DeepResource

Observing the world of renewable energy and sustainable living

Archive for the category “finance”

Solar Grid Parity in Germany, Holland, Italy, California and Australia

PVgridparity_Snapshot3March2015
Notably in Germany and Holland it pays to invest in domestic solar energy

LCOE = Levelised cost of energy [*]

[iea.org] – Technology Roadmap, Solar Photovoltaic Energy – 2014

[*] – The LCOE represents the present value of the total cost (overnight capital cost, fuel cost, fixed and variable operation and maintenance costs, and financing costs) of building and operating a generating plant over an assumed financial life and duty cycle, converted to equal annual payments, given an assumed utilisation, and expressed in terms of real money to remove inflation.

Winners & Losers Oil Price Collapse

winners-and-losers-Financial-Times-Infographic

This development could postpone the financial Big Reset in the West for a while longer.

[killingmycareer.com] – The oil plunge: the facts and why we should care

Oil Price Collapse

oilprice-collapse[source]

Renewables Energy Subsidies 2013

renewables-subsidies-2013[source]

The Big Reset

big-reset-cover

Self-made man Willem Middelkoop is a well known personality in the Netherlands. He has been a peak oil and financial Cassandra for several years and is often invited in the media. He ran a successful online gold business before he sold it. He is very active on twitter and as such one of the most interesting news sources in all things finance, politics and many other areas, mostly in English. His latest book, The Big Reset, is an international bestseller and translated in many languages. It is about the inevitability of the collapse of the international financial fiat money system and the dollar in particular. Unsurprisingly, he is a gold bug and expects that metal to play an important role again in the world of finance after the crash.

In principle fiat money can work, but only if strict discipline is being maintained and the amount of fiat money in circulation is correlated to the size of the economy. If a central bank is truly independent and has the task of keeping inflation low, than it could work. The German Bundesbank or the Dutch Nederlandse Bank can be seen as a positive examples. But the problem is, the central banks are rarely independent. There is always the politician who can’t resist putting pressure on the central bank to ‘help him out’ or the public demanding ‘an end to austerity’.

After a general introduction about the history of money, Middelkoop changes to a Q&A format, until the end of the book and poses and answers some 86 questions, of 1-2 pages each. Questions like: ‘what is fiat money?’, ‘what is quantitative easing?’, ‘how much gold does China really have?’, ‘will Special Drawing Rights become the new world currency?’, ‘what will be the role of gold?’, ‘how the gold price is manipulated?’, ‘possible debt cancellation scenarios?’, ‘can we grow out of debt?’, ‘could the renminbi replace the dollar?’, ‘is the Fed really independent?’, etc., etc. A few of the questions from the book will be discussed here.

[amazon.com] – The Big Reset

Read more…

Peak Gold Now?

Youtube text: On behalf of Matterhorn Asset Management, financial journalist Lars Schall talked with exploration geologist and mining entrepreneur Keith Barron. They’ve discussed, inter alia: the challenges for gold mining companies; the effects of a downward rigged gold price on Third World countries; the “inevitability” of a gold price at 5000 USD per ounce in the future; and Barron’s support for the Swiss gold initiative.

*Peak Gold = a moment in time that gold mining peaks

[goldswitzerland.com] – “I believe we’ve seen Peak Gold”, Keith Barron PhD

gold-production-2013-by-country
Country ranking by gold production 2013

Top_5_Gold_Producers-timeline
Until 1985 the equation was: “gold = South-Africa”. Now China is the largest producer.
China and Russia are still able to increase production, the others are in decline, so the idea of ‘peak gold’ is not far fetched.

[wikipedia.org] – List of countries by gold production (2013)

Editor: Keith Barron is an exploration geologist with over 27 years experience in the mining sector. He thinks that the world has reached the maximum gold production level (“peak gold”). Additionally he believes that the US in particular is not honest about its real gold stockpile and that most has been leased or sold.

270 Years of Consumer Price Index

270years-consumer-price-index
The breaking point is 1913, the year of the creation of the Federal Reserve. Since then endless new money has been pumped into the world financial system, all against interest.

End the FED, end the dollar, end US hegemony (or should we say: hegemoney?) and end the world’s prime source of instability.
Get rid of your dollars by buying something of value, preferably precious metals.

India Ready to Pay Iranian Oil in Euro

Euro_vs_Dollar
New Delhi, March 23: India is likely to grant Iran’s request to be paid fully in euros for oil, against the current practice of partial payment in rupees… Reports quoting Mohsen Qamsari, director for international affairs of the National Iranian Oil Company, said, “Indians are interested in increasing oil imports from Iran and we welcome this matter in the event that it would be possible for us to receive payments in euros in our accounts.”

[telegraphindia.com]

Gold Production & Reserves

2000px-Map_of_gold_production.svg[source]
(Map shows yearly production in kg)

Many doubt the stability of the current financial system and predict a prominent role for gold in any future financial system. Here an overview of who produces how much. A few observations:
– With a current (Nov 2013) gold price of 1000 euro, 1 ton of gold represents 35 million euro.
– One glance at the map reveals why Mali is interesting for France (gold, uranium).

country-ranking-gold-reserves[full list]
(Country ranking official gold reserves. Source: World Gold Council)
These figures are to be taken with a grain of salt. A lot of western European gold is stored in the US, which refuses to allow verification, not even to members of Congress.

gold-production-2012
(Gold production 2012, source U.S. Geological Survey. Mali ranked #11 in 2006)

10-largest-gold-companies
(10 largest gold companies: 9 Anglo, 1 Russian)

World_Gold_Reserves
(World gold reserves. Source: )

[wikipedia.org] – Country ranking gold production
[wikipedia.org] – Largest gold companies

Read more…

Support for the Euro from Lithuania

dalia-grybauskaite-4fc4939ede15b
We never heard of Lithuanian president Dalia Grybauskaitė before but we already like her. She is committed to bring her country into the euro area by 2015. She correctly denies that there is any euro crisis but instead a debt crisis, self-inflicted by irresponsible behavior of politicians. Hear, hear! Grybauskaitė rejects an opportunistic wait-and-see attitude and wants to join the euro out of principle and solidarity, because Lithuania is a European country. That’s the spirit! The EU is supported by 70% of the Lithuanians, even after the implementation of draconian measures during the past years, that were even more radical than the ones currently underway in southern Europe. Grybauskaitė wholeheartedly supports the austerity policies of Angela Merkel. We wished we had ten more Lithuanias in the EU and one Greece less. Where power hungry politicians with an eye on a career in Brussels try to sell a local southern European debt crisis as a euro crisis, using it as a pretext to further centralize the EU, this woman from Lithuania tells the truth.

[spiegel.de]

US Inofficial Debt $222 trillion

RT text: The US national debt is twenty times higher than is officially reported, approaching $222 trillion, and today’s children could soon be paying their parent’s debts, reputed American economist Laurence Kotlikoff told RT.

[transcript]

Read more…

Euro In Safety Zone Again

euro1-transparent[source]
Bloomberg no longer believes in a euro breakup, if it ever did. The euro gained in comparison to currencies of six top rated nations and “the bonds of Greece, Portugal, Ireland, Spain and Italy — the region’s most indebted-economies– have been the best performers among sovereign debt in that period“. The euro has appreciated 7.1% over the last six months. The currencies of top AAA rated countries like Canada, Australia and Singapore have fallen against the euro by 9.6 % in the past six months.

[bloomberg.com]

Why Peak Oil Threatens the International Monetary System

[part 2]

Erik Townsend discusses the consequences of resource depletion and peak oil for the international monetary system (IMS) and why rising energy prices could very well be the catalyst that will cause the present system to fail. The IMS is basically Bretton Woods, the basis for all international trade. [*] Core element is the elevation of the dollar to world reserve currency status, simplifying international trade. The dollar at the time was still fixed to gold ($35/oz) and was backed by the most credit worthy nation. Countries promised to keep their dollar exchange rates fixed as well. To that end they would be required to hold dollar reserves. That system survived until August 15, 1971, when Nixon abandoned the gold standard.

In 1959 the economist Robert Triffin pointed at a dilemma: “if you choose a currency because it’s a strong credit, and then give the issuing nation a financial incentive to borrow and print money recklessly without penalty, eventually that currency won’t be the strongest credit any more!” Indeed, Nixon proved Triffin right when he ‘temporarily’ had to abandon the gold standard, after a bullion bank run, as the dollar was no longer as good as gold. Especially the French under de Gaulle were notorious for exchanging their surplus dollars against gold. At the same time successful exporting nations had a problem with all these dollars. Changing them back into local currencies would appreciate this currency and result in ever lower returns for export nations. The answer was to not exchange but to invest in US government bonds. The result was that the US government could spend even more, all being a consequence of the reserve currency status of the dollar. The author claims that these exporting nations have little choice but to invest in US bonds. The US can borrow almost against zero cost, a situation described by de Gaulle’s finance minister Valery Giscard d’Estaing as exorbitant privilege.
The big miracle is that the IMS did not fall apart after 1971, when the gold standard was dropped. Sure, the Arabs forced an oil crisis, drastically increasing oil prices, partly because of this. But the system largely kept in place because there was no real alternative and because of the overarching power of the US military (DR: look what happened to Saddam and Khadaffi when they tried to circumvent the dollar).

Now that the U.S.debt-to-GDP ratio now exceeds 100%, and the U.S.has literally doubled its national debt in the last 6 years alone, we see increasingly that trading nations are conduction bilateral trade in their own currencies. Examples China, Brazil, Russiam Turkey and Iran. The author thinks that the Peak Oil energy crisis will be the catalyst to cause a global financial system meltdown, going hand in hand with the dollar losing its reserve status. Key questions: when and how is this going to happen? Answer: the loss of reserve currency status will be the forcing function that begins a self-reinforcing vicious cycle that brings about a U.S. bond and currency crisis. We see that major players like China are openly calling for their own currency to be and alternative to the dollar. The only reason why the US can service its debt is because the FED is able to keep interest rates low… because of the reserve currency status of the dollar. Once that is gone the rates will skyrocket and servicing the debt can become problematic. The author puts great faith in the arguments made by Eric Janszen, or more precisely the Janszen Scenario: the U.S. has reached the point where excessive borrowing and fiscal irresponsibility will eventually cause a catastrophic currency and bond crisis. He believes that all that’s needed at this point is a proximal trigger, or catalyst, to bring about such an outcome. He thinks there are several potential triggers that could bring such a crisis about, and chief among the possibilities is the next Peak Cheap Oil price spike. The crucial thing is that in the seventees the US represented 80% of the world oil market, today that is 20% and growth comes from other countries than the US. This means that it makes ever less sense to price oil in dollar. Once this really happens, trading nations no longer will need so many dollars and will start to dump them.

The author ackowledges that unconventional oil/gas is not a marginal phenomenon, but denies that it will change a lot to the global picture and peak oil. In fact if the US would withdraw from the oil market because it can produce all its oil by itself (a big if), then this would hasten the demise of the dollar as reserve currency as oil exporting countries would no longer have an incentive in charging in dollar. The consequence would be dumping of the dollar and bonds, which would cause US interest rates to go up to a point where the US will be unable to finance its federal budget deficit. If the FED would respond by printing money, the dollar would lose its value and imports would become unaffordable.

The author fears that the US could use its military as a means of last resort to stave off a catastrophe by using (nuclear) blackmail… sell us oil against 50$/barrel or else…

[aspousa.org]

[*] The man behind Bretton Woods was a Lithuanian jew and Soviet spy, Harry Dexter White.

Cash Cow Wind Energy

Roenland_Denmark[source]
In 2010 four windturbines placed near Rønland in NW Denmark were the recordholder in generating energy: 63.2 GWh each since 2003, the year of installation. In market electricity prices at 20 euro cent per kwh, this equals to a yield of 12.6 million euro each to date. Extrapolating this over the total life expectancy of 25 year, this amounts to 45 million euro. These are 2 MW windturbines with an estimated price of 2 million euro, excluding maintenance. In financial terms these figures are fantastic. And after 25 years the cost of the tower and foundation is definitely not written off and they could last centuries, think Eiffel tower, built in 1889. Or this still functioning Dutch windmill, dating from ca. 1630. Expect this record to be broken soon. Considering these figures one cannot escape the conclusion that our energy situation is far from hopeless and that the energy transition is mostly a question of awareness and rethinking old assumptions as well as breaking vested interests of the gas & oil industry.

[energynumbers.info]

Turkey Pays Iran Billions in Gold for Gas

Turkey is now under threat from the US but is not impressed. Antiwar.com: “Energy Minister Taner Yildiz, fresh off his unsuccessful attempted visit to Iraqi Kurdistan, shrugged off the threat insisting that the US can’t sanction trades of gold for natural gas and that Turkey is just going to keep doing it no matter how much the US complains“.

[cnn.com]
[antiwar.com]

Silver Price

[source]
Author of the article points to an often forgotten relationship between the silver price and energy market. Core message article: silver demand only just got started. Reason: investment demand has overtaken industrial demand, the public wants silver coins, not in the least because of a deteriorating confidence in paper money. Between 2002 and 2011 the percentage of silver investment as compared to industrial application rose from 9% to 58%. In short: institutional and retail investors have been the predominant force in pushing silver from an average of $4.60 an ounce in 2002 to averaging over $35 an ounce last year. LBMA in London is the largest physical gold and silver market in the world and there has been strong US silver export to Britain to meet rising investor demand. But additionally silver production is highly energy intensive, because the ‘low hanging fruit’ (where did we hear that expression before?) has already been picked. In six years time the silver content of ore declined 34%. The author suggests to see silver as a store of energy. Now that peak conventional oil is upon us and shale likely a fata morgana, oil and gas. This implies that the ‘energy content’ of silver will increase and thus the price. People increasingly turn away from any kind of paper values (fiat money, metal certificates) and demand the real stuff. What we see happening is a bank run on the LMBA. With declining energy liquids supply, silver production will decline. The author concludes: “Get ready. As the forces for pushing silver over $100 have just begun.

[financialsense.com]
[mirror]

US National Debt Projections

[source]
The US population has spoken yesterday and Obama it is going to be for another term. It does not really matter, except maybe for the issue of war against Iran. The winner takes it all, in this case a sinking Titanic. The US has burdened itself with ambitions it cannot service. But maybe the US rulers, those behind the curtains, do not care about the financial destruction of the US, as it could still serve as a springboard to world government, we don’t know. What we do know is that the post WW2 era, aka ‘the West’, will soon come to an end and a new chapter of history will opened.

[zerohedge.com]

Venezuela Wants Its Gold Back


221 tons to be precise, most from Britain. This is usually a sign of diminishing trust and anticipation that things in the near future could be different than before.

[dailymail.co.uk]

A year ago Venezuela withdrew its gold from Switserland and relocated it in Russia, China and Brazil. Venezuele clearly is putting its cards on SCO/BRICs rather than Anglosphere/The West.

[businessinsider.com]

Oh, and than there is Germany that wants to know if Fort Know really still harbors its gold? Why is Germany’s gold stored in the US anyway?

[zerohedge.com]

Making Sense Of The Goldprice


It is not always easy to make sense of the stream of financial news that is fired at us from the media. Here however is an easy to remember rule of thumb, namely the correlation between the gold price and the amount of money around. For the past five years the correlation between these quantities was an astonishing 0.94. That’s lockstep.

[lewrockwell.com]

Gordon Gekko

The Gekko of the eighties juggled with dollars and other financial assets. Gekko is Wallstreet, Wallstreet is eighties, Wallstreet is the 1%, Wallstreet is out, mega out. The Gekko of the future will juggle with kwh instead of $, that’s where the epicentre of society will be: energy, a commodity that no longer can be taken for granted, but has be fought for. Air is taken for granted, you breathe it without thinking, unless you are sailor on a submarine, that got stuck on the bottom of the ocean. Then every inhalation counts. At some point energy could resemble air in that submarine. It has become finite, very finite. We will have to be creative to extract it from some source. Switching on a light will no longer be done without thoughts. Energy will become far more interesting than money. The energy Gekko’s will know where to get the energy units, which form is to be preferred over an other, against what price.

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