s oil and gas progress could benefit Iraq as a whole
• What we can expect for future exploration
• The massive geological potential and high political risk of Somaliland
• What we can expect to find in Ethiopia
• What makes Malta and Morocco high-impact prospects
• Why investors should be excited about offshore Cote d’Ivoire
• How to strike the right balance in frontier venues

Interview by James Stafford of Oilprice.com

James Stafford: On 29 September, a series of attacks targeting security forces in the Kurdish capital of Erbil killed six, sparking fears that the conflict in Syria maybe be spreading Kurdistan. Will this do anything to investor confidence in the region?

Tony Hayward: Kurdistan has been a beacon of stability and security in an unstable region, but sadly nowhere is immune to terrorism. As this is the first such incident in Kurdistan for six years, we have no reason to think that it will or should change investor perception.

James Stafford: Right now, Kurdistan is one of the hottest emerging venues out there, and the media is fascinated with the Kurds’ success in forging oil and gas independence despite threats emanating from Baghdad. As the largest oil producer in Kurdistan, Genel naturally fields the majority of tricky questions related to these political dynamics. Is there anything that can stop Kurdistan from continuing to pursue oil independence at this point?

Tony Hayward: The impending completion of the pipeline is clearly a significant milestone for the oil industry in the Kurdistan Region of Iraq. The relationship between the KRI and Turkey is now very strong, and this has helped the Kurdistan Regional Government to take control of its own exports. The strength of this relationship has helped to give significant momentum to the Kurdistan oil and gas industry.

The signing of an Energy Framework Agreement between Turkey and the KRG in March 2013 was an important step, and we have seen clear evidence of its implementation – KRI crude oil is exported by truck to international markets via Turkey, and a Turkish state-backed energy company has also entered the upstream sector in the KRI, signing 6 PSCs with the KRG and partnering with Exxon in a number of licences. Finally, Turkey and the KRG have agreed a framework for the export of KRI gas to the Turkish gas market – we expect this Gas Sales Agreement to be signed by the end of the year.

Kurdistan has always had the resources, now it is building the infrastructure and has a significant market for its oil and gas. It is a good place to be.

James Stafford: How far along is the pipeline at present?

Tony Hayward: The pipeline from Taq Taq to Fishkabur is very close to completion – welding is now in sight of the pumping station. We expect the entire system, capable initially of exporting some 300,000 barrels a day, to be fully operational around the end of the year. This will be a major inflection point for the Kurdistan Region of Iraq and of course for Genel, allowing us to increase production and realise international prices for our exports.

James Stafford: What can we expect in terms of production once the new pipeline to Turkey comes on line, as planned for the fourth quarter?

Tony Hayward: We have not yet given guidance for production for 2014, but developments at Taq Taq and Tawke are on track to deliver 140,000 barrels a day of working interest production capacity by year end-2014.

James Stafford: What will Baghdad’s response be?

Tony Hayward: While it is difficult for us to speculate on this, we believe that the pipeline will be a positive political benefit, allowing for increased exports of oil from the Kurdistan Region of Iraq with regular and stable payments that will benefit Iraq as a whole.

James Stafford: How much oil is reaching Turkey now? Can you take us through the transport route and the costs?

Tony Hayward: At present we are exporting around 30,000-40,000 bopd a day by truck from Taq Taq to Mersin, on the Mediterranean coast in Turkey, where it is sold on the international market. Contractors are receiving full entitlement for the barrels sold.

James Stafford: What can we expect from new exploration in Kurdistan, and what is the average hit rate for exploration?

Tony Hayward: Hopefully more of the same. High impact exploration drilling is continuing in the KRI, and planned wells are targeting around 1bn boe of gross unrisked resources. We also still have work to do to fully assess our recent discoveries, and so the full potential of the region has yet to be evaluated. We remain very excited about the potential volumes in place. Results from Chia Surkh 11 and Taq Taq Deep are expected in Q4, while Miran Deep will spud in 2014. With the African portfolio taken into account, we are targeting over 4bn boe.

We’ve enjoyed a great run of exploration success in Kurdistan this year, with three successes from three wells adding in excess of 50% to our net contingent resources. While this isn’t typical, our hit rate in Kurdistan has been very pleasing and due in no small part to the extensive preparatory work conducted by our technical teams ahead of drilling.

James Stafford: There are plenty of junior oil companies eyeing Kurdistan right now. What does an E&P company need to know about operating in Kurdistan?

Tony Hayward: We have found Kurdistan to be a very good place to operate. As with all places, you should ensure good working relationships with the local government and communities. As one of the first movers in the KRI we were in a very fortunate position – such has been the success in the region the majors have unsurprisingly now got involved, albeit focusing on exploration and appraisal opportunities so far

James Stafford: Genel is no stranger to high-risk venues, and that brings us to Somaliland. What’s the political risk of exploring in a country that broke away from Somalia 20 years ago but still is not recognized internationally?

Tony Hayward: As an independent oil company I’m afraid the potential for now finding acreage with a very low technical and political risk is nigh on impossible – you have to have one or the other. Kurdistan was a low technical risk, and we were happy with the level of political risk – and we believe the momentum over the last 18 months has proven us correct.

Somaliland is geologically hugely exciting, and so the risk is on the political side.

James Stafford: Why Somaliland? How explored is Somaliland, and what do you expect to find—and when?

Tony Hayward: Somaliland looks analogous with the prolific Yemen Rift Basins – geologically it looks exceptional, and it is a very underexplored area.

James Stafford: What other areas are worth exploring in terms of geological analogy to the prolific Jurassic Rift Basins of Yemen?

Tony Hayward: We like Ethiopia, hence our decision to farm in to the Adigala Block last month. The Block borders Somaliland, and oil seeps and surface outcrops support the presence of a mature and active Jurassic oil prone system, which we believe is analogous to the Yemen basins. We have identified several large potential structures, with further planned seismic and technical work to be done to identify these leads into drill ready prospects. We are also actively reviewing other opportunities in the region.

James Stafford: Where do you predict the next big find to be in this area, and why?

Tony Hayward: Hopefully in our acreage! We like the geology and we are excited about the prospects, but if we could predict the next big find then we would be in a very blessed position indeed. The only way to ascertain whether hydrocarbons are present in commercial quantities is to drill.

James Stafford: What attracted you to Malta and Morocco? What are your expectations?

Tony Hayward: As with all of our acreage – geology. As we have expanded outside Africa we have targeted opportunities to take material interests in high impact prospects, with the potential for field sizes of at least 250 million bbls. Malta and Morocco both fall firmly in these categories and, while expectations are dangerous in this business, we are confident in the geology and look forward to drilling them both. Morocco will be our first well to spud outside the KRI when it does so in the last quarter of this year.

James Stafford: How excited should investors be at the continued prospects for offshore Cote d’Ivoire due to the fact that it is the same basin where Western Ghana’s Jubilee field was discovered?

Tony Hayward: Our prospect is in the same sub basin as the West Coast of Ghana, and the discovery rate there has been 44%. There are clearly proven petroleum systems in the area and there are geological similarities – if the result is the same we will be delighted.

Source: http://oilprice.com/Interviews/Balancing-Geological-Potential-and-Political-Risk-Interview-with-Tony-Hayward.html

Interview by James Stafford of Oilprice.com

By The Sizemore Letter

According to a recent study at Oxford University, nearly half of U.S. jobs are at risk of computerization. 45% of America’s occupations will be automated away over the next two decades.

That sounds scary, and my bet is that it proves to be true.

But it’s also nothing new.  Technology has been making jobs obsolete since the dawn of civilization.  Ever since the first farmer got the bright idea to hitch his plow to an ox and make a team of farm hands obsolete, homo economicus has been destroying labor.  The rate of change went parabolic during the Industrial Revolution, and we’re seeing the same kind of upheaval today, during the Information Revolution.  But there is nothing new under the sun here.  Technology destroys jobs.  It also creates new ones and raises our inflation-adjusted incomes.

Here’s a little stat that will probably blow your mind:  the United States manufactures more today than it did in the 1970s.

Yes, you read that correctly.  I said “more.”  As in a lot more.

Figure 1: U.S. Industrial Production

Take a look at Figure 1, which tracks U.S. industrial production, adjusted for inflation.  You can see a massive dip during the 2008-2009 financial meltdown and recession, but the picture here is clear.  The United States manufactures more today than at any time in its history and two-and-a-half times more than in 1970 — the supposed heyday of American heavy industry before globalization and cheap foreign labor “hollowed it out.”

Figure 2: U.S. Manufacturing Employment

There is a hollowing out, of course.  But it’s not in manufacturing, per se.  It’s in manufacturing employment.  Take a look at Figure 2.  Since 1978, manufacturing employment has declined by about 40%.  Over the same period of time, the U.S. population has grown by about 40%.  As a percentage of a much larger workforce, the percent of U.S. workers in manufacturing has declined by more than half.

Without getting lost in the statistics, let’s state the obvious: technology made us more productive.  We are now able to produce more with the same resources and to do it all far more cheaply.

And what was the result of all this?  Did unemployment go through the roof as robots replaced workers?

Not exactly.

Up until the Great Recession forced unemployment to multi-decade highs, unemployment had been steadily trickling down since the early 1980s.  The “real unemployment rate,” as some have taken to calling the U6 rate, which includes those working part time for lack of better options as unemployed, was also trending downward up until the 2008 meltdown took a wrecking ball to the employment picture.

Economics as a profession tends to focus a little too heavily on heavy industrial jobs.  Perhaps this is because the profession came of age during the Industrial Revolution, or maybe it’s because industrial data is easier to quantify than services and information data.  But the same forces at work are reshaping the employment picture here as well.

Consider the travel industry. Travel agencies used to be the medium through which you booked your flight and hotel. Today, those fuctions are handled by websites like Priceline (PCLN) or Orbitz (OWW).  Agents have been replaced by software or relegated to consierge roles.

And even the economics of website building are changing.  Building a site these days generally consists of taking a pre-built WordPress theme and customizing it.  This leverages a talented software engineer’s time — a quality theme can be used to build an infinite number of sites — with the end result that the time and cost to set up a new site are a fraction of what they once were.

Perhaps it’s easy for me to speak about this dispassionately; after all, finance has been largely immune from this creative destruction, right?

Not quite.  The widespread availability of stock screeners, charting software, and databases have massively cut back the man-hours needed to do basic investment research.  This frees up more time for interpretation and writing, but it also means less need for entry-level analyst work.

All of this raises a very important question: if technology is shaving back the need for labor everywhere, then where will the jobs of tomorrow come from?

I have no idea.  But if the past 200 years of history have taught us anything, the jobs will come, particularly for those motivated and with a solid education.

The general — and not all that helpful — advice to making your career future-proof is to learn skills that are not easily automated.  That’s easier said than done, of course, but as a general rule the more educated you are the better the likelihood is that you will be a deployer of technology rather than one of its victims.

This article first appeared on InvestorPlace.

Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he had no position in any security mentioned. Click here to learn about his top 5 global investing trends and get your copy of “The Top 5 Million Dollar Trends of 2013.”

This article first appeared on Sizemore Insights as Will Technology Make Us All Jobless?

Join the Sizemore Investment Letter – Premium Edition

Source: JT Long of The Metals Report (10/8/13)

http://www.theaureport.com/pub/na/wave-of-the-future-investment-from-the-ground-up-byron-king

An increasingly high-tech world is on the horizon, but technological revolution can’t take place without the right materials, especially graphite and platinum group metals. This is where mining, one of the oldest industries in human history, comes in. In this interview with The Metals Report, Byron King, editor of the Energy & Scarcity Investor and Outstanding Investments newsletters, profiles companies poised to deliver graphite and platinum group metals to tech companies working to change the way we communicate, travel and harness energy.

The Metals Report: Byron, you recently visited Lawrence Livermore National Lab in California. What did you see there that could affect our lives in the next decade?

Byron King: The focus of my visit was a massive physics experimental project known as the National Ignition Facility, or NIF. It uses laser beams to simulate the effects of almost incomprehensibly powerful phenomena like the inside of a star or the inside of a nuclear explosion.

NIF is a gigantic facility—almost as big as an aircraft carrier. It’s a huge building filled with laser-beam systems that focus intense energy on tiny spots inside a 30-foot diameter target chamber. Essentially, the NIF lasers create hydrogen fusion, a sort of tiny hydrogen bomb. Scientists can use it to simulate fundamental physics issues down to the star-like levels of pressure and temperature on protons, neutrons and electrons in the nucleus of an atom. One of the key government purposes, if you will, is to calibrate instrumentation that tests nuclear weapons without actually setting them off. Projects at NIF push the envelope of our understanding of atomic physics. This has the potential to change our lives in ways that we can’t even begin to understand. It’s wide open.

Sitting here talking with you during the current government shutdown, it’s easy to criticize government for being too big, too expensive, etc. But this kind of big science—like we see at NIF—can only be done through a dedicated, long-term, national government effort. In terms of pushing the fundamentals frontiers of human knowledge, I think it’s worth the money we put into it.

TMR: It sounds like NIF could impact technology and energy in many ways. You call graphite the next industrial revolution. Why graphite, and why now?

BK: For most of human history, people have only used a very few materials: cellulose in the form of wood, cotton or other fibers, and metals like bronze, copper, lead and steel. Aluminum only came into widespread use in the early 20th century.

Since the end of World War II and the space race of the 1960s, we are using a larger variety of materials in our daily lives. Today, cell phones, TVs, even light bulbs are filled with all sorts of exotic materials.

I think the next big leap for fundamental material science will be in the field of carbon. This takes us immediately to graphite and what are called allotropes of carbon, such as graphite nanotubes and graphene.

One of the primary carbon raw materials will be a naturally occurring form called graphite. Humankind already uses lots of graphite. Consider what’s called amorphous carbon, which you’ll find in all manner of things—brake pads and pencils, for example. Flake graphite is a higher-end form of carbon; it comes in different grades. Small-flake graphite is only somewhat better than the amorphous stuff, with many of the same applications like brake pads and such. Large-flake graphite is critical to many modern applications. Examples include advanced storage batteries and the heat-conducting foil that dissipates the heat from your smartphone so you can hold it in your hand without getting burned.

We’re barely into the early innings of the materials revolution using advanced forms of graphite.

TMR: Different types of graphite come with their own challenges. What are some of the differences among crystalline, amorphous, lump and vein graphite when it comes to mining it and processing it?

BK: People have been mining and using graphite for centuries. The root of the name is the Greek wordgraphein, which means to write. Someone in the ancient past figured out how to use this interesting mineral to make marks on a parchment.

But let’s dwell on today, and not ancient Greece. People mine graphite all over the place these days, with China being a key world supplier. Gee, where have we heard that before, eh?

Unlike with, say, rare earths, mining and processing graphite isn’t super technically advanced. With graphite mining, as with everything, you have what you have and not what you might wish you had. If you have really high-quality, large flake graphite, it makes it easier to mine but you have to be careful at the mouth of the mine not to crush the material too hard. If you handle it the wrong way, you’ll destroy the very properties that you’re seeking; you’ll destroy the crystalline aspects that might make it most useful.

Natural graphite deposits differ from one locale to another. Mineralogical research seems to be showing that the deeper and the hotter the burial and the temperature at which the graphite forms, the better the crystallinity, and the more suitable it is for high-value end products.

Another angle is that the users—the firms that make batteries, electrical components or electrodes—all have their own secret chemistry for putting the graphite and other additives together into a component. It’s very important for a mining player to work with the downstream users early on. That’s what will make a project succeed. It’s forming partnerships up front, with the downstream users.

TMR: You mentioned the importance of flake size. How much of a price difference can a company demand for large-flake graphite?

BK: Graphite has experienced big price swings in the last five years. A $500–600/ton price for lower quality material is just about the cost of production. Higher-quality material ranges from $1,500–2,000/ton. There has been very exotic, one-off, super-high-quality material that sold for 10 times that, although not just any company can build a mining model using a $20,000/ton price, which is exceptional.

TMR: What do you use as a standard price?

BK: To be very conservative, I look at numbers in the $1,250–1,500/ton range for really good, high-quality material at the 99.9% level.

I see rapid demand growth for material at that level, for use in batteries and foils and innovative uses in fire insulation and heat resistance.

Graftech International Holdings Inc. (GTI:NYSE) is an intriguing story. It makes carbon electrodes for steel mills, graphite foils for companies that make things like the iPad. GrafTech uses engineered graphite for fire proofing in a way that when fire gets to the graphite coating, the graphite will expand and form a char which insulates the substrate. That keeps the substrate from burning or if it’s a metal, it keeps it from melting. If you can crack the building codes of the world and get a material like that approved as a fire insulator, you would have a multibillion-dollar market for graphite right there. It’s a midstream or downstream user, a technology application. It buys its material from mines and material brokers who deal with miners.

TMR: As demand and use for things like insulation develops, when do you expect the graphite price to rise?

BK: Graphite prices, as well as many other metals, have had a tough 18–24 months, but I think we’ve found a bottom. I expect graphite prices to hold their own, if not increase in a gentle way. There is a market for good-quality material.

In the graphite world, it’s interesting to note that we haven’t seen a new mine open up outside of China in the last 25 years. There are precious few mine-building graphite plays out there. Many of the working mines are getting long in the tooth. It’s time for mid- and downstream users to take a hard look at the life of those mines, how much reserve is left and where things can go from here.

TMR: What companies could fill the demand for graphite, and what type of graphite does each project have?

BK: Focus Graphite Inc. (FMS:TSX.V) has a very high-grade deposit in Lac Knife, Québec, on the border with Labrador, near Fermont. This graphite play was discovered several decades ago by miners looking for iron or gold. Focus has done a lot of drilling and defining the graphite ore body.

Focus is still developing its mine and processing capabilities, but management has built the company into more of a technology play on graphite. The company invested heavily in developing applications for graphite that involve other forms of carbon, such as graphene and nanotubes. Focus wants to create a branded, high-spec, high-tech product it can sell to downstream users looking for the high-end stuff.

If you want a down-to-earth company—so to speak—that’s more of a traditional graphite miner, take a look at Energizer Resources Inc. (EGZ:TSX.V; ENZR:OTCQX). Its deposit is on the island of Madagascar. The deposit is so extensive that you can see it from space on satellite photographs. It originated deep underground and was heated to high temperatures 400 million (400M) years ago. Now it’s all large-flake graphite—and I mean beautiful mineralogy!—exposed at the surface.

When I visited, we drove for miles across the scrub of southern Madagascar. The tires kicked up graphite dust. You could do geologic mapping by looking at the termite mounds. The gray mounds were graphite, the brown ones weren’t. It’s very mineable. In terms of strip ratio, there’s virtually no waste.

Energizer has put together plans for a mining and processing facility, logistics, transport and shipping. The company recently hired two well-known mine builders. The company has had successful bench-scale testing and is building a pilot plant to demonstrate the processing capabilities of the material. The next step is to get together with mid- and downstream users, to understand their needs. Madagascar is far away if you look at the map from North America, but it’s also that much closer to major markets in India and East Asia. Plus, Madagascar has a stable government and is relatively mining friendly. Rio Tinto Plc (RIO:NYSE) and Sherritt International Corp. (S:TSX) have operations there.

TMR: Energizer’s new CEO and board are talking to potential offtake partners for its Molo graphite project. Is an offtake deal the next expected catalyst?

BK: The next announcement will probably be about the pilot project, probably around the end of November. A deal with offtake users is the next logical step in the company’s development.

Considering the size of the deposit, the quality of the material, the lead time involved in making the arrangements and commitments on something this big, there isn’t a lot of time for any grass to grow beneath anybody’s feet.

Focus and Energizer are two of the most advanced, most attractive graphite mining plays in terms of their ability to deliver product to an end user that can then add more value to it.

TMR: Some people are saying that synthetic graphene might be more practical than graphene made from graphite. How much demand could be created and how quickly by some of these innovative, but still not very commercial, products being discussed?

BK: Graphene and nanotubes are already finding their way into very high-end, high-spec, high-tech applications. At the NIF, for example, the little targets that they shoot the laser beam at are made of diamond. The laser scientists are thinking about replacing the diamond with nanotubes. That’s a truly exotic application, but it tells you that these materials are finding their ways into the most interesting places.

There are many very aggressive R&D projects out there for the use of graphene in things like touch screens on personal digital devices. One of the largest patent holders on graphene applications is IBM Corp. The fact that IBM holds a very large patent portfolio on graphene ought to make you feel warmer and fuzzier about this whole arena.

I think we will see nanotube, graphene and other carbon allotropes coming from both ends. It’s like you’re building a brick wall held together by mortar. The brick would be the nanotubes or the graphene that comes from the natural graphite. The bonding or “healing” process would be with a process called chemical vapor deposition (CVD), which is like the mortar that holds bricks together.

Right now, graphene and nanotubes can be manufactured using CVD. This is a well-known technique used in the computer chip fabrication industry. One example is CVD Equipment Corp. (CVV:NASSDAQ)of Long Island, New York, which makes very high-end fabrication equipment for CVD applications. The CVD customer list is a who’s who of scientific research organizations: I mean research universities, national laboratories like Oak Ridge and Livermore, big industrial corporations like IBM, Pratt & Whitney, Advanced Micro Devices (AMD:NYSE) and KLA-Tencor Corporation (KLAC:NASDAQ).

CVD makes equipment that deposits graphene and nanotubes on a substrate. This gets us closer to mass production of a very complex, nano-scale product with unbelievably high tolerances. Mass production drives down the unit cost, which means you can start to put this nanotube or graphene material into more applications. It’s important to devise a way to produce larger amounts of high-quality material at a predictable cost, so designers can create items that use these materials.

TMR: What other companies could supply some of this graphite?

BK: In terms of minerals in the ground, we have to mention Zenyatta Ventures Ltd. (ZEN: TSX.V), which has had a remarkable share price run in the last year or so. The company drilled up a couple of geophysical anomalies and found a remarkable graphite-based material that appears to be quite a scientific curiosity. While the stock has had a great price run, this remains a very early-stage idea with a lot of development work left to do.

Mason Graphite Inc. (LLG:TSX.V) has the Lac Guéret deposit in Québec, a discovery of fairly recent vintage. It was discovered as a graphite deposit, unrelated to any gold or iron exploration. The grade of the ore appears to be even better then Focus’ project. Where Mason can go with this is wide open, but the company definitely has the right materials to start with. It’s possible that the high grade could lead to much higher purities and higher prices. That would benefit the bottom line, because it would allow the company to sell high-end product out of the mill, and capture premium pricing sooner in the value chain.

TMR: Let’s shift over to platinum and palladium. Is the ongoing strike at Anglo American Plc (AAUK:NASDAQ) in South Africa making projects outside of Africa more viable?

BK: Anything that diminishes the South African supply of platinum and palladium is generally good for pricing around the world, although it does make supply more problematic.

September and October tends to be a season for strikes in South Africa. Last year, strikes got very violent and people died. That was very bad for South Africa’s political risk profile. This year we’ve seen strikes, but the overall climate hasn’t been as violent. Anything that affects the labor climate and the output from any of the major South African platinum mines will affect world supply.

One key point to keep in mind is that we’re still dealing with the effects of the unending recession. We’ve got the China slowdown, the Japan doldrums, the Eurozone issues, the slowdown in other developing nations like Brazil and of course the issues in the U.S.

On the positive side, at least in a global sense, the automobile industry is doing very well. North American auto sales are up to nearly the pre-crash levels of five years ago. People are buying big cars; SUVs and pickup trucks are rolling off the lines as fast as the makers can build them. Every one of those vehicles has a catalytic converter installed on its engine exhaust system. The rebound in auto sales has to feed back to the demand for platinum and palladium for those catalytic converters. If the European automobile market ever starts to recover, it could be another real kicker for platinum and palladium prices.

TMR: Are there any projects outside of Africa that could fill that demand?

BK: There are only a couple of small players outside of Africa.

I like the management and early-stage work being done by Prophecy Platinum Corp. (NKL:TSX.V; PNIKF:OTCPK; P94P:FSE). It has an intriguing project up in the Yukon north of Skagway, Alaska, which would be the company’s shipping port.

We won’t see a mine there for several years. Meanwhile, management is doing good work revitalizing an old platinum play that operated in the 1970s and ’80s. It closed for several reasons, but lack of ore was not one of them.

Yukon is a mining-friendly jurisdiction, and because the Prophecy mining claims are in the rain and snow shadow of the Chugach mountain range of Alaska, it gets relatively little snowfall. It could operate year-round. You move the product across the border to the U.S. and export out of Alaska. The company has good geology and good management. It’s all very doable.

TMR: That’s one to watch. Any others?

BK: Platinum Group Metals Ltd. (PTM:TSX; PLG:NYSE.MKT), a South African play, has made great progress. The deposit is in a sweet spot of the old Bushveld complex, where the company has discovered entire new zones—to the degree that the geology books on the Bushveld almost need to be rewritten. The company is finishing up a brand-new mine, scheduled to start producing ore in 2014. Platinum Group Metals will deliver ore with excellent grades from a brand-new mine with all modern safety equipment and production technology.

TMR: Should all of that help with the labor issues?

BK: I think the company has its labor issues under control. It doesn’t have any legacy issues of mine pit alumni or government meddling. It’s new.

TMR: Last time you talked about recycling. Does that remain a viable option for meeting demand?

BK: Oh, yes. Recycling, in particular recycling catalytic converters, is an important option. I’ve mentionedPro-Or Inc. (POI:TSX.V) before. Its pilot plant has been up and running in Quebec for eight or nine months with excellent output. It seems to have a very workable chemical process, with astonishing yields and a cost curve to make grizzly old miners weep. Pro-Or is now raising funds to build more, similar reactors to improve the technology and the process.

In the U.S. and Canada, 12M or more catalytic converters are scrapped every year. Right now almost all of them are exported to Japan or South Africa, and we buy them back at full price on the showroom floor. Pro-Or offers a technological option that allows that recycling value chain to occur here in North America. The materials would stay in the North American market and we could keep that added value inside the U.S. and Canadian economies.

TMR: When could that new plant be operational?

BK: Depending on the fundraising, it could be operational in 2014. The people who run Pro-Or could crank these reactors out pretty fast if the tech took hold.

TMR: What will the world look like twenty, thirty years from now? What commodities will be critical? And what can we invest in that will make the world a better place for the long term?

BK: We’re going to see absolute transformations in energy use and energy efficiency. No, we’ll never defeat the laws of thermodynamics, but it will take less and less energy to do many of the things that we already take for granted today. Energy conversion levels will be much higher. Prices will fall for the technology, and it’ll become more and more available to a mass market.

Materials will change, including the strength of materials. We will still use cars, but they will be stronger and more lightweight. Actually, in the future, I think the cars will be driving us. Also, the devices we carry around in our hands will get even smaller. Some communications technology might get small enough to be implanted in your skin. People will become walking specimens of technologically enhanced humanity—a more pleasant form of the Borg, of Star Trek fame, you might say.

Along the way, we have to convince our children and teenagers to study math, science and foreign languages. People who don’t understand these subjects will be on the outside of the economy looking in. That is, if you can only do certain basic things, you are destined to be replaced by a robot. If you can work with other people and enhance the technology that’s already there, then there’s a place for you.

That’s my happy version of the future. There’s plenty of room for apocalyptic thinking as well. Just as technology allows more people to do good things with greater efficiency, it also allows bad people to do more bad things with greater efficiency.

TMR: Let’s hope that your happy version is the one that plays out. Byron, thanks for your time and insights.

Byron King writes for Agora Financial’s Daily Resource Hunter. He edits two newsletters: Energy & Scarcity Investor and Outstanding Investments. He studied geology and graduated with honors from Harvard University, and holds advanced degrees from the University of Pittsburgh School of Law and the U.S. Naval War College. He has advised the U.S. Department of Defense on national energy policy.

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The U.S. Dollar Trying to Recover Being Under Pressure

The EURUSD Trading Above Support of 1.3545

The EURUSD was being traded mixed within a narrow range yesterday. The support around the 1.3545 level continues to cope with its task, as well as the resistance in the 36th figure. The positive sentiment towards the euro is preserved, but there are two alarming things: an inability to get back above 1.3600 and the Parabolic SAR which is located above the price chart on the 4-hour and daily timeframes. So do not rule out a deeper correction towards 1.3500-1.3475, until a rise to 1.3700 is resumed.

The GBPUSD Is Out of the Overbought Stage

Having fallen to 1.6005, the GBPUSD managed to recover to 1.6100. This level still does not let the pair to come above. The RSI has come out of the overbought stage both on the daily and the 4-hour chart, though the pair may be corrected lower – towards the 59th figure. This will not take its toll for the uptrend, but it will give the opportunity to buy from the best levels. As a whole the picture remains positive for the pound, and it may return to the current highs. Falling below 1.5915-1.5873 will weaken the bulls` positions.

The USDCHF Trying To Form A Base

Yesterday the USDCHF was declining until it reached the level of 0.9015. Here the pair was bought out, and it went back to 0.9062, and then it came under pressure again. It seems that the bulls have a chance to form a base in the 90th figure, but talking about it will only be possible after its rising above 0.9140. While the pair is being traded below this level, the risks of a return to the current highs are maintained and attempts to increase will be used by the players to open short positions.

The USDJPY Fails to Be Consolidated Below 97.00

The Japanese yen managed to push the U.S. dollar lower then a support around the 97th figure, and the pair tested the 96.56 mark. However, it is early to speak about a breakout of the support, as the pair returned above 97.00 and tested 97.18. It still does not give a handle for concern the USDJPY bears, as long as the dollar is being traded above the descending resistance line. But the growth above will return the USDJPY bulls confidence and may be a harbinger for the resumption of the uptrend. The growth above 99.00 will confirm this.

provided by IAFT

S&P Futures market is very slow for the last few days and quite unidirectional. From an Elliott Wave perspective you will have hard times counting a decline as an impulse. So if it’s not an impulse then it’s probably corrective move, which in fact could be near complete as we are tracking an ending diagonal in wave (c) position. If we are correct then sooner or later prices will turn up, but ideally that will be from 1658/1660.
S&P Futures 1h

EURUSD found some support in the last hour, now pushing towards 1.3600 region where we think it’s nice resistance area for a three wave rally from 1.3536 low. An impulsive reversal back to 1.3570 will put wave (c) leg in action.
EURUSD 1h

Written by www.ew-forecast.com

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