Dave Gonigam – June 22, 2012
- “We’re going to run entire cities off of batteries,” says Byron King — who’s spied the perfect opportunity to profit
- Two substances behind the next breed of computer chips… and the breakthrough in today’s news that makes Byron’s Monday conference call more timely than ever
- Death by foreclosure: The tragedy that overshadows Moody’s downgrade of the sickly banks
- The man who warned about an “international currency war” joins in China’s war on the dollar
- World’s most outrageous “new taxes and weird fees” entry curtailed… Reader musings about crossing borders with gold… The dollar bill vs. corncobs… and more!
“I believe we’re witness to the beginning of an entirely new industry,” says Byron King.
“We’re going to run entire cities off of batteries, which will change the overall nature of the electric power industry. This kind of change is already roaring down the tracks, but almost nobody even knows that it’s happening.”
The opportunity lies in an energy truism: “When it comes to electricity,” Byron explains, “you’ve got to use it or lose it.”
The “use it or lose it” proposition is a major reason wind and solar power haven’t caught on more than they have: The sun doesn’t always shine. The wind doesn’t always blow. And when they do cooperate, there’s no adequate means of storing up excess juice for those “down” times.
Use-it-or-lose-it also weighs down existing power plants, no matter their fuel source: “Consider all the power plants across the world,” says Byron, “spinning turbines and generating electric power.
“That power goes into wires for transmission and distribution. Down at the end of the wires, at the homes, businesses, factories and cities, it’s called the ‘load.’ Ideally, the load is balanced with overall generation.”
Alas, it’s not an ideal world: “Utility systems across the world have complex assemblages of communication and switching gear working 24/7, making sure that ‘enough’ plants are on line to meet the load or that other plants go offline when the load diminishes — such as every night.”
The consequence: “‘Extra’ electric power often goes to waste for lack of adequate means to store it.”
The solution lies in large storage battery systems.
“The technology is out there,” Byron tells us, “and it’s going to happen sooner than later. This could electrify the world, so to speak.”
Key to these battery storage systems is an element called vanadium. “This substance is one of the most important elements in the entire periodic table,” Byron goes on. “Heck, you almost can’t ‘do’ modern industrial life without it.”
Henry Ford’s original Model T needed vanadium. Without it, the steel would have been too weak. “The car would’ve bent under the weight of the chassis, and likely just fallen apart.”
One hundred years on, vanadium is also critical to the battery storage systems that will make the electrical grid far more efficient, and less costly.
And the story gets better.
Vanadium is also key to a new breed of computer chips: “It’s a design,” says Byron, “that emulates the most-impressive computer on the planet, the human brain.”
The work is under way right now at IBM’s Zurich Research Laboratory. “The human brain is 10,000 times more dense and efficient than any computer today,” says lead researcher Bruno Michel. “That’s possible because it uses only one extremely efficient network of capillaries and blood vessels to transport heat and energy, all at the same time.”
Using the brain as a model, Michel and his team are on the verge of a breakthrough. “They expect to have a fully functioning prototype chip within 18 months,” says Byron.
Next-generation computer chips will require something else that Byron has an eye on: graphene.
That’s a variation on plain old graphite. It’s only a single atom thick… but those atoms line up in a way that makes graphene unbelievably strong and flexible. So it’s ideal as a replacement for silicon… allowing computer circuits to make a quantum leap in power.
The problem is that turning graphite into graphene is an expensive process. Or it was until now.
“Existing methods for graphene fabrication require complex procedures and special and expensive equipment,” says a report at AZoM.com, a website geared to the materials industry.
This morning brings word researchers at the Institute of Physical Chemistry of the Polish Academy of Sciences (IPC PAS) and the Interdisciplinary Research Institute (IRI) in France have developed a cheaper, simpler solution. “The method devised by IRI and IPC PAS involves the use of common laboratory equipment, the ultrasonic cleaner.”
AZoM calls it “a new graphene fabrication technique that is simple and can be carried out in any laboratory without the need for complex equipment.”
Here, too, a major breakthrough is closer than it’s ever looked.
The timing couldn’t be any better for Byron’s conference call on Monday afternoon. He’s lined up the CEOs of a small vanadium miner… a small graphite miner… and the miner of another high-tech element called beryllium. Joining this group will be veteran resource investors Sheldon Inwentash and longtime friend of Agora Financial Rick Rule.
“It will be the first time — and possibly the only time — the five experts I’m about to introduce you to will come together to speak,” says Byron. “To say the information you hear could be worth a fortune would be an understatement”:
There’s still time to sign up and assure your place on the line at 3 p.m. EDT Monday. Here’s where to act.
U.S. stocks are rallying today, traders having priced all the bad news out there into yesterday’s vicious sell-off. The S&P is back to 1,330.
The drop was widely attributed to the rotten economic numbers we ran down yesterday. The only problem is those numbers were all out by 10 a.m. EDT, and the big dump didn’t come till around 11.
That was moments after Goldman Sachs came out with a call to short the S&P 500, targeting 1,285. You don’t think Goldman had some positions it wanted to unwind before word got out to the public about Moody’s cutting its rating, do you? Naw…
The rumors swirled as the afternoon went on, but confirmation didn’t come till after the close: Moody’s cut the rating of 15 global banks.
This morning, the bank stocks are rallying. Moody’s move amounted to a day-late, dollar-short acknowledgment of the obvious.
“Bruised, but the Too Big To Fail gang continues on,” sums up Doug French, the newest addition to our growing stable at Laissez Faire Books. In the same vein, he reminds us that while Fannie Mae made money in the first quarter, it’s paid back only $23 billion of a $116 billion federal bailout.
Meanwhile, says Doug, “death by foreclosure is quietly going on around the country.” Foreclosed and underwater homeowners figure the only way out is suicide.
It’s practically an epidemic in bubble-scarred Las Vegas. KLAS-TV interviewed a cop who saw a foreclosed homeowner shoot himself upon being served notice… and a lawyer who’s lost 29 of her clients to suicide.
“I’ve previously compared underwater homeowners with battered spouses,” Doug writes in a provocative blog entry today. “How many lives must be lost before Fannie, Freddie and the rest are allowed to fail?”
Precious metals are bumping around a new and lower range today after getting pummeled themselves yesterday.
Gold is at its lowest point this month, at $1,565. For the moment, silver has pushed below its year-end 2011 low — currently $26.76.
“China will keep being the place to do business,” says Brazilian Finance Minister Guido Mantega — heralding the latest in China’s parade of currency swaps.
China is Brazil’s largest trading partner. The two nations’ central banks are now able to exchange local currencies up to $30 billion. China struck other deals this year with Australia, Hong Kong and Japan.
“We will see firms in the two countries settle their accounts in local currencies,” says Westpac chief currency strategist Sean Callow. “The motivation,” he adds, “is to be less reliant on the U.S. dollar.”
As we noted at the start of the month when the Japan agreement was announced, China has effectively launched a war on the dollar. While it could be fairly characterized as a war of self-defense, you still want to be ready for the fallout:
Note well: It was the aforementioned Mr. Mantega who warned in September 2010 of an “international currency war.”
“It will take a few years for China to have its currency ready to float and be more open to investment,” Addison writes in The Little Book of the Shrinking Dollar — but now’s the time to brace for impact.
The crackdown on impromptu carpools crossing the George Washington Bridge between New York and New Jersey might be over.
New Jersey Gov. Chris Christie has asked the Port Authority to lay off drivers who pick up passengers to take advantage of the lower carpool toll, according to The Wall Street Journals.
As mentioned in yesterday’s 5, the regular $9.50 toll falls to only $3.50 when a vehicle is carrying three or more people. Many drivers took to picking up pedestrians at a nearby bus stop located just before the bridge. The Port Authority, seeing revenue dry up, sicced its cops on the drivers — even though there’s no law against picking up strangers:
A Journal source says the word’s gone out from the Port Authority: no more citations, unless the driver commits a moving violation. We imagine the officers will be watching for violations very closely.
“Yours is the second article I read yesterday about the secret treaty,” writes a reader who caught our take on the Trans-Pacific Partnership. Turns out Washington’s Blog took it on a couple days ago too.
“A couple congressmen and senators have spoken out against this. We need to support them, and get other politicians to do likewise. Please inform your readers how to best go about this, and if there are any other groups that act politically to oppose this treaty. From your article, it appears that the Tea Party and Occupy Wall Street are not very motivated on this topic.”
“Keep up the good work! Your newsletters are addictive, even though they no longer have the hot coffee included.”
The 5: We know of no serious organized opposition. Perhaps, in this case, the proverbial strongly worded letter might get through to a member of Congress, if you appeal to the fact the secret negotiations amount to an executive power grab.
Not that such an appeal cuts much ice in the post-Sept. 11 era. “In war,” said James Madison, “the discretionary power of the Executive is extended; its influence in dealing out offices, honors and emoluments is multiplied; and all the means of seducing the minds are added to those of subduing the force, of the people.”
The coffee stains have migrated, by the way, to the top of Addison’s Facebook page. Heh.
“The Italian you referred to in your item about being nailed by the police with €2 million in gold was on his way into Switzerland,” writes a reader who appears to be in the know.
“Italian Guardia di Finanza are far more interested in stopping people taking stuff into Switzerland than out of it. And the Swiss don’t care how much gold you bring in.”
“Having worked and lived in Italy for the past 10 years,” adds another, “rest assured the Italian police check you entering and exiting Italy.”
“Since Italy is broke,” chimes in a third, “we need to assume that the Polizia di Stato has checkpoints a few miles inside its borders for all those who want to escape paying taxes and going out of the country.”
“Who in his right mind would want to bring gold bars to Italy? So it makes more sense that the guy was trying to move the gold out of the country.”
“I always liked the Mogambo Guru’s words, ‘Here’s my money, so give me my metal!’” writes a reader with more suggestions for rubber-stamping dollar bills.
“Or here’s one: ‘Whee, this inflation thing is easy!’ And ‘We’re freaking doomed!’”
Another reader suggests, “Spend Fast — Depreciates Daily.”
And a Reserve member offers this: “The only buck worth something nowadays has antlers!”
“I absolutely disagree with the poorly thought-out comment about U.S. currency as toilet paper,” a reader writes in reply to one of yesterday’s suggestions.
“As stiff and crinkly as it is, a corncob might be more comfortable. Of course, with the potential health hazard from genetically modified organism corn, that may not be a safe choice. Lordy-Lord, now we really is in deep doo-doo…”
The 5: And in many locales, they’ve stopped printing phone books. Deep, indeed…
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
P.S. Wow, is it ever close for Abe Cofnas’ mock trade of the week. But as long as Dow futures stay above the 12,575 threshold, it’s a 29% payoff. Final results on Monday.
For Abe’s paying readers, it’s been a good week: One aggressive play will expire worthless, but they’re looking at a 12% gain on the Swiss franc… 15% on Germany’s DAX index… 15% on the S&P 500… and 34% on gold. And all in four days.
To learn more about Abe’s trading strategies, look here.
P.P.S. Keep an eye out for 5 Things You Need to Know tomorrow morning — it’s our new weekly wrap-up for busy people who might have missed a 5 or two during the week.