The Energy Revolution…(update)

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Anyone who makes market predictions is likely to get it wrong – at least some of the time. And with the benefit of hindsight, I can admit to it that not all my calls have come good – yet… But I’m in good company – David Einhorn of the hedge fund Einhorn Fund, made only its second annual loss in two decades in the last few days, so I don’t feel quite so bad.

But sadly, I also have to report that a silver miner – Arian Silver, (AIM:AGQ) I thought deserved our attention has had its shares suspended in Canada, and on 29th November, the company announced that Quintana, who had provided the finance, had been given control of assets in lieu of payments due under a financing agreement, leaving little for hard-pressed shareholders. SAD…

However, for those who took their profits on Jubilee Platinum (AIM:JLP) when I recommended an exit, their exit price was just below 4p. The price rose briefly over the next few days, but as expected has now fallen back to circa 3.5p. While Platinum prices remain in the doldrums, JLP remains on the watch list.

Lightbridge Corporation (US:LTBR), who produce Thorium and Beryllium Nuclear Fuel Rods for existing Nuclear power stations, to enable them to increase power, increase the margin of safety and lower production costs, as well as provide consultancy services, has also not done as well as I’d hoped. (See my previous mention Here.)

However, with recent lows in, in commodity prices, which according to reports I’ve seen, now suggest that the next wave of the commodities super-cycle is about to begin sometime in the New Year, and with it, I suspect Lightbridge will follow suit, as Uranium gets more expensive, and cheaper more productive alternatives are sought.. As the old saying goes… “The darkest hour, is just before the dawn.” and never has this been more true in the commodity mining, and energy production space.

Meanwhile, Silver which if it follows the events of the 1970s, will achieve similar price record highs. Silver went from around $1.30 in 1970, to $8 in 1975, before falling back to $4, then on to $48.70 in 1980, which was achieved when Bunker Hunt, and a group of middle-eastern nationals tried to corner the silver market. Its inflation adjusted high, would be $130, but given the amount of currency in circulation, in my opinion, in the next round, it could even hit 10x that 1980 high.

That previous high, wasn’t matched until November 2011, when it touched it for the second time in 40 years. But now, silver has several other things going for it, that it didn’t have those 35 years ago.

For one: Silver is now used in more industrial applications than all other commodities except oil – 10,000 and counting. I even found Silver nano-particles in a shower-gel recently because of its bactericidal properties.

Secondly, Silver was used in money, for centuries, and when it was removed from the monetary system in several countries and finally the U.S. money supply back in 1964, all that above ground silver went into storage. That silver – (circa 10x billion ounces) was sold into the market at the rate of around 200 million ounces per year over the last 50 years, and by 2014, that silver stock had all but gone. The U.S. that year sold none into the market, meaning that as the cyclical lows end in the next few months, those companies still mining, will be able to take advantage of the rising price for the next 4-15 years of this super-cycle.

Third: This time around, there’s 2.5 Billion Indian and Chinese individuals, many of whom (around 800+million) are now classed as middle-class, and will want in on this next price rise in precious metals, and with the $4 Trillion pumped into the American economy, £1.5 Trillion in Britain, €1 Trillion thoughout Europe and ¥200 Trillion in Japan, not forgetting the Chinese Renminbi/Yuan which on 30 November was given the nod to join the IMF currency basket – the SDR – in about April 2016, the Russian Roubles, Indian Rupees, Hong Kong and Singaporean Dollars, Indonesian Rupiah, Aussie Dollars, South African Rand, Saudi Riyahls, Swiss Francs, Danish, Norwegian and Swedish Krona, Korean Wan, Vietnamese Dong, and Malaysian Ringgit, Myanmar Kyats and other nations whose elites will all pile into precious metals. The last time between 1971 and 1980, it was restricted primarily to Europeans and North Americans – about 2-300millions, with a few OPEC elite who also participated.

Q: Is that why J.P Morgan-Chase Bank have reputedly accumulated 350 million ounces of silver on their own account?

The timing couldn’t be better for those with some spare investment money. Remember: “The darkest hour is just before the dawn.”.

But, the really important reason for those who live under the control of the U.S. Dollar, is that there are now many pundits predicting a crash for the dollar in the next major stock market financial crisis.

So much so, that there are also those who are predicting a total collapse of the U.S. banking system, bloated as it is, on derivatives and free or almost free currency from the Fed.. And the most bloated bank of them all, appears to be Goldman Sachs, if the information received is reliable. A precious metals spike, or dollar collapse, may be the straw that breaks the camel’s back.

In the energy space, oil prices are low due to several factors. As the world economy evolves during this demographic shift as baby-boomers retire, and prepare for this shift in their lifestyles, the new technologies waiting in the wings are now being developed.

In the Solar Energy sphere, some companies previously mentioned (see above link) are also down as the world economy has slowed, and revenue growth has succumbed with it.

The following all previously mentioned are all down slightly.

Vivint Solar – VSLR
Solar City – SCTY
Canadian Solar – CSIQ
Trina Solar – TSL
Jinko Solar – JKS

One new name not mentioned in that list, who have just signed major contracts with two Californian utility companies, is First Solar. (FSLR) whose revenue, which dropped during the first quarter of this year, has in the last quarter exceeded the previous high of 2014, and looks set to continue this rising trend due in large part to its superior technology, which according to their web-site, produces 8% more energy than other powerplants with similar capacity in high temperature, and high humidity environments.

Solar Edge – SEDG also operating in this arena, supply their kit to some of their apparent competitors. (Jinko and SolarCity to name but two)

Solar Edge use their own design inverters, and the TESLA powerwall battery technology to store energy from their own PV panels, typically mounted on domestic roofs.

However, there’s another development, by SunVault Energy, SVLT:OTC BB and Edison Power (ED or EIX) that has promise, they have agreed to co-develop a motor-vehicle, capable of beating the fastest cars currently available, but using SunVault’s Graphene based Super-Capacitors, which charge extremely fast, and with a water fuelled fuel-cell that will act as a back-up, giving the range, power and flexibility of the best of the markets Porsches, Ferraris, and Lambourghinis with 0 – 100kph times of circa 2.5 seconds. The technology is expected to be available by mid-2016.

Meanwhile, Skeleton Technologies is also building super-capacitors, which are set to revolutionise the battery marketplace. Used in several industrial applications from Motorsport, Aerospace to Heavy Transport, their super-capacitors can be installed in trucks to provide fuel savings, up to 50% extended battery life, faster cranking, reliable starting, rested drivers and reduced pollution. How much growth is likely in this narrow market is a moot point, but if its broader applications are recognised and tackled, this too could be one to watch.

Both technologies use Graphene in building the storage capability. So this bodes well for both graphene as a product, and Graphite miners, who have good resources and low mining costs.

That said, one company in the Graphene marketplace, I have been watching for a while before dipping a toe in the proverbial water is a company that manufactures graphene from waste palm oil. The company has several products currently in production, That said they are going through a transition at the moment from a low value low profit, but high demand product, to lower demand, but higher value and thus higher profit margin products in the oilfield services industry. The share price has fallen as they exited that particular marketplace, but is now going to be able to focus on its higher value-added product set.

That Company is Graphene Nanochem, (GRPH:L). The company is listed on the UK AIM index, and operates in Malaysia, and the Far-East with a growing client base in emerging market oilfield service companies. This should therefore, be one that rises from its low price level of circa 12p as oil prices recover, and exploration expands again.

So, why the concentration on Solar as I have done. Well, the recent Paris climate talks, together with the almost exponential increments in power to costs ratio that has occurred in the last 4-5 years, bringing the cost per Kwh down to as little as $0.05/Kwh, has seen interest in Solar Energy explode. And new financial arrangements developed in California, has seen interest there explode 16 fold since 2008.

Events in Cumbria, where reports of 360 mm of rainfall in 24 hours, beating the previous record of 240 mm falling just 6 years ago, which was at that time, supposedly a once in a 100 year event. There will be those naysayers, who say this has nothing to do with man, and others using this to ram home the message – we need to do something about our weather, other than just building up flood defences.

The whole Solar power realm therefore, coupled with developments in Graphene, and Super-capacitor technology, means this segment of the market can only continue to grow at exponential rates for the foreseeable future.

I hope I’ve given you some food for thought, and further research…

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Also a review of Graphene Nanochem.;