Friday, 4 December 2015


Baltic Dry Index. 574 -16        Brent Crude 43.83

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

Murray N. Rothbard

The big news today is what OPEC decides. Will the Saudis cave in to pressure and cut their production? Unlikely. Or will the massive crude oil over production do in the American frackers and Canadian tar pits? My money is on crashing American frackers, but if the Saudis cave in, a massive global short covering panic will set in in the futures market of “paper” oil. A ten dollar temporary oil spike could easily be the result. Still my money is on the Saudis holding firm. Twenty dollar oil it will be in 2016. But will OPEC move to accept oil traded in Yuan?

OPEC Heads for Status Quo as Members Clash Over Output Cut

December 3, 2015 — 9:26 AM GMT Updated on December 4, 2015 — 4:55 AM GMT
OPEC looked on track to maintain the status quo after member states clashed over oil production policy at an unusual informal gathering before the group’s official meeting in Vienna on Friday.

Saudi Arabia held its line on Thursday, insisting other big producers outside the group such as Russia would have to join any output cuts by the Organization of Petroleum Exporting Countries, according to a person with knowledge of the discussions in a Viennese hotel.

With oil prices hovering near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production. A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.

The Saudis, the world’s largest oil exporters, have stuck to their one-year-old view that any output cuts won’t work unless big producers outside OPEC, including Russia and Mexico, join. If prices recover sharply, it could revive some U.S. shale production, displacing OPEC crude.

Russia, Mexico and other big producers outside OPEC have given no indication they would agree to any OPEC-led output cuts. Russian Energy Minister Alexander Novak said Thursday that the country doesn’t see a production cut as viable.

----At the informal gathering in a Viennese hotel, Venezuela tabled a proposal to reduce current production by about 5 percent, the person said, asking not to be identified because the meeting was private. Several other countries backed the proposal, the person said. Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Saudi Arabia didn’t propose a cut.

Don’t write off the future of oil and gas just yet

The speed of change to greener alternatives is extraordinary, but we will still need the black stuff

Remember “Peak Oil”, the theory popularised by Marion King Hubbert – a geologist at Shell – to the effect that worldwide production of petroleum would soon reach its maximum potential, after which it would go into terminal decline? By now, we were meant to be running out of oil, resulting in sky high prices, rationing and descent into international conflict for scarce energy resources.

In the event, it never happened. Thanks in part to the development of American shale, there is today an unprecedented glut of the black stuff, sending the oil price plummeting and helping to reshape the geopolitical state of the world, very probably for the better.

Russia’s Vladimir Putin once boasted that his country’s oil and gas reserves were a more potent weapon than nuclear bombs. He must think again. Likewise, the Gulf states are struggling to maintain their often malign influence on the region and the world economy. This week’s meeting in Vienna of the Organisation of Petroleum Exporting Countries (Opec) will confirm a cartel all at sea, having lost its once all-powerful grip on prices and supply.

In any case, worries about running out of oil have transmogrified into a different concern – that if we are to safeguard the future of the planet, much of the world’s known hydrocarbon reserves will have to be left in the ground. Efforts to limit man-made climate change, the theory goes, will render these reserves “stranded”, and therefore essentially worthless.

In terms of substance, the two ideas argue the same thing – that man’s use of hydrocarbons, the transformative energy source of the past two centuries, is essentially time limited and is fast running out. Coal is a different story, which I’ll come to, but as far as oil and gas are concerned, the “stranded asset” argument is as much of a red herring as “Peak Oil”.

Whatever the environmentalists at the COP21 Climate Change conference in Paris tell you, the reality is that oil still has a long future ahead of it. And it is one, moreover, which is perfectly compatible with any realistically framed shift to a low-carbon economy.

China says to cut power sector emissions by 60 percent by 2020

Wed Dec 2, 2015 10:38pm EST
China will cut emissions of major pollutants in the power sector by 60 percent by 2020, the cabinet announced on Wednesday, after world leaders met in Paris to address climate change.

China will also reduce annual carbon dioxide emissions from coal-fired power generation by 180 million tonnes by 2020, according to a statement on the official government website. It did not give comparison figures but said the cuts would be made through efficiency gains.

In Paris, Christiana Figueres, head of the U.N. Climate Change Secretariat, said she had not seen the announcement, but linked it to expectations that China's coal use would peak by the end of the decade.

"I can only assume they are talking about the same thing," she told Reuters.

Researchers at Chinese government-backed think-tanks said last month that coal consumption by power stations in China would probably peak by 2020.

An EU official, speaking on condition of anonymity, said Wednesday's announcement seemed to relate more to air pollutants than greenhouse gas emissions.

China's capital Beijing suffered choking pollution this week, triggering an "orange" alert, the second-highest level, closing highways, halting or suspending construction and prompting a warning to residents to stay indoors.

The smog was caused by "unfavourable" weather, the Ministry of Environmental Protection said. Emissions in northern China soar over winter as urban heating systems are switched on and low wind speeds meant that polluted air does not get dispersed.

The hazardous air, which cleared on Wednesday, underscores the challenge facing the government as it battles pollution caused by the coal-burning power industry and raises questions about its ability to clean up its economy.

In the unfolding commodities depression, expect a giant wave of bankruptcies in 2016. The “commodities super cycle” of last decade set off a biblical epic of debt fuelled malinvestment, from copper, to iron ore, to cement. Now comes the unpleasant aftermath. Money lost is just that. No amount of smoke and mirrors brings it back. We are entering a period of reality pain.

Why Bankruptcy Might Be the Mining Industry's Last Best Hope

December 3, 2015 — 12:00 AM GMT Updated on December 3, 2015 — 12:38 PM GMT
For the world’s ailing metals-mining industry to have any hope of a turnaround, more producers may have to go belly up.

Companies that dig up everything from gold to copper have failed to stem a prolonged collapse in mineral prices mostly because not enough mines are closing. Years of increased output have created global surpluses just as slower economic growth erodes demand. Unprofitable operations were kept alive by across-the-board cuts in operating costs, lower energy prices, a strong dollar and the unfulfilled hopes by mining executives that markets will improve.

“We are going to see bankruptcies,” Evy Hambro, who manages Blackrock Inc.’s $3.5 billion World Mining Fund, said at a conference in London on Tuesday. “Some companies have been praying for commodity prices to deliver a kind of escape route from the problems that they face. That’s clearly gone the other way.”

While nobody expects industry giants such as Rio Tinto Group or BHP Billiton Ltd. to go bust, higher-cost producers and those unable to raise more cash are vulnerable as a measure of base-metals prices heads for a third straight annual decline. The loss of value means more companies are getting closer to default, Moody’s Investors Service said Wednesday.

There have been some production cuts, but the rout has deepened because companies are still supplying more metal than is needed around the world. Most mining executives don’t want to trim even unprofitable output because the resulting tighter supply and higher prices would benefit rivals.

----“We need to see supply cuts across these markets to try to bring them back into balance,” said Colin Hamilton, global head of commodities research at Macquarie Group Ltd. in London. “It’s either companies making the decisions themselves, or it comes through a full process of people dying very slowly.”
A gauge of contracts on the London Metal Exchange has slid 26 percent this year, the most since 2008, to near the lowest in six years. About 15 percent of copper production and a quarter of zinc output are unprofitable, while 60 percent of aluminum and 70 percent of nickel are supplied at a loss, according to Standard Chartered Plc.

We close for the week with more on our ever changing world. Tomorrow will not be like today, which was like yesterday. Tomorrow will increasingly usher in cleaner energy. But don’t expect any miracles. China and India are still building hundreds of new coal power stations. It’s the only way short term to meet the demand for electric power.

Google Buys 781 Megawatts of Wind, Solar Power in Three Nations

December 3, 2015 — 11:00 AM GMT
Google, the world’s biggest corporate buyer of renewable energy, is expanding its clean power portfolio with deals for 781 megawatts of solar and wind power.

The Alphabet Inc. unit completed five deals to buy the output from power plants in the U.S., Chile and Sweden, and now has contracts for 2 gigawatts of renewable energy worldwide, according to a statement Thursday. The power-purchase agreements run from 10 to 20 years.

“It’s the largest, most diverse purchase of renewable energy by a non-utility,” Michael Terrell, Google’s principal of energy and global infrastructure, said in an interview.

The announcement coincides with the climate talks in Paris, where envoys from almost 200 nations are seeking to complete a global deal to limit greenhouse gas emissions.

“We wanted to send the message that corporate America is really committed to driving the transition to a clean-energy economy,” Terrell said.

Google will buy 200 megawatts of power from Renewable Energy Systems Americas Inc.’s Bluestem wind project, and 200 megawatts from Electricite de France SA’s Great Western wind project, both of which will be built in Oklahoma. The company will also buy 225 megawatts of U.S. wind power from independent power producer Invenergy LLC.

In Chile, Google will use 80 megawatts of solar power from Acciona Energia SA’s El Romero farm, which will be built in the Atacama region. And in Sweden, the company agreed to buy 76 megawatts of wind power from Eolus Vind AB’s Jenasen wind project, which will be built in Vasternorrland County.

Google signed its first large-scale power purchase agreement in 2010, when it agreed to buy power from a wind farm in Iowa. Last week, Google announced that it would buy 61 megawatts from a solar farm in North Carolina -- the first customer under a new state program that lets companies buy renewable energy directly from local utilities.

In July, Google committed to tripling its purchases of renewable energy by 2025. At the time, it had contracts to buy 1.1 gigawatts of such power.

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

“Adam Smith” aka George Goodman.

At the Comex silver depositories Thursday final figures were: Registered 42.93 Moz, Eligible 115.02 Moz, Total 157.95 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Below, it sounds like Russia is going to squeeze more than a few Turkish tomato farmers. The Erdogan gang are likely to feel a lot of heat for a lot longer than Sultan Erdogan bargained on. Russian hackers will dog him for years.

Putin: Turkey won’t get away with "tomato bans"

December 03, 12:47 UTC+3
The Russian president has accused Ankara of supporting terrorists but said he considered the Turkish people friendly
MOSCOW, December 3. /TASS/. Russia will not indulge in sabre rattling, but Turkey should brace for a far harsher response than the decision to impose a ban on the export of tomatoes to Russia, President Vladimir Putin said in the annual address to the Federal Assembly on Thursday.
"Nobody will ever see a nervous, hysterical reaction, risky for ourselves and the whole world. A reaction that might yield some external effects or, possibly, brief and timeserving gains," he said. "There will be nothing like this. Responsibility for the country and the people will be the basis of our actions. We are not going to indulge in sabre rattling and we will not do that."
"If somebody may have thought that after committing a treacherous war crime - the killing of our people - it will be possible to get away with restrictions on tomato trade or some other restrictions in the building and other industries, they are grossly mistaken," Putin said. "We shall remind them many a time what they have done and they will more than once feel regret what they have done. We are perfectly aware of what action is to be taken."
"Our armed forces, secret services and law enforcement agencies have been mobilized to give a rebuff to the terrorist threat," Putin said. "Everybody should be aware of one’s responsibility: the authorities, political parties, civil society structures and mass media. Russia’s strength is in the free development of all peoples, in the diversity and harmony of cultures, languages and traditions, in mutual respect and dialogue among the Orthodox Christians, Muslims, Judaists and Buddhists."
"We are obliged to firmly resist any manifestations of extremism and xenophobia and take care of the inter-ethnic and inter-religious accord. This is the historical basis of our society and of Russian statehood," Putin said.
The Russian president has accused Ankara of supporting terrorists but said he considered the Turkish people friendly.
"We know who in Turkey makes money and allows terrorists to make profit," the Russian president said in his annual State of the Nation Address on Thursday. According to him, this money is used by gunmen for "recruiting mercenaries, purchasing weapons, organizing inhuman terrorist attacks directed against our citizens, citizens of France, Lebanon, Mali and other countries."
The Russian president recalled that militants who operated in the North Caucasus in the 1990s and 2000s had taken refuge and received financial backing in Turkey. "And now they are still spotted there," he said.
"Meanwhile, the Turkish people are good, hard-working and gifted. We have a lot of old and reliable friends in Turkey. I will emphasize that we do not equate them and the part of the current ruling elite, which bears direct responsibility for the deaths of our service members in Syria," the Russian leader said.
"We will not forget this complicity with terrorists," the Russian president noted. "We have always considered treachery to be the worst and the most shameful thing. Let those in Turkey who shot our pilots in the back, who are hypocritically trying to justify themselves, their actions and cover up the crimes of terrorists know this," he said.
Putin noted he was curious as to why the Turkish authorities had issued the order to shoot down a Russian warplane. "Any questions, any problems and contradictions that we did not even see should have been resolved in a totally different way. We were ready to cooperate with Turkey on the most sensitive for it issues and were ready to go as far as its allies were unwilling to go. Maybe, only Allah knows why they did that," the Russian president said.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this new section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Rwanda’s eye-grabbing solar power facility has roots in a shared experience with Israel

December 02, 2015
What does the Holocaust have to do with a gleaming $27 million, 8.5 megawatt solar energy facility in the heart of east Africa? More than you might think.

The burgeoning ties between Israel and Rwanda—fueled in part by what the two nations perceive as their shared experience as genocide victims—helped spur Israeli green energy pioneers to build the field of 28,360 solar panels on a verdant rolling hillside outside Kigali.

The sprawling project went from contract signing to completion in a lightning-quick 12 months and is already providing 6% of Rwanda’s power. Yosef Abramowitz, the CEO of Gigawatt Global, called that evidence of Rwanda’s place as a business and tech-friendly role model for the continent.

“It is a symbol of hope for sub-Saharan Africa’s tens of millions of orphans and 600 million people without power,” said Abramowitz, who in 2006 co-founded solar giant Arava Power, one of Israel’s pioneering solar companies.

Not coincidentally, the solar plant, which went online in February, is built on the grounds of a non-profit called the Agohozo-Shalom Youth Village, which was founded by Jewish philanthropists to care for orphans of the 1994 genocide in which up to 1 million Rwandans were murdered.
The group says it uses strategies developed by Israel’s kibbutzes after the Holocaust.
“There is definitely a parallel with Israel,” said Jean-Claude Nkulikiyimfura, the village’s director, though he couldn’t comment further on the broader strategic relationship between Israel and Rwanda. “The genius is to take the model and tweak it for the Rwandan context.”
Abramowitz relishes the idea of supporting the non-profit’s charitable mission by leasing its land for the solar plant, which is built in the shape of an enormous map of Africa. He also aims to create a inspiring model that could be replicated in other parts of the continent or other parts of the developing world.

Another weekend, and the Christmas retailing madness is in full swing, have a great weekend everyone.

The monthly Coppock Indicators finished November

DJIA: +25 Down. NASDAQ: +121 Down. SP500: +45 Down. 

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