"Long-term — nuclear. Short-term — coal."
That pretty much sums up commodities expert Garry White’s position on where Britain — and the world — will get its future energy from.
We’re in the middle of a massive energy crunch. The most cursory glance at an oil futures chart reveals where traders believe the price of the black stuff is headed. And it’s not just oil that’s getting more expensive...
Take a look at your most recent electricity bill. Compare it to one from a year ago. Electricity prices have surged — because the cost of fuel for power stations has gone through the roof.
We need electricity. And as living standards rise around the globe, we need much, much more of it.
"The answer," says Garry, "is nuclear. It doesn’t release carbon dioxide, and we can get uranium from stable, friendly countries."
Trouble is, it takes a long time to build a nuclear power plant. Around 15 years. So what do we do in the meantime?
"Coal!" says Garry. "It’s an absolutely, 100% proven way of generating electricity. And the world has plenty to go round. Yes, it’s dirty — but there really is no alternative... not yet."
As it happens, scientists think they may have found a way to reduce the greenhouse impact of burning coal. Garry’s not sure it’ll work, as he explains in today’s free edition of Smart Commodities.
But one thing he is sure of is this — clean or dirty, coal has a big future. The bull market in oil may be hitting headlines now, but Garry reckons it’s coal that will end up being the shrewder investment (and Garry himself is an oil bull!)
Find out why investing in coal today could be the smartest move you make this year.
The BBA conference — where the stars come out to shine...
Yesterday saw one of the hottest events of the year — the British Banking Association (BBA) conference.
And there was only one name on the lips of those who’d been lucky enough to get their hands on a ticket. Mervyn "The Governor" King.
Big Merv was, of course, headlining the lunchtime bash. And what a performance!
He talked about how, traditionally, it’s the job of central bankers to take away the punch bowl just as the party’s getting started. He said there would be innocent bystanders losing their homes as a result of banking excess. He used other confusing metaphors, including this gem:
"If banks feel they must keep on dancing when the music is playing and that at the end of the party the central bank will make sure everyone gets home safely then, over time, the parties will become wilder and wilder."
Party animal King then put himself "on a collision course" (not my hyperbole, blame the Times) with high street banks by suggesting they pay more into a compensation scheme that would protect depositors if one of them went bust.
He also said the special liquidity scheme, by which banks can swap mortgage-backed securities for government bonds, would be made permanent.
But King wasn’t the only star turn at yesterday’s afternoon knees-up. Outgoing FSA chairman Sir Callum McCarthy wowed the crowd with his Basle Banking Supervision routine.
The Basle boys are discussing liquidity requirements next month, but that’s not soon enough for C McC — he wants action now!
"Unless there’s a step change in the speed with which the Basle Committee progresses international agreement, regulators will be forced to deal with this on a national level."
Without a doubt the best gag in the entire show!
HSBC chairman Stephen Green struggled by comparison. His best routine was the one about how the banks have turned their back on huge leverage.
"It’s not the end of a bubble, it’s the end of a business model," he quipped.
A bit of a slow burner for many in the room. Today, though, we get the punch line. Libor — the rate at which UK banks lend to each other — has crept back up to 5.95%.
Fund manager Robin Geffen has predicted that banks will need a second round of rights issues. Shareholders won’t be laughing — they’re already aggrieved that banks are paying interim dividends in shares, not cash.
The high-leverage business model may well have been put on the shelf for now. But its effects are still very much with us.
It’s at times like these that I’m thankful for my friend and colleague Manraaj Singh. The UK scene may be looking bleak, but Manraaj’s international outlook allows him to pick up exciting plays in some very interesting parts of the world...
Dead presidents, abandoned mines... is this an investment or an action movie?
"OK," says Manraaj. "This is the story in a nutshell. There was a copper mine. They closed it. Then everyone forgot about it. For years! Then we got word that the mine might re-open. We told our readers to buy in, and pow! The share price has soared since!"
Now, a quick word of caution. This is a volatile play, and what matters now is what happens next.
What will happen next?
Well, here’s the thing – even though this share price has shot up, the mine is still actually closed. Manraaj reckons there’s a hell of a lot more profit to come if it gets re-opened.
And that looks like a real possibility – especially now. Because the president of the country where the mine is located has just died (sorry for being vague, Manraaj’s orders. He wants to tell you the details himself).
One man in a strong position to replace him just so happens to be an ex-employee of this mining company.
"It’s like having shares in, I don’t know, Halliburton," says Manraaj. "And then someone connected with Halliburton takes up a powerful position in government. Hang on..."
One thing’s for certain – we’re now one step closer to seeing this huge copper mine re-open. Find out more HERE
Until tomorrow
Ben Traynor
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