It is a mark of prudence never to trust wholly in those things which have once deceived us.
- Descartes
The rose has thorns only for those who would gather it. - Chinese Proverb
Investor. Any references to securities are not recommendations or solicitations to buy or sell anything. I may have positions in securities mentioned.
Thursday, May 23, 2013
Quotes
It is a mark of prudence never to trust wholly in those things which have once deceived us.
- Descartes
The rose has thorns only for those who would gather it. - Chinese Proverb
Thursday, May 9, 2013
Alan Abelson: 1925 to 2013
Letter From the Editor
| THURSDAY, MAY 9, 2013Alan Abelson: 1925 to 2013
By ED FINN
Editor and President,
Barron's
Financial journalism lost one of its leading lights today when Alan Abelson died at the age of 87.
Alan had served Barron's as a writer, editor, and chief columnist the past 57 years.
Alan wrote wise comments each week in Up and Down Wall Street.
But Alan's contributions to Barron's, and to financial journalism, go beyond his marvelous column. During his career, Alan
trained dozens of journalists to be skeptical, to be exacting, to help
average investors, and to be on the lookout for Wall Street's crooks.
One of the unique things about Alan was that his keen knowledge of Wall Street was matched by his love of artful writing.
Before
Alan began his newspaper career in 1947, he earned a bachelor's degree
in English and Chemistry from The City College of New York and a
master's degree from the prestigious Writers Workshop at the University
of Iowa, which counts among its alumni Flannery O'Connor, Jane Smiley
and John Irving.
Alan arrived at Barron's in 1956 and began writing his column in 1966.
Alan wrote his column, week in and week out, always with gracious prose, sharp insights and a hilarious sense of humor.
Read more @ Source: http://online.barrons.com/article/SB50001424052748704253204578473291926739834.html
Wednesday, April 17, 2013
Gold Market Volatility
GMO Emerging Thoughts: Present and Emerging Risks to the Gold Trade - By Amit Bhartia and Matt Seto
The
notion of gold as a hedge against systemic risks is flawed. We believe that the
concept of gold’s role as an insurance policy needs to be narrowed
significantly.
Last
year we argued that relying on conventional wisdom to analyze gold price
movements is naive. Conventional wisdom would lead us to believe that gold
price movements are driven solely by the actions of developed markets’ central
banks. We believe this view is misinformed and that the available data does not
support it.
In
that paper, we argued instead that the key driver of the significant rise in
gold prices since 2000 has been the emerging markets consumer. Between 2000 and
2010, consumers in emerging markets accounted for 79% of total demand. Conversely,
ETF purchases accounted for only 7.5% of demand and central banks in aggregate
were net sellers.
This
expanded framework demonstrates that gold is also positively exposed to
pro-cyclical factors in the emerging markets. Moreover, given the cyclical
challenges gold’s key consumers may be facing, the value of gold as insurance should
be questioned.
Over
the past 13 years, the impact of emerging markets on gold prices was
unequivocally positive: emerging markets drove gold prices higher. However,
this has not always been the case through history and, we believe, will not
always be the case going forward. Emerging markets can be both a positive and a
negative driver.
Saturday, April 13, 2013
Peter F. Drucker: Small is better
While we often read about economies of scale, we proably should pay more attention to the dis-economies of scale.
When a solid sphere doubles its radius, its surface area increases 300% while its mass goes up 700%. The same ratio seems to affect organizations.
As they grow, the center becomes more remote from the surface-the part that actually is in contact with customers, competitors, and new technology. The gravitational pull of the increased mass draws more and more efforts inward where they focus on internal processes, procedures, rules, expenses, and politics.
Internal forces soon overwhelm the organization's ability to respond intelligently to external events.
As Jack Welch puts it, the company "has its face toward the CEO and its ass toward the customer." An odd posture to be sure since as Peter Drucker has preached for a half-century "the only profit center is a customer whose check hasn't bounced."
Costs Versus Expenses
It is counter-intuitive to include expense control as one of the driver's of dis-economies of scale. How can saving money be bad?
There is a big difference between costs and expenses.
Accountants, for example, rarely quantify the costs (in lost revenue) of inertia, strategic indecision, or product delay. They can easily calculate money saved using less expensive materials, but they rarely capture the erosion in brand equity which results from using inferior materials. Accountants are willing to spend time to save money even though we know that is usually better to be first to market.
If effective employment of intellectual capital is the key success factor in the new economy, then should training and education be an expense or investment? And where do most accounting departments put it?
Furthermore, most cost containment exercises are Mickey Mouse. They focus on little items like office supplies, travel, and training budgets. As such they are Band-Aids and placebos. Managers get to feel like they are doing something while big issues are ignored.
Moreover, an expense focus is a continuation of a nineteenth century mindset. It presumes that customers are grateful to have something rather than nothing. But the days are long gone when the typical customer will happily lineup for black Model T's simply because they are cheap. We have, as consumers, come to expect more choices and new products. Squeezing out expenses threatens a company's ability to compete on these other dimensions customers care about.
But what's the first lever executives reach for when trying to improve profits?
For 40 years after the end of Prohibition Schlitz was America's best-selling beer. Then they decided to change the formula so it would brew faster (i.e. cheaper). The new formula changed the beer's taste and customers deserted in droves. By 1984 nobody drank Schlitz anymore.
Notional Benefits, Real Problems
Take this everyday example of the center becoming a drag on performance.
The organization decides "leverage its buying power" to reduce costs. At the outset, everything sounds great. Centralized buying promises increased profits because costs will go down while responsiveness and quality will not change one iota. With great fanfare, a new purchasing process is put in place and new experts appointed to oversee it. But the benefits are only notional.
The purchasing staff quickly makes suppliers aware of the new decision criteria. The latter get with the program and focus on delivering low costs. Quality service and responsiveness usually suffer because they are less quantifiable than price and because the purchasing unit is too removed from the action to gauge the non-quantifiable dimensions of the product. (If they can't graph it, it doesn't exist).
Often, the central buyers become an internal police force- shoving standardization on diverse business units so that order quantities can be increased and inventories managed more efficiently. But standardization can create products that fail in the marketplace because they are neither fish nor fowl.
GM experienced this when they consolidated platforms. In theory this allows multiple divisions to utilize the same basic components with immense savings in research, engineering, and tooling. The result was the Cadillac Cimmeron-a Chevy Cavalier with minor changes and a high price. Not only did it flop in the marketplace; it inflicted grievous harm to Cadillac's image as a premium product.
Even today, standardization has created look-alike models which have strong appeal to no particular segment. GM sales are lackluster. They keep losing share.
Ford faced similar dilemmas as it pursued the white whale of the "world car"-a single model that can be sold in dozens of countries in great quantities. But the Ford Escort was too bland and under-powered to sell at a profit in the US. At the same time, it was too large and expensive to be successful in Latin America and Eastern Europe.
Centralization also creates political problems. Like courtiers around the throne HQ staffs create suspicion between the center and the market frontier. They usually have influence, sometimes they are responsible for some expense lines. But they do not have responsibility for any whole project. The line managers, who do have that responsibility, have to deal with the marketplace and the central staff. No surprise, often the latter gets the most attention.
.......................
Peter Drucker has written of management's "degenerative tendency" to focus on internal and operational data, to the exclusion of the more important and more strategic information about customers, competitors, and technology. Centralization and defused authority feed this tendency and exacerbate the problems it causes.
From:
Sunday, July 25, 2004 - prior to the bankruptcies after the 2008 credit crisis.
Friday, April 12, 2013
In History Departments, It’s Up With Capitalism
Kendrick Brinson for The New York Times
Bethany Moreton, who wrote “To Serve God and Wal-Mart,” with Stephen Mihm, author of “A Nation of Counterfeiters.”
April 6, 2013
In History Departments, It’s Up With Capitalism
By JENNIFER SCHUESSLER
A specter is haunting university history departments: the specter of capitalism.
After decades of “history from below,” focusing on women, minorities and other marginalized people seizing their destiny, a new generation of scholars is increasingly turning to what, strangely, risked becoming the most marginalized group of all: the bosses, bankers and brokers who run the economy.
Even before the financial crisis, courses in “the history of capitalism” — as the new discipline bills itself — began proliferating on campuses, along with dissertations on once deeply unsexy topics like insurance, banking and regulation. The events of 2008 and their long aftermath have given urgency to the scholarly realization that it really is the economy, stupid.
The financial meltdown also created a serious market opportunity. Columbia University Press recently introduced a new “Studies in the History of U.S. Capitalism” book series (“This is not your father’s business history,” the proposal promised), and other top university presses have been snapping up dissertations on 19th-century insurance and early-20th-century stock speculation, with trade publishers and op-ed editors following close behind.
The dominant question in American politics today, scholars say, is the relationship between democracy and the capitalist economy. “And to understand capitalism,” said Jonathan Levy, an assistant professor of history at Princeton University and the author of “Freaks of Fortune: The Emerging World of Capitalism and Risk in America,” “you’ve got to understand capitalists.”
That doesn’t mean just looking in the executive suite and ledger books, scholars are quick to emphasize.
The new work marries hardheaded economic analysis with the insights of social and cultural history, integrating the bosses’-eye view with that of the office drones — and consumers — who power the system.
“I like to call it ‘history from below, all the way to the top,’ ” said Louis Hyman, an assistant professor of labor relations, law and history at Cornell and the author of “Debtor Nation: The History of America in Red Ink.”
The new history of capitalism is less a movement than what proponents call a “cohort”: a loosely linked group of scholars who came of age after the end of the cold war cleared some ideological ground, inspired by work that came before but unbeholden to the questions — like, why didn’t socialism take root in America? — that animated previous generations of labor historians.
Instead of searching for working-class radicalism, they looked at office clerks and entrepreneurs.
“Earlier, a lot of these topics would’ve been greeted with a yawn,” said Stephen Mihm, an associate professor of history at the University of Georgia and the author of “A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States.” “But then the crisis hit, and people started asking, ‘Oh my God, what has Wall Street been doing for the last 100 years?’ ”
In 1996, when the Harvard historian Sven Beckert proposed an undergraduate seminar called the History of American Capitalism — the first of its kind, he believes — colleagues were skeptical. “They thought no one would be interested,” he said.
But the seminar drew nearly 100 applicants for 15 spots and grew into one of the biggest lecture courses at Harvard, which in 2008 created a full-fledged Program on the Study of U.S. Capitalism. That initiative led to similar ones on other campuses ...
While most scholars in the field reject the purely oppositional stance of earlier Marxist history, they also take a distinctly critical view of neoclassical economics, with its tidy mathematical models and crisp axioms about rational actors.
Markets and financial institutions “were created by people making particular choices at particular historical moments,” said Julia Ott, an assistant professor in the history of capitalism at the New School (the first person, several scholars said, to be hired under such a title).
The history of capitalism has also benefited from a surge of new, economically minded scholarship on slavery, with scholars increasingly arguing that Northern factories and Southern plantations were not opposing economic systems, as the old narrative has it, but deeply entwined.
And that entwining, some argue, involved people far beyond the plantations and factories themselves, thanks to financial shenanigans that resonate in our own time.
In a paper called “Toxic Debt, Liar Loans and Securitized Human Beings: The Panic of 1837 and the Fate of Slavery,” Edward Baptist, a historian at Cornell, looked at the way small investors across America and Europe snapped up exotic financial instruments based on slave holdings, much as people over the past decade went wild for mortgage-backed securities and collateralized debt obligations — with a similarly disastrous outcome.
Other scholars track companies and commodities across national borders. Dr. Beckert’s “Empire of Cotton,” to be published by Alfred A. Knopf, traces the rise of global capitalism over the past 350 years through one crop. Nan Enstad’s book in progress, “The Jim Crow Cigarette: Following Tobacco Road From North Carolina to China and Back,” examines how Southern tobacco workers, and Southern racial ideology, helped build the Chinese cigarette industry in the early 20th century.
Whether scrutiny of the history of capitalism represents a genuine paradigm shift or a case of scholarly tulip mania, one thing is clear:
“The worse things are for the economy,” Dr. Beckert said wryly, “the better they are for the discipline.”
Source: http://www.nytimes.com/2013/04/07/education/in-history-departments-its-up-with-capitalism.html?nl=todaysheadlines&emc=edit_th_20130407&_r=2&
Our Greed Gets Us In Trouble
Scams, Rip-Offs and the Psychology of Greed
Suppose you won a million dollars in the lottery, and in order to collect your winnings, lottery officials required you to enter a special vault that was protected by a high-voltage electrical barrier.
Would you attempt to enter that vault for a million dollars, or would you walk away and forfeit your winnings?
My guess is while most of you would probably walk away, a few of you would attempt to enter that vault. After all, no risk, no reward right?
Amazingly, every single day, people are performing the equivalent of the aforementioned lottery analogy by entering a vault of scams, despite all the obvious warning signs.
And guess what happens? They get electrocuted...metaphorically speaking, of course.
But why? Why do so many people continue to fall victim to obvious rip-offs and scams both online and off? Personally, I find it beyond comprehension that so many people can be that gullible - but the evidence suggests they are.
A couple of years ago, I remember reading a story about the arrest of the notorious spammer, Robert Alan Soloway. How notorious was he? It is estimated that he sent out billions of e-mails a day. Yes, I said billions with a "B."
Among the myriad of Internet schemes he was involved with, he sent out e-mails claiming he would send as many as 20 million e-mail advertisements in two weeks for $495.
And gullible consumers fell for his scams hook, line and sinker. Authorities estimated he raked in approximately 1.6 million dollars from his illegal enterprise.
Which brings me back to the question...Why? Why do people continue to fall for this nonsense. We've all heard the warning cliches, since we were children:
"Let the buyer beware."
"If it sounds to good to be true..."
Phishing Anyone?
For example, with all the talk in the media nowadays about identity theft, how is it possible that so many people continue to fall for "phishing" scams?
For those of you not familiar with phishing scams, it's basically a spam e-mail or pop-up advertisement stating words to this effect:
"We suspect an unauthorized transaction on your account. To ensure that your account is not compromised, please click the link below and confirm your identity."
Phishing is designed to steal your personal information, credit card numbers, bank account information, Social Security number, passwords, or other sensitive information.
If you get an email or pop-up message that asks for personal or financial information, delete it immediately. Whatever you do, DO NOT click on the link in the message. Legitimate companies DON'T ask for this information via email.
Another scam that people continue to be victimized by, that always leaves me scratching my head is the "Nigerian Letter Scam." This classic scam has been been around for decades. Here's how it works:
Nigerian Letter Scam
You receive an e-mail from someone claiming to be a Nigerian official, relative or the surviving spouse of a former king or prince. Con artists offer to transfer millions of dollars into your bank account in exchange for a small fee. If you respond to the initial offer, you may receive some "official looking" documents. Typically, you're then asked to provide blank letterhead and your bank account numbers, as well as some money to cover transaction and transfer costs and attorney's fees.
Sensing another easy payday, the con artists keep stringing you along making up excuses for the delay of the transfer, and asking for more and more money. And in some instances, you may even be encouraged to travel to Nigeria or a border country to collect your riches. Of course, there really wasn't any money to begin with, and you can kiss the money you sent them goodbye.
A word of warning...there have been reports of people traveling to Nigeria to meet with these con artists and being murdered.
So, why with a worldwide communication medium like the Internet, where news both good and bad travels at the speed of light do people keep getting ripped-off by same old scams? And why do the con artists who orchestrate and commit these scams do so?
In my opinion, it comes down to one thing - greed. Or as David Hannum once stated, "There's a sucker born every minute." (And yes, it was Hannum who originally coined that phrase, not PT Barnum as has been erroneously reported.)
The Demon Greed
In her book Greed: The Seven Deadly Sins, author Phyllis Tickle states:
"Greed is a sin we see readily in others, but rarely acknowledge as our own--and therein lies its power."
And Chinese philosopher Chuang Tzu once stated:
He who considers wealth a good thing can never bear to give up his income; he who considers eminence a good thing can never bear to give up his fame. He who has a taste for power can never bear to hand over authority to others. Holding tight to these things, such men shiver with fear; should they let them go, they would pine in sorrow."
But this quote by Janwillem van de Wetering is my favorite:
"Greed is a fat demon with a small mouth and whatever you feed it is never enough."
The Psychology of Greed
I completely agree with the aforementioned quotes, and I think they accurately explain why people like Bernie Madoff - individuals who have so much want so much more. It's almost like they're drug addicts - junkies addicted to material wealth, and they'll do whatever it takes to get that next fix - including rip-off family members and friends.
In fact, in his article "Looking at Greed as an Addictive Dysfunction," psychotherapist Mel Schwartz writes:
"The saga of the Bernard Madoff debacle, AIG bonuses and the host of other repugnant behaviors actually reveal a terrible dysfunction in our culture, which has now come to our screeching attention. We are a society that is addicted and ultimately maddened by our obsession with profligate abundance and extravagance. How inconceivable is it that a man who has attained so much success and wealth and earned the rewards of privilege and prestige, feels compelled to ruin himself and his investors in his vainglorious attempt to have yet more? When is enough yet enough?
Madoff is a sick man; not simply due to the devastation that he unleashed on so many, but because his craving is no different than a junkie prepared to do anything for their next fix."
Well said, Mr. Schwartz, well said. And I couldn't agree more. Bernie Madoff and his ilk are scumbags, plain and simple.
How to Avoid Being Scammed
So how can you protect yourself from being scammed?
First of all, you should realize, at some point in their life, everyone has been scammed at some level. And if you haven't yet been a victim, it's probably just a matter of time.
That being said, there are definitely some common sense steps that you can take to greatly reduce your chances of becoming a victim:
1. Unless you signed up to receive e-mail solicitations from a particular company, DELETE all spam. DON'T open it, and DON'T send scam artists your hard-earned money!
2. DON'T EVER respond to any e-mail or pop-up that asks you to login to your account to confirm your personal information. Legitimate companies would NEVER ask you to confirm your personal information via an e-mail.
3. DON'T EVER accept offers or business propositions at face value - not even from friends or family members. ALWAYS check things out with with the Better Business Bureau, Department of Consumer Affairs and the Attorney General.
In addition, websites like Scam.com and RipOffReport.com can be very helpful in avoiding scams.
4. Use common sense. Remember, if it sounds too good to be true, it probably is!
Suppose you won a million dollars in the lottery, and in order to collect your winnings, lottery officials required you to enter a special vault that was protected by a high-voltage electrical barrier.
Would you attempt to enter that vault for a million dollars, or would you walk away and forfeit your winnings?
My guess is while most of you would probably walk away, a few of you would attempt to enter that vault. After all, no risk, no reward right?
Amazingly, every single day, people are performing the equivalent of the aforementioned lottery analogy by entering a vault of scams, despite all the obvious warning signs.
And guess what happens? They get electrocuted...metaphorically speaking, of course.
But why? Why do so many people continue to fall victim to obvious rip-offs and scams both online and off? Personally, I find it beyond comprehension that so many people can be that gullible - but the evidence suggests they are.
A couple of years ago, I remember reading a story about the arrest of the notorious spammer, Robert Alan Soloway. How notorious was he? It is estimated that he sent out billions of e-mails a day. Yes, I said billions with a "B."
Among the myriad of Internet schemes he was involved with, he sent out e-mails claiming he would send as many as 20 million e-mail advertisements in two weeks for $495.
And gullible consumers fell for his scams hook, line and sinker. Authorities estimated he raked in approximately 1.6 million dollars from his illegal enterprise.
Which brings me back to the question...Why? Why do people continue to fall for this nonsense. We've all heard the warning cliches, since we were children:
"Let the buyer beware."
"If it sounds to good to be true..."
Phishing Anyone?
For example, with all the talk in the media nowadays about identity theft, how is it possible that so many people continue to fall for "phishing" scams?
For those of you not familiar with phishing scams, it's basically a spam e-mail or pop-up advertisement stating words to this effect:
"We suspect an unauthorized transaction on your account. To ensure that your account is not compromised, please click the link below and confirm your identity."
Phishing is designed to steal your personal information, credit card numbers, bank account information, Social Security number, passwords, or other sensitive information.
If you get an email or pop-up message that asks for personal or financial information, delete it immediately. Whatever you do, DO NOT click on the link in the message. Legitimate companies DON'T ask for this information via email.
Another scam that people continue to be victimized by, that always leaves me scratching my head is the "Nigerian Letter Scam." This classic scam has been been around for decades. Here's how it works:
Nigerian Letter Scam
You receive an e-mail from someone claiming to be a Nigerian official, relative or the surviving spouse of a former king or prince. Con artists offer to transfer millions of dollars into your bank account in exchange for a small fee. If you respond to the initial offer, you may receive some "official looking" documents. Typically, you're then asked to provide blank letterhead and your bank account numbers, as well as some money to cover transaction and transfer costs and attorney's fees.
Sensing another easy payday, the con artists keep stringing you along making up excuses for the delay of the transfer, and asking for more and more money. And in some instances, you may even be encouraged to travel to Nigeria or a border country to collect your riches. Of course, there really wasn't any money to begin with, and you can kiss the money you sent them goodbye.
A word of warning...there have been reports of people traveling to Nigeria to meet with these con artists and being murdered.
So, why with a worldwide communication medium like the Internet, where news both good and bad travels at the speed of light do people keep getting ripped-off by same old scams? And why do the con artists who orchestrate and commit these scams do so?
In my opinion, it comes down to one thing - greed. Or as David Hannum once stated, "There's a sucker born every minute." (And yes, it was Hannum who originally coined that phrase, not PT Barnum as has been erroneously reported.)
The Demon Greed
In her book Greed: The Seven Deadly Sins, author Phyllis Tickle states:
"Greed is a sin we see readily in others, but rarely acknowledge as our own--and therein lies its power."
And Chinese philosopher Chuang Tzu once stated:
He who considers wealth a good thing can never bear to give up his income; he who considers eminence a good thing can never bear to give up his fame. He who has a taste for power can never bear to hand over authority to others. Holding tight to these things, such men shiver with fear; should they let them go, they would pine in sorrow."
But this quote by Janwillem van de Wetering is my favorite:
"Greed is a fat demon with a small mouth and whatever you feed it is never enough."
The Psychology of Greed
I completely agree with the aforementioned quotes, and I think they accurately explain why people like Bernie Madoff - individuals who have so much want so much more. It's almost like they're drug addicts - junkies addicted to material wealth, and they'll do whatever it takes to get that next fix - including rip-off family members and friends.
In fact, in his article "Looking at Greed as an Addictive Dysfunction," psychotherapist Mel Schwartz writes:
"The saga of the Bernard Madoff debacle, AIG bonuses and the host of other repugnant behaviors actually reveal a terrible dysfunction in our culture, which has now come to our screeching attention. We are a society that is addicted and ultimately maddened by our obsession with profligate abundance and extravagance. How inconceivable is it that a man who has attained so much success and wealth and earned the rewards of privilege and prestige, feels compelled to ruin himself and his investors in his vainglorious attempt to have yet more? When is enough yet enough?
Madoff is a sick man; not simply due to the devastation that he unleashed on so many, but because his craving is no different than a junkie prepared to do anything for their next fix."
Well said, Mr. Schwartz, well said. And I couldn't agree more. Bernie Madoff and his ilk are scumbags, plain and simple.
How to Avoid Being Scammed
So how can you protect yourself from being scammed?
First of all, you should realize, at some point in their life, everyone has been scammed at some level. And if you haven't yet been a victim, it's probably just a matter of time.
That being said, there are definitely some common sense steps that you can take to greatly reduce your chances of becoming a victim:
1. Unless you signed up to receive e-mail solicitations from a particular company, DELETE all spam. DON'T open it, and DON'T send scam artists your hard-earned money!
2. DON'T EVER respond to any e-mail or pop-up that asks you to login to your account to confirm your personal information. Legitimate companies would NEVER ask you to confirm your personal information via an e-mail.
3. DON'T EVER accept offers or business propositions at face value - not even from friends or family members. ALWAYS check things out with with the Better Business Bureau, Department of Consumer Affairs and the Attorney General.
In addition, websites like Scam.com and RipOffReport.com can be very helpful in avoiding scams.
4. Use common sense. Remember, if it sounds too good to be true, it probably is!
Friday, April 5, 2013
Canadian Junior Mining Companies, Independent Brokers, Have A Bright Future
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Haywood Securities Managing Director Kevin Campbell is
concerned by all the negative talk about the state of junior mining. In
this reaction to an interview in The Gold Report with B&D
Capital consultant Don Mosher, Campbell outlines the fundamental demand
for commodities behind his conviction that this is a temporary, albeit
viscous, downturn and that the TSX Venture Exchange, the industry and
the experienced web of service providers that have built up around it
are here to stay.The Gold Report: As a managing director of investment banking at Haywood Securities, you're in a perfect position to report on the state of the junior mining financing environment. You called The Gold Report's March 25 interview of B&D Capital Consultant Don Mosher titled, "Strangulation by Regulation-Is the Venture Exchange on Its Deathbed?," alarmist. What is the state of the TSX Venture Exchange? Will it continue to serve the retail investor?
Kevin Campbell: The state of junior mining finance is abysmal. There's no question about that. The traditional sources of capital have all but evaporated over the last couple of years. Companies are seeking alternate sources of funding and in many cases are being successful. These sources include selling metals streams, selling royalties, hybrid debt, looking overseas, and all this is also leading to heightened merger and acquisition potential. The right companies will find ways to get by, but it's undoubtedly tough. Good management teams and good projects are going unfunded at the moment.
My concern is more around the public discussion of an existential threat to junior mining. I just don't believe that to be the case. It is an asset class like any other. It may be more volatile than others and subject to more extreme cycles. And we happen to be in a severe down cycle right now. Nonetheless, I believe that junior mining will remain an integral part of the commodity cycle going forward, and I believe in commodities going forward.
TGR: Are you saying that the challenges the junior miners are facing right now, particularly in finding funding, are simply cyclical? It has happened before; it will happen again and things will pick up.
KC: It all really comes down to flow of funds. The flow of funds from conventional sources has departed junior mining for the time being. But the demand for metals very much still exists. I think it comes down to some basic questions: Will there be more or less people in the world by 2025? Are they going to be more or less urbanized? Is their per-capita metal consumption going to be more or less than it is today? I think the answers point to the direction of enhanced metal consumption and more pressure from the demand side in the face of what has been a fairly anemic supply response thus far. I think there's reason to be optimistic and I think the cycle will see the flow of funds return. It just happens that we are in a trough where a lot of pain has been felt. I don't see any overall structural issue that would prevent junior mining from coming back to the fore at some point after this has all been cleansed and rationalized. One of my mentors in this business was let go from his mining role at a Canadian firm in 2001 with the explanation that mining was a "sunset industry." That sentiment is as nonsensical today as it was then.
Read More
Source: http://seekingalpha.com/article/1322561-kevin-campbell-counterpoint-canadian-junior-mining-companies-independent-brokers-have-a-bright-future?source=kizur
Thursday, March 28, 2013
Solar Batteries
Solar batteries could be utilities' next headache
FRANKFURT/MILAN (Reuters) - Renewable energy (NasdaqGS: REGI - news)
is constantly evolving and challenging traditional utilities but one
growing sector could make home-generated power much easier to use and
cut customers' dependence on energy companies dramatically - solar batteries.
A major conundrum with solar panels has always been:
how to keep the lights on when the sun isn't shining.
Solar batteries allow homes and businesses to store solar power to use in the hours of darkness and can also help to create "smart grids" that react to sudden power swings and free stored energy when needed.
The technology is still expensive and not widely used but with energy bills soaring for consumers, it could quickly gain market share and reduce dependence on utilities, which are already struggling with overcapacity and weak demand.
Italy has some of the highest power prices in Europe and is looking at how to cut costs to allow its businesses to compete.
Nicola Cosciani, head of energy storage at Italy's top industrial battery maker Fiamm, says heavy power users like cement and steel makers are looking at generating and storing their own solar power - and even selling excess power from their batteries on to the grid.
"Germany and Italy will be explosive markets for residential storage and big energy users are also starting to show an interest. This is a game changer," he told Reuters.
By 2020, the EU aims to get 20 percent of its energy from renewables. That compares to 12.5 percent of the EU energy mix in 2010 and 8.1 percent in 2004, according to most recent EU statistics. Batteries will be crucial in reaching this target.
In Germany, the world's largest solar market and Europe's largest energy consumer, about 40 percent of all modules sold have been installed in homes, directly hitting demand for power from E.ON and RWE (Xetra: 703712 - news) .
A four-person household can cut the amount of power it uses from the grid by 30 percent per year if it uses solar panels and another 30 percent if it uses a solar battery, leaving it to buy only 40 percent of supplies from utilities.
With power bills rising and solar subsidies and battery prices falling, power storage is expected to expand dramatically within the next 2-4 years.
PRICE FALLS
Solar batteries look like a large car battery and are usually installed in the basement of a house, hooked up to a solar panel outside and on to the grid with an inverter.
That allows the batteries to charge up and store excess energy during the day and release it in the evening. They can also release surplus energy on to the grid.
The kit is still expensive but the price of solar panels has already dropped two thirds in the last two years and the price of batteries is expected to halve in the next few years.
A single solar battery costs about 800 euros per kilowatt hour (kWh), so an average 6kWh battery costs about 5,000 euros (4,324 pounds).
Including installation, tax and components to connect it to the grid, an average household - which consumes 3,500 kWh per year - would pay about 10,000-20,000 euros per storage system.
"We believe that lithium batteries will be available for 400-500 euros per kilowatt hour (kWh) in a few years, featuring a lifespan of 20 years," said Martin Rothert, product manager at SMA Solar, Germany's largest solar company.
Solar batteries use either lead-acid or lithium-ion.
Germany plans to support the installation of solar batteries with at least 50 million euros in credit lines which will also support a greater roll-out.
Italian energy consultant BIP said the battery market will reach at least 9,000 megawatts (MW) of capacity by 2020 from today's 270 MW.
"Due to rising supply and awareness, we expect several tens of thousands of these systems to be sold in Germany this year," said Norbert Hahn, board member at IBC Solar.
Batteries are also needed to develop smart grids, which adjust power supply to satisfy demand across the network.
Seeing the writing on the wall for traditional generation and distribution, Italian utility Enel (Milan: ENEL.MI - news) has done a deal with Japan's NEC - one of the world's leading energy storage system makers - to roll out new generation smart grids.
Developing smart grids can help cut costs and allow independent renewable energy providers to sell their power into the grid. Renewable energy, once capital costs are amortised, is cheaper and more secure.
"The idea is to apply the same principles of the Internet to electricity networks - any device hooked up can send and receive content," said Ugo Govigli, vice president for European smart grid solutions for NEC Italia.
(Additional reporting by Paul Arnold in Zurich; editing by Jane Barrett)
Source: http://news.yahoo.com/solar-batteries-could-utilities-next-101729309.html
By Christoph Steitz and Stephen Jewkes | Reuters – Fri, Mar 8, 2013
A major conundrum with solar panels has always been:
how to keep the lights on when the sun isn't shining.
Solar batteries allow homes and businesses to store solar power to use in the hours of darkness and can also help to create "smart grids" that react to sudden power swings and free stored energy when needed.
The technology is still expensive and not widely used but with energy bills soaring for consumers, it could quickly gain market share and reduce dependence on utilities, which are already struggling with overcapacity and weak demand.
Italy has some of the highest power prices in Europe and is looking at how to cut costs to allow its businesses to compete.
Nicola Cosciani, head of energy storage at Italy's top industrial battery maker Fiamm, says heavy power users like cement and steel makers are looking at generating and storing their own solar power - and even selling excess power from their batteries on to the grid.
"Germany and Italy will be explosive markets for residential storage and big energy users are also starting to show an interest. This is a game changer," he told Reuters.
By 2020, the EU aims to get 20 percent of its energy from renewables. That compares to 12.5 percent of the EU energy mix in 2010 and 8.1 percent in 2004, according to most recent EU statistics. Batteries will be crucial in reaching this target.
In Germany, the world's largest solar market and Europe's largest energy consumer, about 40 percent of all modules sold have been installed in homes, directly hitting demand for power from E.ON and RWE (Xetra: 703712 - news) .
A four-person household can cut the amount of power it uses from the grid by 30 percent per year if it uses solar panels and another 30 percent if it uses a solar battery, leaving it to buy only 40 percent of supplies from utilities.
With power bills rising and solar subsidies and battery prices falling, power storage is expected to expand dramatically within the next 2-4 years.
PRICE FALLS
Solar batteries look like a large car battery and are usually installed in the basement of a house, hooked up to a solar panel outside and on to the grid with an inverter.
That allows the batteries to charge up and store excess energy during the day and release it in the evening. They can also release surplus energy on to the grid.
The kit is still expensive but the price of solar panels has already dropped two thirds in the last two years and the price of batteries is expected to halve in the next few years.
A single solar battery costs about 800 euros per kilowatt hour (kWh), so an average 6kWh battery costs about 5,000 euros (4,324 pounds).
Including installation, tax and components to connect it to the grid, an average household - which consumes 3,500 kWh per year - would pay about 10,000-20,000 euros per storage system.
"We believe that lithium batteries will be available for 400-500 euros per kilowatt hour (kWh) in a few years, featuring a lifespan of 20 years," said Martin Rothert, product manager at SMA Solar, Germany's largest solar company.
Solar batteries use either lead-acid or lithium-ion.
Germany plans to support the installation of solar batteries with at least 50 million euros in credit lines which will also support a greater roll-out.
Italian energy consultant BIP said the battery market will reach at least 9,000 megawatts (MW) of capacity by 2020 from today's 270 MW.
"Due to rising supply and awareness, we expect several tens of thousands of these systems to be sold in Germany this year," said Norbert Hahn, board member at IBC Solar.
Batteries are also needed to develop smart grids, which adjust power supply to satisfy demand across the network.
Seeing the writing on the wall for traditional generation and distribution, Italian utility Enel (Milan: ENEL.MI - news) has done a deal with Japan's NEC - one of the world's leading energy storage system makers - to roll out new generation smart grids.
Developing smart grids can help cut costs and allow independent renewable energy providers to sell their power into the grid. Renewable energy, once capital costs are amortised, is cheaper and more secure.
"The idea is to apply the same principles of the Internet to electricity networks - any device hooked up can send and receive content," said Ugo Govigli, vice president for European smart grid solutions for NEC Italia.
(Additional reporting by Paul Arnold in Zurich; editing by Jane Barrett)
Source: http://news.yahoo.com/solar-batteries-could-utilities-next-101729309.html
Sustainable Energy Technologies Raises $500,000
Sustainable Energy Technologies Raises $500K
Sustainable Energy Technologies, a Calgary-based designer, manufacturer and distributor of power inverters for grid-connected solar PV systems, announced that it has received a C$500K investment from UK-based Doughty Hanson Technology Ventures.
Doughty Hanson has been investing in Sustainable Energy Technologies since 2009.
PRESS RELEASE:
Sustainable Energy Technologies Ltd (TSX VENTURE:STG) (“Sustainable Energy” or the “Company”) is pleased to announce that Doughty Hanson Technology Ventures (“DHTV”) will invest $500,000 to enable the Company to accelerate production of its energy storage inverters for German solar battery systems. The inverters will be delivered under a previously announced multi-year deal with a leading European developer of solar battery systems (News Release dated February 19, 2013).
George Powlick, Managing Director of DHTV commented: “Sustainable Energy’s inverter is a natural fit for the energy storage market with distinct efficiency, cost and integration advantages that make it compelling. We believe this market presents a large opportunity for the Company and we continue to work with management to help make it a reality.”
Solar batteries enable homes and businesses to store solar power for use during peak demand periods reducing demands on the power grid and helping to create “smart grids” that can react to sudden power swings and free up stored energy when needed. Sustainable Energy’s energy storage inverters manage the connection of the battery to the power grid and to the homeowner, seamlessly transitioning from charging to discharging the batteries to optimize the use of the solar energy.
Germany and Italy will be explosive markets for residential storage; and expectations are for tens of thousands of systems to be installed in Germany alone this year with as many as 9,000 MW to be installed in Europe alone over the next 6 years according to industry experts.
(See: Solar Batteries Could be Utilities Next Headache; Reuters, March 8 2013: http://news.yahoo.com/solar-batteries-could-utilities-next-101729309.html)
Depending on power ratings and the energy storage required up to 3 energy storage inverters are typically included in each solar battery system. Sustainable Energy is forecasting delivery of a minimum 10,000 inverters to Germany over the next 30 months with the potential for more than double that amount over the same period.
“We are very excited about our partnership in Europe and we have had engagement from multiple large players in this energy storage sector over the past 10 – 12 weeks for this and other applications. The investment by Doughty Hanson is strong validation of the significant value of our patented technology and the strategy we are executing.” commented Michael Carten CEO of the Company
The Convertible Debenture is unsecured, bears interest at 8% per annum, and is convertible into 50,000, $10, 8% First Preferred Shares (“Preferred Shares”) of Sustainable Energy. The Preferred Shares are themselves convertible into common shares of the Company at a price of $0.105 per share. The term of the Debenture is for a period of 6 months enabling the Company to secure longer term financing for its business. DHTV has a pre-emptive right to participate in up to $1 million of such a financing alongside outside investors and management, including the option of tendering the Convertible Debenture as payment.
As additional consideration the Company will issue detachable common share purchase warrants to acquire up to 4,750,000 common shares of the Company at an exercise price of $0.105. This financing remains subject to TSX Venture Exchange approval.
The Company also announced that the Company has issued $114,000 3% Secured Debentures to the CEO of the Company on terms identical to the previously announced (See News Release dated June 29, 2012) issue of 800,00 3% 5 yr Royalty Debentures. Subject to approval of the TSX Venture Exchange the Company will also issue 39,900 bonus shares at a nominal price of $0.50 per share.
About Sustainable Energy:
Sustainable Energy (www.SustainableEnergy.com) designs and manufactures intelligent power inverters for a wide arrange of distributed generation and storage technologies. The inverters incorporate patented breakthrough technologies which enable the highest efficiency conversion of low voltage direct current inputs in the industry.
A single standard low cost electronics platform supports (i) the solar industry’s only industry standard inverter enabling the higher yields and installation flexibility; the solar industry’s only industry standard inverter enabling the safety of extra low operating voltages and (iii) the industry’s highest bi-directional power conversion efficiencies for grid tied energy storage and fuel cells.
Approximately 20MW of 1st and 2nd generation PARALEX inverters have been installed in 7 different countries.
Contact Information:
Sustainable Energy Technologies Ltd.
Michael Carten
Chief Executive Officer
403.508.7177 #111
Michael.Carten@sustainableenergy.com
Photo courtesy of Shutterstock.
Source:
http://www.pehub.com/193135/sustainable-energy-technologies-raises-500k/
News
Doughty Hanson Completes Restructuring
08/02/2013
Doughty
Hanson, one of the largest independent private equity firms in Europe,
today announced its intention to focus on its private equity business following the creation of a new partnership structure.
After the death of co-founder and majority shareholder Nigel Doughty in February 2012, Dick Hanson has resumed his role as Head of Private Equity and Executive Chairman. He has conducted a review of the overall business to ensure it is best positioned to continue to deliver outstanding returns to the investors in its funds. As a result of this review, the Firm will focus on its core business of private equity. No future funds will be raised for its Real Estate or Technology Ventures businesses.
Members of the Real Estate team will continue to manage Real Estate Fund II as before. Members of the Technology Ventures team will continue to invest Technology Ventures II and manage the Technology Ventures portfolio.
Doughty Hanson CEO, Stephen Marquardt, said:
After the death of co-founder and majority shareholder Nigel Doughty in February 2012, Dick Hanson has resumed his role as Head of Private Equity and Executive Chairman. He has conducted a review of the overall business to ensure it is best positioned to continue to deliver outstanding returns to the investors in its funds. As a result of this review, the Firm will focus on its core business of private equity. No future funds will be raised for its Real Estate or Technology Ventures businesses.
Members of the Real Estate team will continue to manage Real Estate Fund II as before. Members of the Technology Ventures team will continue to invest Technology Ventures II and manage the Technology Ventures portfolio.
Doughty Hanson CEO, Stephen Marquardt, said:
“We have spent
considerable time speaking with our investors and reflecting on the
future of the business. While we have had notable successes in both
Real Estate and Technology Ventures, the real heritage of Doughty Hanson
lies in its private equity business, where we have an outstanding track
record. Following the creation of a partnership structure for the
private equity business, today’s announcement is a logical step and in
the best interests of our investors, the firm and its many
stakeholders.”
"We are not planning to make changes to our Real Estate or Technology Ventures teams, which will continue to manage their existing funds as before and will focus on generating returns for our investors. However, we will not be establishing any new funds in these sectors.”
For over 25 years, Doughty Hanson has had a history of creating value, investing responsibly and generating superior returns for its Limited Partner investors.
"We are not planning to make changes to our Real Estate or Technology Ventures teams, which will continue to manage their existing funds as before and will focus on generating returns for our investors. However, we will not be establishing any new funds in these sectors.”
For over 25 years, Doughty Hanson has had a history of creating value, investing responsibly and generating superior returns for its Limited Partner investors.
Recent transactions have included
-the acquisition of
Quirón/USP Hospitales, one of the largest private hospital operators in
Spain;
- Eurofiber, a major fibre optic company in the Netherlands; and
in Germany,
- the public-to-private acquisition of CinemaxX by Vue
Entertainment.
Recent realisations have included
- the successful IPO of
Tumi (a Private Equity Fund IV portfolio company) on the NYSE in April
2012, as well as
- a secondary public offering in November 2012, and
- the
sale of Norit (a Private Equity Fund V portfolio company) which was
announced in June 2012.
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