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September 04, 2009 |
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The solar power boondoggle... Natural gas heading to less than $2... Big fall for oil, too... OBAMA! now paying for your college...
 Longtime readers of my newsletter will recall my frequent warnings about the solar-power industry. In short: Solar power is yet another example of hope conquering experience (and reason).
Solar technology isn't nearly efficient enough to generate power for an electrical grid. The laws of physics tell me (and anyone else who considers them) it never will be. Energy doesn't work that way. You can't make diffuse sources of energy, like sunlight, concentrated enough to deliver across a grid at any reasonable price. It's like trying to put a smashed egg back together.
Nobody in his right mind would buy a solar panel for a power grid. So who does buy these things for power grids? Governments, of course. In particular, the governments of California, New Jersey, Germany, and Spain.
I'll let you connect the dots about what kind of politicians these places are all well known for having. These states also have another thing in common: They are all broke. Spain, in particular. That's bad news for the solar-panel industry...
In 2008, Spain accounted for half of the world's new solar-panel installations. It spent roughly $1.6 billion on subsidies to build 2.6 megawatts of solar-generating capacity – or about 1% of its total generating capacity. That's $615 per watt. The national power company of the Philippines is building a new 100 megawatt coal power plant this year. The cost estimate is $95 million. That's 95 cents per watt. Which do you think is a better investment?
Spain nearly bankrupted itself trying to afford solar power. So this year, the politicians cut the subsidies. Now, we're back to a "no one in his right mind would buy solar power" situation. This year, Spain's solar capacity is actually falling. It's not even worth the cost of maintaining the existing plants.
You may have noticed the price of natural gas dropping to around $2.50 per thousand cubic feet (mcf) this week. I've delivered plenty of warnings about the likelihood of much lower gas prices. I believe natural gas will fall to less than $2 per mcf before this bear market is over. You've heard me say that before... but you haven't yet heard me say this: I think a similar move to much, much lower prices is also coming for oil.
New, giant oil fields are being discovered all over the world in deep wells – wells that couldn't be drilled 10 years ago. We're about to discover an entire new ocean of oil, two miles below the surface of the Earth.
The latest discovery happened on Wednesday. BP announced yet another new giant field in the Gulf of Mexico, 200 miles due south of Lake Charles, Louisiana. You may recall oilmen had long called the Gulf of Mexico the "Dead Sea" because the industry believed there was no more oil there. Wrong. Just like the new technology enabled natural gas production from coal seams and reversed the decades-long trend of declining onshore gas production, so will new technology unlock enormous amounts of oil from the bottom of the oceans. And just like the price of natural gas has collapsed under the weight of these new supplies, so will the price of oil.
It will take a long time and require a lot of capital to bring these new supplies to the market. But it will happen. And when the oil reaches the market in 2011-2013, consumers won't care how much it cost to drill. That'll be a sunk cost. I'd be very cautious when it comes to oil companies.
"We need to make sure that the University of Texas-Austin is financially accessible to all qualified students," says Tom Melecki, director of the university's office of student financial services. This was the university's official explanation for why it was withdrawing from the National Merit Scholarship program, the merit-based financial aid program that awards about 8,200 scholarships each year to the highest-achieving high school students in the United States.
Rather than funding students with a remarkable record of achievement, the university will instead use its resources to pay for need-based scholarships. Perhaps OBAMA! will pay for your college after all...
The University of Texas is the second elite public university to drop the program. All of the People's Republic of California colleges withdrew from the program in 2006. The National Merit Scholarship program used to be the best way for very bright middle class kids to finance their college education. But now it seems our schools have become yet another cog in the great welfare state, where aid is given according to need and expenses are paid according to means. Gee... who first wrote that?
Almost all National Merit winners have parents whose incomes disqualify them for other public assistance. How will these kids, who have worked incredibly hard in school for the chance to win a college education based on merit, afford college?
I have a few conflicting thoughts about the matter... First, I don't think anyone should go to college and certainly not straight out of high school. An eager, hungry, and energetic mind is a terrible thing to waste on a formal, stultifying, state-approved education. Second, it's certainly not my responsibility to pay for your kid's wasted four years at college. On the other hand, if we're going to be forced to pay for someone's college, it certainly seems to be a much better investment to do so based on merit, doesn't it?
Finally... I ought to admit this issue strikes close to home for me. I was a National Merit Scholar semifinalist. I'll never forget walking into the lunchroom at my high school (Go Winter Park Wildcats!) early one Monday morning in the fall of my senior year. I'd been invited to a breakfast the school was hosting in the semifinalists' honor. As I recall, there were 12 or 15 of us. I'd driven over from New Smyrna beach, where I'd spent the weekend driving up and down the beach in my old VW camper surfing in huge offshore hurricane waves (Gilbert) with Steve Sjuggerud's younger brother, Mike.
When I arrived at school, I was still covered in sand. I was still wearing my surf trunks and flip-flops. And I was a few minutes late. As I sat down, the pretty girl across the table from me, Vanessa, who was our valedictorian, said, "What are you doing here?" My grades and my attendance were never any match for my test scores. I'm pretty sure Vanessa didn't think I could read. I didn't end up winning one of these coveted scholarships. My SAT scores missed the mark. I was never any good at math. But I was grateful for the opportunity. And I knew the students who won those scholarships deserved them.
In the new highs, lots of precious metals: Market Vectors Gold Miners ETF (GDX), iShares Silver Trust (SLV), Silver Wheaton (SLW), International Royalty (ROY), Goldcorp (GG), Sino Gold (SGX.AX).
Finally, an idea we can get behind... starting our own country. Drop us a line over the Labor Day weekend: feedback@stansberryresearch.com.
"I can't help but remember 1999, when a lot of newsletters (maybe not yours) was telling me the 2K problem was unfixable and I should buy rice and canned goods and a shotgun and bullets, etc. Also, 40 years ago, I had a boss who was a Mormon and he kept 1 year of food in his basement because some cataclysm was on the horizon. I've eaten much healthier for 40 years by not doing this stuff. Anyway, some cataclysm may occur, but I kind of think we'll muddle through this one somehow... As for governments, Switzerland has one and has had it for a long time. Somolia is where you want to move." – Anonymous
"Oregon is a pretty state... Seattle Washington... off its coast is a Island, ferrys go to it. Quimby island? Beautifull place. Has a quaint lil town on it and homes. The atlas 400 club members ought to check it out, if you like it buy it up build a compound and buy the ferry service out so you can limit access. Fortify the coast and hire blackwater or whatever they are called now... or your own military group to man the fortifications.
"Once you own the whole Island succeed from Washington state and the US. Ought to have a contest to name your new country... Course your gonna hafta form some kinda Goverment and... uh pay taxes to support it. Then you'll need some lil people to do manual labor for you capitalists. Next thing you know they will want a lil piece of land then voting rights... next thing you know you all be paying for entitlements... taxes go up, whole damn country of Porter will go to hell... happens every time.
"Or you could attack the US , let them invade n cause some damage to Porter then surrender and they will give you money for the next hundred years or so. Save you all from imposing taxes on yourselves. Take some of that free US tax payer bucks invest it in some kinda goofy Goldman Sachs dirivities... leverage it bout 60-1 and wait ten years and the U S Gov will give you even more billions through GS or the Federal reserve if you have your own central bank, (I will happily run it for you... I always say 'give me control of a nations money supply and i care not who makes the laws'). Worked for a couple other island Nations I know of." – Anonymous
Regards,
Porter Stansberry and Sean Goldsmith
Baltimore, Maryland
September 4, 2009
P.S. Please note, S&A's offices will be closed Monday in recognition of Labor Day. You'll receive your next Digest on Tuesday. Stansberry & Associates Top 10 Open Recommendations
| Stock |
Sym |
Buy Date |
Total Return |
Pub |
Editor |
| Seabridge Gold |
SA |
7/6/2005 |
1,035.98% |
Sjug Conf. |
Sjuggerud |
| Crucell |
CRXL |
3/10/2004 |
225.84% |
Phase 1 |
Fannon |
| Humboldt Wedag |
KHD |
8/8/2003 |
178.71% |
Extreme Val. |
Ferris |
| EnCana |
ECA |
5/14/2004 |
175.42% |
Extreme Val. |
Ferris |
| Exelon |
EXC |
10/1/2002 |
174.79% |
PSIA |
Stansberry |
| International Royalty |
ROY |
3/16/2009 |
147.95% |
Extreme Val. |
Ferris |
| Icahn Enterprises |
IEP |
6/10/2004 |
127.74% |
Extreme Val. |
Ferris |
| VeriFone |
PAY |
4/24/2009 |
100.58% |
Inside Strategist |
Copeland |
| QLT Inc |
QLTI |
12/17/2008 |
98.13% |
FDA Report |
Huang |
| Posco |
PKX |
4/8/2005 |
89.19% |
Extreme Val. |
Ferris |
| 5 |
Extreme Val. |
Ferris |
| 1 |
PSIA |
Stansberry |
| 1 |
Inside Strategist |
Copeland |
| 1 |
FDA Report |
Huang |
| 1 |
Phase 1 |
Fannon |
Stansberry & Associates Hall of Fame
| Stock |
Sym |
Held |
Gain |
Pub |
Editor |
| JDS Uniphase |
JDSU |
1 year, 266 days |
592% |
PSIA |
Stansberry |
| Medis Tech |
MDTL |
4 years, 110 days |
333% |
Diligence |
Ferris |
| ID Biomedical |
IDBE |
5 years, 38 days |
331% |
Diligence |
Lashmet |
| Texas Instr. |
TXN |
270 days |
301% |
PSIA |
Stansberry |
| MS63 Saint-Gaudens |
|
5 years, 242 days |
273% |
True Wealth |
Sjuggerud |
| Cree Inc. |
CREE |
206 days |
271% |
PSIA |
Stansberry |
| Celgene |
CELG |
2 years, 113 days |
233% |
PSIA |
Stansberry |
| Nuance Comm. |
NUAN |
326 days |
229% |
Diligence |
Lashmet |
| Airspan Networks |
AIRN |
3 years, 241 days |
227% |
Diligence |
Stansberry |
| ID Biomedical |
MIDBE |
357 days |
215% |
PSIA |
Stansberry |
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