The End of Silicon Valley

February 28, 2013

  • Massive to miniscule: History is repeating itself in one “tinier” innovation…
  • China counters hack accusations… claims the U.S. has some ‘splainin’ to do…
  • The chairman has spoken… apparently, nobody was listening… but one spark of interest emerges…
  • Revisiting the “Carson City recluse”… Another cruise ship? Really?… Sequester pie charts… and more!

  If you’ve ever wondered what happened to make computers go from massive to minuscule, it was one innovation: the silicon transistor.

Put simply, a transistor is what amplifies and switches signals and power in electronic systems. It’s what turned the living room-sized computer into the today’s laptop and smartphone. No transistor, no modern technology.

  And now, the next wave.

“Electronic engineers at Japan’s GNC and AIST research centers,” reports the tech blog ExtremeTech, “have successfully created graphene transistors that are constructed and operated in a way that redefines 50 years of transistor development.”

The graphene transistors “could potentially be many times smaller, hundreds of times faster and consume much less power than silicon transistors.”

If you can imagine that.

  Enter “Graphene Valley.”

“At MWC 2013 in Barcelona,” ExtremeTech goes on, “Samsung has announced that it will be funding new research into graphene-based antennae for intra-chip communication in the terahertz band.”

Or, as ExtremeTech is calling it, the “graphennae.”

Samsung is shooting to be the first to create chips that communicate wirelessly within a frequency band silicon chips are physically unable to “reach.”

“Thanks to the unique properties of this nanomaterial,” Nanowerk News writes, “the new graphene-based antenna technology would also make it possible to manufacture antennas a thousand times smaller than those currently used.”

So what’s it to you, the smartphone user… and connoisseur of bleeding-edge investing opportunities?

The difference between graphene antennas and the current silicon-chip variety is like — as ExtremeTech puts it — “ants conducting signals more efficiently by drumming on branches rather than emitting into the air, or elephants thumping the ground with seismic infrasound. On board a chip, we are just beginning to imagine the full potential of this technology.”

Smaller… faster… and with a ton more battery life. “Silicon” Valley is about to be turned upside down.

[Ed. Note: In case you’re wondering, this isn’t the “special announcement” we’ve been anticipating from Samsung. Although good news for graphene, what we’re expecting Samsung to do, beginning next month, will set the stage for the “development” era of graphene. And, subsequently, skyrocket shares of a company Byron King follows. But time is of the essence — your chance to get in while it’s still cheap ends forever tonight at midnight. Click here to act before it’s too late.]

100  “Wasn’t it an American [computer] virus,” a reader writes, leading us to our next point of discussion, “that backfired which made a mess of some American company’s system recently? Maybe the Pentagon should make good on its ‘missile down your smokestack’ threat…”

Well, yes. Indeed, it’s the Stuxnet computer worm aimed at Iran’s nuclear plants.

“For people who worry about the security of critical U.S. facilities, Stuxnet represented a nightmare,” reported NPR in late 2011: “a dangerous computer worm that in some modified form could be used to attack an electric or telecommunications grid, an oil refinery or a water treatment facility in the United States.”

  As we noted in The 5 last week, security company Mandiant released a report blaming China for a series of hacks targeting companies and government agencies in the United States.

Now the Chinese say they’re the real victims.

“The Defence Ministry and China Military Online websites,” ministry spokesman Geng Yansheng told Reuters this morning, “have faced a serious threat from hacking attacks since they were established, and the number of hacks has risen steadily in recent years.

“According to the IP addresses,” Geng goes on, “the websites were, in 2012, hacked on average from overseas 144,000 times a month, of which attacks from the U.S. accounted for 62.9%.

“We hope,” Geng says, “that the U.S. side can explain and clarify this.”

Heh… Let’s see how long the tough talk from Washington about sanctions will last…

  And that’s not the only card China played this week…

“For the first time,” Bloomberg reports, “China’s yuan has overtaken the Russian ruble for transactions in the global payment system, according to Society for Worldwide Interbank Financial Telecommunication (SWIFT), a financial messaging platform.”

According to a recent report released by SWIFT, global usage of the yuan increased 24% between December and January… and a whopping 171% from a year ago.

The yuan is a “very young currency,” SWIFT senior business manager James Willis says. “Growth has been dramatic and this is something we expect to continue.”

A trend that we last referred to in our virtual pages last December, alluding to one of six of Apogee’s predictions for 2013 and beyond: $5,000 gold by 2015. We’ll have much more to say about this in the month of March…

  As we write this morning, gold has slid below $1,600 again, to around $1,591. Spot silver is down around $28.80.

  The big bullion story, however, centers on 2013 U.S. Silver Eagle sales.

You remember last month, that the U.S. Mint ran out of its first issue in only 10 days. January sales set a monthly record of 7.5 million.

As February draws to a close, the total is 3.37 million — the highest February ever.

Year to date, that’s nearly 11 million. Assuming the sales pace of the first two months this year keeps up — admittedly a tall order, but nonetheless plausible — Silver Eagle sales will smash the annual record of nearly 40 million set in 2011.

[Ed. Note: We covered the high demand for physical precious metals in this month’s Apogee Advisory— describing a “zero hour” scenario when the price of real metal in your hands starts to run away from the price you see on CNBC’s ticker. Not an Apogee reader yet? You can remedy that here.]

  Stocks are taking a breather. The Dow has slid 11 points from its latest post-2007 high yesterday. But the S&P and the Nasdaq are slightly in the green.

  “Monday was a scary day for stocks,” our stock technician Jonas Elmerraji writes. “After drifting lower late last week, the major indexes recorded their worst day of the year after opening higher. Unexpected Italian election results hogged all of the attention — and stocks moved considerably lower by midmorning.

“But Tuesday’s hold off the market’s lows and Wednesday’s broad rally have quickly turned the market from gloomy to giddy. It’s now becoming clear that a solid trend channel is emerging in the S&P 500:

“The channel really puts the past week in perspective,” he goes on. “Stocks reacted favorably to solid data yesterday — and continued to push higher throughout the day. The Russell 2000 — which was hit especially hard during the brief pullback — resumed a leadership role, along with the Dow transportation index and homebuilders.

“It’s all too easy to get sucked into the bull versus bear talk churned out by the financial media every hour. But this information won’t help you trade. Charts like this help us interpret the market’s important messages. Right now it’s telling us that a healthy bounce is brewing.” [Access to Jonas’ trading guidance is available here.]

  Speaking of headline noise, how did Ben Bernanke’s testimony to Congress affect markets? Uh, not much — judging by this chart of currencies, the S&P 500 and 10-year Treasuries going back to 2007…

Call it a wash.

  But this time around, an intriguing nugget emerged. His testimony confirmed reports the Fed will remit less or even no “profits” to the Treasury once it starts selling off its $3 trillion-plus balance sheet.

Seriously, this is what the mainstream is worried about?

In 2012, the Fed sent the Treasury an estimated $88.9 billion in so-called “profits” on its holdings — including all U.S. Treasuries purchased that year. The left hand can’t pay the right fast enough.

“Looking toward the Fed’s previous goal of beginning to reduce its balance sheet by selling bonds in the open market in mid-2015,” suggests MSN Money’s Jim Jubak, “it’s only logical to ask when will traders begin to sell their bond holdings in anticipation of that move or when will they start to demand higher interest rates in compensation for greater uncertainty in Fed policy?'”

Ah, yes… That’s when the mother of all financial bubbles blows at long last.

  Less boring lately: Europe. Kind of.

“European Union leaders,” Dan Amoss writes, “are pressuring rival parties in Italy to form a unity government — one that will continue Mario Monti’s austerity policies. Outside pressure from Brussels will only further irritate the Italian public. Voters rejected Monti’s austerity, and they won’t support any more of it.

“This leaves two options for German politicians:

“1) Continue supporting Italy through the European Central Bank (ECB), despite its unwillingness to reform its budget. This would ruin the euro’s reputation as a store of value.

“2) Plan for a breakup of the euro by preparing to support and recapitalize the banking system.

“Circumstances may force German Chancellor Angela Merkel to make this decision before fall elections. She is campaigning for re-election on a platform that she has kept the euro crisis under control without burdening Germany with excessive costs or ruining the integrity of the euro. As costs of holding the euro together mount, Merkel may no longer be able to use these campaign talking points.

“The ECB’s ‘Outright Monetary Transactions’ (OMT) program, announced by Mario Draghi last year, is credited for ending the euro crisis in 2012. Bullish European investors seem to forget that before implementing OMT to buy unlimited amounts of Italian bonds, Italy must formally request a rescue from the EU bailout fund and subject itself to budget austerity. Then — and this is the tricky part — the German Bundestag must vote to approve disbursement of EU bailout funds.

“There are no happy endings from this situation: Either the euro’s value collapses on fears that the ECB will monetize Italy’s debt with no budget austerity conditions (which means other countries like Spain, Portugal and Greece will stop austerity programs) or we see a return of banking system stress and euro breakup fears.

“Plan accordingly…”

[Ed. Note: Today’s PRO features one follow-up play to profit from the ongoing euro-turmoil. If interested in going PRO, click here.]

  “Every one of us has a little hoarder nature in our culture,” Alan Rowe of Carson City bullion dealer Northern Nevada Coin told reporters, “and we all like to have things, but to this degree is quite a story.”

We made a mention last September of the “Carson City recluse” Walter Samaszko Jr., who passed away with $200 in his checking account… and $7 million in gold discovered by a cleanup crew, much to the surprise of his neighbors.

A recap: “Officials discovered the trove neatly wrapped and stored mostly in ammunition boxes stacked on top of each other,” AP writes. “There were more than 2,900 Austrian coins, many from 1915; more than 5,000 from Mexico; at least 500 from Britain; 300 U.S. gold pieces, some dating to 1880; and more than 100 U.S. gold pieces as old as the 1890s.”

The first auction, which raked in more than $3.5 million for roughly 150 pounds of the Midas metal took place on Tuesday. After the $800,000 in fees and estate taxes, the rest will go to Samaszko’s first cousin and sole heir, a substitute teacher in San Rafael, Calif.

  At least no one is on board this time…

An empty cruise ship floats aimlessly off the coast of Ireland. Named the Lyubov Orlova, it’s been free floating for near two months.

It was a cruise ship until it was seized at a Canadian port for debts owed by its Russian owners. Last year, it was bought by individuals in the Caribbean. As the ship was being towed away for delivery, the cable broke. Days later, it was reattached, only to snap free again.

Now everyone’s adopted a policy of “let’s pretend this free-floating eyesore doesn’t exist”– except the buyer. He can’t seem to get anyone to help him out. It seems pretty clear to us that this can end only so many ways….like it becoming the problem of whoever’s shore it beaches up on.”

If no pays attention to a ship floating in the ocean, does it really exist?

The rat-filled liner has now been spotted drifting toward Europe.

  “This chart showed up on Facebook,” one reader writes. “It looks just like one you published a while back, but with a little more.

“Thought you might like this.

The 5: And as noted yesterday, the $85 billion is really $44 billion.

Cheers,

Dave Gonigam
5 Min. Forecast

P.S. Final reminder: Access to Byron King’s premium research identifying the very best way to profit from the graphene-tech revolution expires tonight at midnight. Act here.

rspertzel

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