Month: December 2011

Green activists, take note – for Australia fully to embrace solar power, Canberra would have to spend $100 billion, with photovoltaic cells to generate the electricity covering an area twice the size of Sydney in order to replace Australia’s indigenous inexpensive coal-fired power plants with renewable energy sources.

This is not an insignificant figure, as Australian coal currently generates 80 percent of Australia’s electrical energy output.

The grim statistic was contained in the recent report, “Keeping the Home Fires Burning,” issued by the Australian Strategic Policy Institute.

So, who is the Australian Strategic Policy Institute? Tree-hugging, wallaby and kangaroo friendly ecological leftists or energy company flacks?

Uh, no.

According to the Australian Strategic Policy Institute website, “ASPI is an independent, non-partisan policy institute. It has been set up by the government to provide fresh ideas on Australia’s defense and strategic policy choices… It aims to help Australians understand the critical strategic choices which our country will face over the coming years, and will help government make better-informed decisions.”

Accordingly ASPI’s conclusions cannot be seen as either energy industry shills nor environmental advocates, which makes them accordingly worth careful consideration.

The report starts ominously, “Australia, like all modern economies, needs an assured supply of energy to function effectively. As a net exporter of energy, Australia is well placed in most respects. But we are still reliant on external sources of oil.”

Authors Andrew Davies and Edward Mortimer pull no punches, first noting that Australia’s massive indigenous energy reserves of coal and natural gas would shield it from political disruptions in the Middle East before adding, ”The energy security policy challenges of the next 20 years are likely to pale into insignificance compared to those that will arise when the availability of fossil fuels declines significantly. Unfortunately, it doesn’t look like renewable sources of energy will be able to provide adequate substitutes, at least based on current technology. Developing countries are even less likely to be able to adopt alternative energy sources on a large scale. As a result, any large reduction in fossil fuel usage will most likely be due to scarcity and price rather than choice. The timescale is decades rather than years, and the decline of existing fuel stocks will be gradual rather than precipitous, so there’s scope for technological advances to come to the rescue – but there are no obvious solutions at the moment.”

So, solar power to the rescue? According to the authors, ”The requirement (to generate solar power per capita) can also be expressed as 200 square meters of panel per person, or about four times the average amount of roof area per person in Australia today.” As for the country weaning itself off fossil fuel power and diverting to solar power generation, the authors conclude, “As a rough estimate, if the cost per panel could be halved (due to economies of scale), the total cost would be around $100 billion.”

What to do?

Davies and Mortimer suggest that in conjunction with neighbors New Zealand, Papua New Guinea and the Pacific Island countries Australia develop a strategic oil reserve to maintain transport and industry if and when Middle East disruptions imperil supplies.

For a government sponsored institute providing “fresh ideas,” ASPI seems stuck in a “business as usual” rut, looking at the immediate bottom line versus the long-term picture.

As for establishing an oil strategic reserve, the rising tensions in the Middle East over Iran’s nuclear programs could change the dynamics of Persian Gulf oil exports to East Asia long before strategic reserves could be established.

Australia does indeed have significant reserves of coal as well as access to natural gas, including the offshore Sunrise natural gas field, shared with Timor Leste and estimated to contain 5.1 trillion cubic feet of liquefied natural gas and 226 million barrels of condensate, the largest petroleum resource in the Timor Sea. Development of the field with Timor Leste has been blocked by disputes with the Timorese government for the last nine years.

Charming as the idea of boring holes in the ground and pumping Middle Eastern oil down them for a rainy day, would it not be in Australia’s interest to negotiate fairly with Timor Leste over the Sunrise field? Even if solar power gives Canberra sticker shock, it seems preferable to make local arrangements for more environmentally friendly fuels such as natural gas rather than continuing to import hydrocarbons from the Middle East or burning local coal. Best then, at the end of the day, it’s an economic issue, with quality of life considerations coming second.

But if Canberra has to give its energy import policies hostage to fortune, Timor Leste is a lot closer than the Persian Gulf.

Source: http://oilprice.com/Alternative-Energy/Solar-Energy/Australia-Going-Solar-Gonna-Cost-Ya-Mate.html

By. John C.K. Daly of Oilprice.com

Dec. 5 (Bloomberg) — Martin Gilbert, chief executive officer of Aberdeen Asset Management Plc, discusses the company’s performance and asset allocation. Scotland’s largest money manager said fiscal full-year profit rose to 241.7 million pounds ($378.2 million) from 169.6 million pounds a year earlier. He talks from London with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

A Bear Market in Trust: Good for Gold Stocks

by David Fessler, Investment U Senior Analyst
Monday, December 5, 2011

The world markets held their collective breaths over the political spectacle regarding raising the U.S. debt ceiling. Ultimately, a half-baked plan that essentially kicks most of the cans down the road emerged.

Our trust that politicians would come up with something productive went out the window. As a result, the credit rating of the U.S. Government was lowered. In response, central banks around the world stepped up their purchases of gold.

Trust is still the issue. Now it’s the European financial crisis that’s in the cross-hairs. That will keep a floor under gold prices through 2012, and we could even see the metal breach the $2,000 an ounce mark. Once that happens, the bull-run in gold will likely take off like a rocket.

You could play this rise in gold by buying physical bullion, but not everyone’s comfortable with having tens of thousands of dollars of gold coins or bars at home or even in a safety deposit box.

A better bet is a proxy for the metal itself. The easiest way to do that is via the popular SPDR Gold Trust ETF (NYSE: GLD). It holds the physical metal in a large underground vault in London. Shares are issued and are priced at roughly 10 percent of the current price of the metal.

The investment objective of GLD is to mirror the price of the physical metal. The custodian of the trust and the holder of the gold is HSBC Bank USA, N.A.

The Best Way to Play the Gold Boom: Gold Mining Stocks

While GLD rose 23 percent in the last year, many gold mining stocks underperformed the metal.

Take Yamana Gold Inc. (NYSE: AUY), for instance. Its shares rose a respectable 29 percent over the last year. Its total proven and probable reserves of 14.9 million ounces of reserves are located in Brazil, Argentina, and Chile.

With a current share price of just $16.14 though, Yamana’s reserves are priced at $807.75 an ounce or just under half of what gold bullion is currently selling for. Not bad. But you can do even better.

Let’s look at another big producer, Newmont Mining Corporation (NYSE: NEM) for example. With estimated gold reserves of 93.5 million ounces, its shares were up a paltry 7.5 percent in the last 12 months.

With a current price of $67.03 per share, investors are pricing its gold at roughly $355 an ounce, or roughly 20 percent of the price of the barbarous relic. If that sounds like a bargain, it is. And you’re essentially getting all the other metals they mine for free.

Let’s take a look at one more gold mining stock: Barrick Gold Corporation (NYSE: ABX). With 140 million ounces of proven and probable reserves, Barrick holds the largest reserves in the industry.

Last year, Barrick shares dropped 5.5 percent. How are investors pricing its gold reserves? With a current share price of $51.02 and 999.8 million shares outstanding, you can buy Barrick’s gold for $364 an ounce, or about the same as Newmont Mining. It’s also a bargain.

Junior Miners A Riskier Proposition

Here’s an important point to keep in mind when investing in gold mining stocks: the three mentioned above (there are others I haven’t mentioned) are large, producing miners.

They’re not junior mining wannabees, who might someday open a mine. Investing in shares of junior miners carry a lot more risk, and some will never amount to anything.

With governments in Europe and the U.S. running their money printing presses round the clock, investor trust is out the window. Central banks feel the same way, and are buying gold at record paces.

The upside for shares of all three companies in a gold bull market is huge. Plus, they all keep adding to their proven and probable reserves.

Whether you decide to hedge your portfolio with the physical metal, the SPDR Gold Trust ETF, or gold miners, you should have at least 5-10 percent of your assets in gold. In the coming gold bull market of 2012, the upside for the miners is far greater than the metal itself.

Good investing,

David Fessler

Article by Investment U

Dec. 5 (Bloomberg) — Jesper Koll, head of equity research at JPMorgan Chase & Co. in Tokyo, talks about Japanese stocks and the nation’s economy. Koll speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Introduction:

We discussed in the last article, in the previous week, about the United States Dollar index being at an important level of ‘80’ and also this level acting as a serious resistance in the near term. Yes, it did. ‘80’ level is posing a small nuisance for those who are bullish on the Dollar index. The United States Dollar index lost around ‘3’ % last week on the news of some bailout package from the European banks. The Dow Jones did rise nearly ‘500’ points to close over the ‘12000’ mark from ‘11500’ mark.

Factors effecting:

There are certain reasons why this index clawed back from the level of ‘80’ to around ‘78’ in the previous week. The first and the foremost one, is, the European banks coming out with a package to slow down the European crisis. Some of the big European banks along with the ‘ECB’ are planning to reduce the debt situation and the ongoing crisis in Europe. This has made all the global markets to fly high and the dollar index and the bonds to fall down. Other currencies also rose against the dollar showing that the dollar index will be weak. Many analysts feel that this bailout package wouldn’t be sufficient to hold down the European crisis. This should be positive for the Dollar index going forward.

Technical Analysis:

The Dollar Index remained weak throughout the week and that one was due to some reforms in Europe and some good data from the United States. The global markets, too, rallied which was not a good sign for the dollar index.

This chart shows the movement of the Dollar index in the past few days. This clearly tells us that the ‘80’ mark is becoming a hurdle to cross. As suggested in the last article, that traders and investors should watch out for the ‘80’ mark on the upside and the ‘75’ mark on the downside, they must do the same, this week, too. ’75 – 77’ is a good support and the dollar breaking this level could see some downsides. Similarly, the Dollar breaking ‘80’ on the upside will give some gains and the trend will become bullish.

Forecast:

We suggest our readers to cautiously go long on the United States Dollar Index or sit on the sidelines waiting for the band of ‘75 – 80’ to be broken. Once, this level is broken, traders would be advised to go long or short accordingly. Breaking ‘80’ is the signal to go long and on the downside, ‘75’ would be watchful. The trend now or the direction now, is sideways. Any major news about the European crisis will definitely affect the Dollar index. There is a European summit later this week and that would have a major impact on the world markets as well as the Dollar index. So, investors and less risk traders are advised to sit on the sidelines until some news comes out about the European crisis.

Disclaimer:

The author has personal interest in the Forex markets. He may have positions and may have recommended these strategies to his clients.

for more information on forex education, stock trading or CFD visit us at Avafx.com

Google Takes on Amazon With Same-Day Shipping Service

by Jeannette Di Louie, Investment U Research
Monday, December 5, 2011

I’ve said for a while now that Google (Nasdaq: GOOG) wants to take over the world.

First, it debuted the search engine, which changed how we use the internet so significantly that English dictionaries everywhere now include “Google” [goo-guh’l] as an official entry (incidentally both as a noun and a verb).

But the company didn’t stop there, adding Google News in 2002, Google Maps in 2004, Google Finance in 2006, Gmail in 2007, and its web browser, Google Chrome, in 2009.

These days, it also offers music, video, image and finance services, not to mention Blogger, a popular site where users can create their own blogs for little or nothing, and Google Docs, which serves as a free, online competitor to Microsoft’s Word, Excel, Power Point and the like.

It also owns YouTube, not to mention the Android smartphone operating system. And now, it looks like it’s taking a very serious crack at the fast-growing world of online shopping.

The Wall Street Journal reported last week that Google is talking with retailers such as Gap (NYSE: GPS), OfficeMax (NYSE: OMX) and Macy’s (NYSE: M) to combine its existing product-search capabilities with a new, fast, cheap delivery service.

Amazon (Nasdaq: AMZN) look out, because Google clearly wants to come through.

What Amazon Can Learn From the Google-Apple Rivalry

Considering Google’s past forays into different fields, it should come as no surprise that Amazon isn’t the first company it’s happily encroached on. Yahoo! (Nasdaq: YHOO), Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL) all have huge competitions with Google over its mail, apps and phones, respectively.

In Apple’s case particularly, that rivalry recently came under close scrutiny thanks to the release of Walter Isaacson’s official Steve Jobs biography.

The book highlights Jobs’ seething hatred of Google’s former CEO, Eric Schmidt, who once served on Apple’s board of advisors. Jobs believed Schmidt “wholesale ripped us off” by stealing classified information he had access to during his time with Apple and using it to build the Android operating system for Google.

He even vowed to “spend every penny of Apple’s $40 billion in the bank” to make him pay for the thievery. If current CEO Tim Cook honors Jobs’ wishes, Google could be in a whole heap of trouble going forward.

But even if that doesn’t happen, Amazon can still take some comfort in that toxic rivalry. As Dan Frommer points out in the Business Insider, Google does have a significantly larger market share of the smartphone industry… but Apple still makes more profit, which isn’t insignificant.

Google Might Be Doing Amazon a Favor

Amazon has another thing going for it as Google prepares to take it on.

Contrary to popular belief, bigger is not always better. Sometimes bigger just means more complicated and therefore more trouble than it’s potentially worth.

White Cap Research Group Chief Investment Strategist Lou Basenese put it plainly in an Investment U article in 2009. “The golden rule of income investing,” he said, is to “go with simple businesses, because simple businesses make money and can pay dividends consistently.” Not to mention that trying to be good at everything usually makes for mediocrity in everything.

That rule hasn’t grown any less golden since then. And the best and brightest know that, Steve Jobs among them, as evidenced by his advice to incoming Google CEO Larry Page back in 2010:

“Figure out what Google wants to be when it grows up. It’s now all over the map. What are the five products you want to focus on? Get rid of the rest because they’re dragging you down.”

That’s wise advice that obviously wasn’t taken completely to heart.

So far, Google appears to relish its increasing role as a Jack-of-all-trades. But its arrogance has gotten it into trouble before, most notably in China, where it debuted its search engine in with a lot of smug assumptions… and soon emerged a dismal failure.

Google might like to project itself as the end-all and be-all of the tech world, but it’s not nearly as invincible as it likes to think. And the more it expands, the greater the chances are that consumers will catch wind of that.

Good investing,

Investment U Research

Article by Investment U

The Banco de Mexico held its overnight interest rate target steady at 4.50%.  In its monetary policy statement the Bank noted: “Annual general inflation and its core and non-core components have shown a favorable evolution, although there was a slight increase recently,” further noting a “persistent slack in the economy, a declining trend in unit labor costs” and “increased levels of competition in some sectors of the economy,” adding, “in addition, inflation expectations have not been affected by the recent depreciation of the exchange rate,” also commenting that “a currency rate anchored by solid fundamentals of the Mexican economy.”

Dec. 5 (Bloomberg) — Douglas McWilliams, chief executive officer of the Centre for Economics and Business Research, talks about the global economy. McWilliams also discusses the outlook for Europe’s debt crisis and the euro. He speaks from Kuala Lumpur with John Dawson on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

The Bangko Sentral ng Pilipinas kept its overnight borrowing rate unchanged at 4.50% and the overnight lending rate at 6.50%, and kept reserve requirements unchanged at 21%.  The Bank said: “decision is based on its assessment that the inflation outlook continues to be manageable, with within-target headline inflation and well-contained inflation expectations. Latest baseline forecasts indicate that the annual inflation rates for 2011-2013 are likely to fall within the 3-5 percent target range. The Monetary Board also took into account the data showing subdued domestic economic activity in the third quarter, due to the weather-related slowdown in the expansion of the agricultural sector, weak global economy and concerns over Europe’s sovereign and banking sectors.”


The Philippine central bank also held the rate unchanged at its last meeting, and last raised its interest rate in May this year by 25 basis points to 4.50%, and increased reserve requirements by 100bps at its previous meeting.  The Philippines reported annual consumer price inflation of 5.2% in October, 4.8% in September, compared to 4.7% in August, 4% in July, 4.7% in June, 4.5% in May and 4.3% in April.  Inflation is currently tracking just outside the Bank’s inflation target range of 3%-5%.