ENERGY
The New South Wales government has placed a ban on coal seam gas exploration within two kilometres of a residential area. As we wrote in our weekly update to Australian Small-Cap Investigator subscribers,
‘…you’d think that given the state of the government’s finances they would be keen to promote anything that can provide jobs, income and potentially exports.’
According to the green movement, all fossil fuels are bad. They pollute the environment, cause greenhouse gasses, and poison the kiddies. That’s why the green movement prefers renewable or replaceable energy. Such as biofuels.
But hang on a minute. What’s this from New Scientist?
‘Say goodbye to the grass. The scramble for biofuels is rapidly killing off unique grasslands and pastures in the central US.‘Christopher Wright and Michael Wimberly of South Dakota State University in Brookings analysed satellite images of five states in the western corn belt. They found that 530,000 hectares of grassland disappeared under blankets of maize and soya beans between 2006 and 2011. The rate was fastest in South Dakota and Iowa, with as much as 5 per cent of pasture becoming cropland each year.
‘The trend is being driven by rising demand for the crops, partly through incentives to use them as fuels instead of food.
‘The switch from meadows to crops is causing a crash in populations of ground-nesting birds.’
(Ed Note: It’s worth pointing out that North and South Dakota contain some of the world’s largest shale oil and gas reserves. So is it possible the research is tainted? We don’t know, but we thought it’s worth mentioning.)
The important thing to remember is that everything has pros and cons. It’s pretty much impossible to eliminate the cons. What you have to do is manage them. Even ultra-green energies such as wind energy and solar power have cons. Because they are less efficient than coal, oil, gas or nuclear, you need more solar panels and wind farms.
That means setting aside more farm land for energy use, which means lower crop production. Or even worse, in order for farmers to keep crop yields high they need to use genetically modified food – another enemy of the green movement. To be honest, we’re not keen on GM food either, but that’s why we prefer farmland to biofuel land.
GOLD
In his latest issue of Diggers & Drillers, our old pal Dr Alex Cowie introduced his readers to two new proprietary indicators. He uses price action and the 200-day moving average to pinpoint the optimum time to buy, hold or avoid gold and gold stocks.
He says about his indicators:
‘They’re not fool-proof, of course. Nothing is. But let me show you why I think they’ll be helpful at timing the gold market in 2013.‘The old mantra goes, ‘Buy on the dips.’ And I have designed this index to help you do exactly that. To be precise, it works out where the Australian gold price is in relation to the 200-day moving average, expressed as a percentage.
‘Roughly speaking, this tells you whether gold is cheap, expensive, or fairly priced, relative to a long-term average price.’
At the time he revealed the indicator, it pinpointed Aussie dollar-priced gold as a ‘Good Buy’. But there was still potential for the price to fall further, moving it into the ‘Strong Buy’ category. That’s exactly what has happened as the price has fallen nearly $100 in just a few weeks:
The Doc says gold (and gold stocks) is great value at this level…and we couldn’t agree more.
TECHNOLOGY
This week we highlighted a few technology stories on our Google+ page (don’t forget to check it out if you haven’t already). One of the stories was the Google Glass (or Google Specs as we prefer to call it).
Google is marketing smart eye glasses. The idea is that you’ll be able to wear these specs that will have a built-in camera and a display screen on the lenses that will allow you to view specific images.
For instance, imagine you’re driving somewhere and rather than fiddling about with your mobile phone or in-car navigation system, you can just follow the directions as they appear on your Google Glass…right before your eyes:
You can see the map image in the top right corner. That’s pretty much how you would see it if you wore a pair of Google Glass.
There are many other potential applications both social and commercial. A designer can look at an empty room while scrolling through design images on their Google Glass…a doctor can operate on a patient while seeing images of a scan taken before the operation to locate a specific problem.
There really is no end to the possibilities. Least of all, if it will mean people will look where they’re going as they walk along the street, well, then Google Glass is fine by us.
HEALTH
In an interview with the Life Sciences Report, Ram Selvaraju selects nine top stocks in the US biotech industry. They include:
Trius Therapeutics [NASDAQ: TSRX]
Galena Biopharma [NASDAQ: GALE]
Synergy Pharmaceuticals [NASDAQ: SGYP]
Pernix Therapeutics [NYSE: PTX]
MINING
The big mining news this week was the resignation of BHP Billiton [ASX: BHP] chief Marius Kloppers. But as our old pal Dan Denning noted in Wednesday’s Daily Reckoning:
‘Poor Marius Kloppers had unlucky timing. He replaced Chip Goodyear in July of 2007, just when everything started to go downhill for the world. Kloppers pursued some high-profile mergers and acquisitions. Some of them got done (on-shore US shale gas being the main one). And some did not. And now he’s leaving just when everyone says things are getting better.’
Maybe in six years we’ll say ‘Poor Andrew Mackenzie’…the new boss of BHP who takes over the role in May.
BHP shares have performed well since last July, gaining 23.5%. And they’ve doubled since the 2008 low. However, BHP is still down from the $50 mark it hit in 2011. So if we’re being simplistic about it, we could say that Mr Mackenzie has a 50/50 chance of getting a lucky break.
In order to get the break, Mr Mackenzie needs one thing to happen. It’s not a recovering China or US or Europe…BHP needs what every boom needs – a global credit boom. If that doesn’t happen, then it’s curtains for the Aussie resources sector.
Cheers,
Kris
From the Archives…
Four Things to Look Out for When Buying Gold Stocks
15-02-2013 – Kris Sayce
Here’s One Way to Eke More Gains from this Rising Stock Market
14-02-2013 – Kris Sayce
When Will the Inflationary Stock Boost End?
13-02-2013 – Murray Dawes
Gold Stocks: Back Up the Truck
12-02-2013 – Dr. Alex Cowie
The Next Surge in the Gold Price Looms: It’s Time to Buy Gold Now
11-02-2013 – Dr. Alex Cowie
