BOOM as at 17th December 2018

INCONVENIENT TRUTH IN CLIMATE CHANGE DEBATE
THE RARE EARTHS ROADBLOCK

The energy debate seems lost in narrative.

Protagonists seek to outdo each other in hyperbole — “climate collapse is coming”, “an ice age is coming”, “the globe is warming”, “the thermosphere is cooling rapidly”, “electric cars will save us”, “how will we dispose of the batteries?”, “electric cars need huge distributed base load power stations for re-charging”, “Elon Musk is a genius”, “the oceans will wash away islands”, “the oceans will provide wave energy”, “large bushfires and wildfires are caused by climate change, hurricanes are getting more frequent and more violent”, “hurricane frequency and severity have been the lowest ever recorded over the last decade”, “we must reduce CO2 emissions by 45% by 2030”, “we must do that while excluding 3 billion people from any responsibility (China and India)”, “we must do that while excluding the two largest economies on Earth (China and the USA)”, “solar panels and windmills can replace conventional energy generation”, “we will need more conventional energy generation to build more solar panels and windmills”, “climate science is settled”, “science is never settled”.

On and on the arguments go but facts seem to be rarely discussed. Some say “the facts are settled” and refuse any further discussion. They appear completely satisfied with narratives. That stymies any further consideration of new facts. Their view is fascist in nature. Mussolini would be proud.

The debate has become suffused with what appear to be semi-religious, moral and political motivations. Virtue signalling is rampant. The tendency towards catastrophic rhetoric is increasing. BOOM has noted the terms “Climate Collapse” and “Climate Breakdown” being used more frequently. “The whole planet is under threat” is another.

So let’s just look at one key fact that will impact very much on any plans to transition to alternative energy technologies — the availability (or not) of rare earth metals in the future.

What the hell are Rare Earth Metals?

The first thing to know is that rare-earth elements are not rare. They can be found in many places on the planet however they need to be refined and that is where there is a catch. The refining process is a very toxic and environmentally damaging process. China dominates in refining rare earth metals. These critical metals are especially used in low-carbon technologies such as in solar panels, the electric motors of hybrid vehicles, electric vehicles and windmill turbines. Those products can include rare earth metals such as magnetic neodymium, electronic indium, and silver, along with lesser-known metals like praseodymium, dysprosium, and terbium.

A new scientific study supported by the Dutch Ministry of Infrastructure has warned that shortages in the supply of rare earth metals could be coming. The study is called METAL DEMAND FOR RENEWABLE ELECTRICITY GENERATION IN THE NETHERLANDS — Navigating a Complex Supply Chain.

The very first sentence in the Summary of the Report is shocking — “Current global supply of several critical metals is insufficient to transition to a renewable energy system.” And the calculation made in the study only accounts for solar panel and windmill turbine production. It does not take into account the demand for rare earths in electric vehicles or consumer electronics. This means that any coming shortage could be much worse than anticipated in the report. “Houston, we have a problem”.

Link: https://www.metabolic.nl/publications/metal-demand-renewable-electricity-generation-netherlands/

More from the Report Summary — “The global energy transition requires a rapid and global rollout of renewable energy technologies. Safeguarding the supply of the required critical metals needs greater attention, since supply and demand cannot be guaranteed through a free market. Mining of the required ores takes place in a few select countries, and refining of these ores is concentrated in even fewer countries.

Geopolitical powers will shift from oil-dominated countries to critical metal-dominated countries. A second important issue is the slow scaling rate for critical metal production: opening a new mine takes 10 to 20 years and large capital investments, making it difficult to meet a rapid increase in global demand with a comparable increase in global supply. Mining corporations require a global, long-term investment assurance to be able to fund new mining and refining activities.”

And more here — “The supply chain of critical metals is extremely complex. Not all theoretical reserves are technically (or economically) extractable, and with ore grades declining, mining requires an increasing volume of water and energy. Furthermore, mining is often associated with significant environmental and social costs“.

In 2017, China produced 81% of the world’s rare-earth supply, mostly in Mongolia, although it has only 36.7% of reserves. Why is that? Because it dominates the environmentally damaging refining process being responsible for 95% of that. Australia is the second and only other major producer with a refining plant in operation in Malaysia.

Perhaps recycling can solve the problem? That sounds convincing but, at present, less than 1 % of rare earth metals are recycled and some are not recycled at all.

Facts are so inconvenient, aren’t they? The truth can hurt. This problem may well be the Achilles heel of any utopian dreams concerning a proposed successful transition to solar energy or wind energy.

But who cares about facts? After all, they often do get in the way of a good story.

The closing remarks of the Dutch report should be chilling to the Transitionists — “As future demand of these (rare earth) metals exceeds the expected supply, the energy transition becomes a vulnerable process.”

VACLAV SMIL
ENERGY REVOLUTION? MORE LIKE A CRAWL

Vaclav Smil is a Czech-Canadian scientist and policy analyst. He is Distinguished Professor Emeritus in the Faculty of Environment at the University of Manitoba in Winnipeg, Manitoba, Canada and he has written over 40 books and many scientific articles on energy.

Smil is sceptical that there will be a rapid transition to clean energy, believing it will take much longer than many predict. Why? Because all technology is slowly adopted in a global sense. That is what history teaches us. BOOM strongly recommends that you watch “Energy Revolution? More like a Crawl” — a video freely available on Youtube.

Link: https://www.youtube.com/watch?v=5guXaWwQpe4

GDP FALLS — SANTA WILL SAVE US

Significant falls in Real GDP growth have occurred recently in Australia, Germany, France, Japan, Sweden, Switzerland and Italy.

Australia’s GDP growth dropped to 0.3 % for the September quarter and its forecast annual growth dropped from 3.5 % to 2.8 %. Germany’s GDP growth for the September quarter was negative -0.2 %. France’s GDP growth for that quarter was 0.4 % with annual growth falling to 1.4 % and that was before the Yellow Vest demonstrations which will certainly cause another drop in growth for the December quarter. Another negative number was delivered in Japan for the September quarter with the GDP falling to negative – 0.6 %. Their annual growth rate is now officially at Zero. Italy’s September quarter GDP growth rate was negative -0.1 %. Sweden’s was negative -0.2 % and Switzerland’s was negative -0.2 %.

These are all advanced, industrialized economies and this slow down is presumably global in nature. What strategies are our central banks and governments using to combat this situation? As far as BOOM can tell, there are no strategies even being considered. In fact, the US is continuing to believe in its “strong economy” fairy story while it creates less than 200,000 jobs per month with 250,000 retirements and 250,000 fresh applications for disability. Go figure.

Maybe they all believe in Santa Claus?

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

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Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

EMAIL: gerry [@] boomfinanceandeconomics.com

PRICE PULSE DOMINANCE CHANGES DURING LAST WEEK Ended 15th December 2018:

1. US TRANSPORT INDEX — Changed to DOWN Arrow Dominant
2. US INSIDER SENTIMENT (KNOW) — Changed to DOWN Arrow Dominant

TRANSPORT INDEX

INSIDER SENTIMENT

NOTE — RED ARROWS INDICATE BOOM PRICE PULSE DOMINANCE in the present moment (as indicated by the date of the chart and taking into account the 3 year time frame shown).  The charts are now arranged in PRICE PULSE RED ARROW DOMINANCE.    NOTE: All Charts are WEEKLY Charts over the last 3 YEARS time frame.  Arrows indicate PAST price action (not future).  No predictions are implied from past action.

Comments refer to past PRICE PULSE (Red Arrow DOMINANCE) over the last 3 years, the week ended 15th December 2018.  You can RIGHT CLICK a chart and OPEN in a New Tab.  Make your own conclusions, do your own research. BOOM does not offer investment advice. 

PLEASE NOTE — Many charts are ETF’s from NY Market  (not the base commodity or currency etc). The NY Stock Code is in the Top Left Hand Corner of each chart.
Charts are produced from http://www.stockcharts.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

PRICE PULSE RISING — (RED ARROW UP DOMINANCE)

# INDIAN STOCKS — UP Arrow Dominant
# JAPAN STOCKS — UP Arrow Dominant
# NATURAL GAS (SPOT PRICE) — UP Arrow Dominant
# BRAZIL STOCK INDEX — UP Arrow Dominant
# PALLADIUM PRICE — UP Arrow Dominant
# ARGENTINA STOCKS — UP Arrow Dominant
# US INFLATION PROTECTED BOND PRICES — UP Arrow Dominant
# US UTILITIES STOCKS — UP Arrow Dominant
# RWR (US Real Estate REIT Fund) — UP Arrow DominanT
# VALE STOCK (Iron Ore) — UP Arrow Dominant
# WEST TEXAS OIL PRICE — UP Arrow Dominant
# US 3 MTH T BILL YIELD — UP Arrow Dominant
# LIBOR — UP Arrow Dominant

PRICE PULSE FALLING — (RED ARROW DOWN DOMINANCE)

# US TRANSPORT INDEX — DOWN Arrow Dominant
# US INSIDER SENTIMENT (KNOW) — DOWN Arrow Dominant
# SOIL (POTASH ETF) — DOWN Arrow Dominant
# QUAL (Quality ETF) — DOWN Arrow Dominant
# MTUM (Momentum ETF) — DOWN Arrow Dominant
# RUSSELL 2000 INDEX — DOWN Arrow Dominant
# TRIM TABS US FLOAT (TTAC) — DOWN Arrow Dominant
# US HIGH GRADE CORP BONDS (LQD) — DOWN Arrow Dominant
# EMERGING MARKETS ETF (EEM) — DOWN Arrow Dominant
# FINANCIAL SECTOR ETF (XLF) — DOWN Arrow Dominant
# US KBW BANK INDEX — DOWN Arrow Dominant
# NASDAQ COMP INDEX — DOWN Arrow Dominant
# US JUNK BOND PRICES — DOWN Arrow Dominant
# COMMODITIES INDEX (USCI) — DOWN Arrow Dominant
# SWISS FRANC (AGAINST $US) — DOWN Arrow Dominant
# FRANCE STOCKS — DOWN Arrow Dominant
# AUSSIE ALL ORDS INDEX — DOWN Arrow Dominant
# THAI SETI INDEX — DOWN Arrow Dominant
# GERMAN DAX — DOWN Arrow Dominant
# TAIWAN STOCKS — DOWN Arrow Dominant
# FVL — VALUE LINE — DOWN Arrow Dominant
# US LONG BOND PRICE (TLT) — DOWN Arrow Dominant
# YEN (AGAINST $US) — DOWN Arrow Dominant
# DENMARK STOCKS — DOWN Arrow Dominant
# COAL ETF (KOL) — DOWN Arrow Dominant
# TED SPREAD — DOWN Arrow Dominant
# COPPER PRICE — DOWN Arrow Dominant
# INDUSTRIAL METALS ETF (DBB) — DOWN Arrow Dominant
# YUAN (AGAINST USD) ETF — DOWN Arrow Dominant
# HANG SENG — DOWN Arrow Dominant
# SOUTH KOREA STOCKS — DOWN Arrow Dominant
# SINGAPORE STOCKS — DOWN Arrow Dominant
# AUSSIE DOLLAR AGAINST US DOLLAR — DOWN Arrow Dominant
# CANADIAN DOLLAR AGAINST USD — DOWN Arrow Dominant
# BRITISH POUND AGAINST USD — DOWN Arrow Dominant
# EURO (AGAINST $US) — DOWN Arrow Dominant
# NOMURA HOLDINGS — DOWN Arrow Dominant
# PLATINUM PRICE — DOWN Arrow Dominant
# SHANGHAI STOCKS — DOWN Arrow Dominant
# BITCOIN INDEX $NYXBT — DOWN Arrow Dominant
# DEUTSCHE BANK SHARES — DOWN Arrow Dominant
# FOOD INPUT PRICES (DBA) — DOWN Arrow Dominant
# EURODOLLAR INDEX ($XED) — DOWN Arrow Dominant

PRICE PULSE UNCERTAIN —  NON-DOMINANCE OF RED ARROW –

# US DOW STOCK INDEX — NO Arrow Dominant
# US BIOTECHNOLOGY INDEX — NO Arrow Dominant
# GOLD PRICE in USD —NO Arrow Dominant
# GOLD PRICE (in Aus Dollars) — NO Arrow Dominant
# AGGREGATE US BOND PRICES (BND) — NO Arrow Dominant
# SWISS STOCKS — NO Arrow Dominant
# RUSSIAN RTSI STOCK INDEX — NO Arrow Dominant

Disclaimer: All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

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LIGHTHOUSE SYDNEY

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