| | | | | Thursday, October 1, 2015 | |
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If You Were Nearly Certain It Would Make You Money, Would You Invest?
Let me ask you a quick question...
Would you invest in a company that...
- Found a way to increase production by 600%
- Operates up to 70% cheaper than competitors
- Is rated a unanimous "Buy" by 21 ratings firms
- Is set to double production in the year ahead?
If your answer is yes, click here. If no, you may want to look into a beginner's finance course.
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Eric Fry, channeling the late Richard Dawson, reports...
Let's play a virtual game of Family Feud. I, as the virtual Richard Dawson, will pose the following question: "Name something that can contain silver."
Take as much time as you need...
What was your answer? Was it "jewelry" or "dollars" or "spoons" or "photography"? Or did you maybe think about something a little further afield like "bullets" or "anniversaries" or "cloud linings"?
Or maybe something even further afield... like "photovoltaic cells"?
If you actually had answered "photovoltaic cells," you probably would have lost almost any game of Family Feud, but at least you would have won The Non-Dollar Report's "Best Segue of the Day Award."
The connection between silver and photovoltaic cells (i.e., solar power) is still relatively small, but it is growing very rapidly. The solar power industry, which consumed close to zero silver 10 years ago, now consumes 11% of the world's mined silver supplies.
Kitco provides some background:
In its first phase of growth, photovoltaics saw its primary uses in densely populated countries with significant dependencies on foreign oil. Two things happened: Germany and Japan became the countries with the highest percentage of renewable energy production (which includes wind and hydro-electric power); and Chinese manufacturers aggressively entered the market and became the main suppliers.
Presently, however, we seem to have entered a second round of expansion where countries larger in size are beginning to cover suitable surface areas in solar panels for the purpose of power production:
- China, going back and forth on targets, appears to be aiming at up to 35 gigawatts (GW) of solar-produced power [over the next year or two].
- India just commissioned a 1GW pilot of a 4GW project covering water canals in Gujarat and installing rooftop panels on a large scale.
- Saudi Arabia has projected to cover a section of its desert to produce 16GW of power by 2032 as part of a 41GW renewable energy project.
Clearly, the world is moving toward sustainability and solar power not only for environmental reasons, but also to mitigate risks of geo-political dependencies. The fact that the average solar panel contains between 15 and 20 grams of silver leads us to assume that this development will not be without impact on silver prices.
The solar industry's impact on silver prices may not be evident immediately, as this industry still represents a relatively small source of silver demand. On the other hand, this source of demand is growing very rapidly. And solar is not the only "green industry" that is boosting its silver consumption.
The Silver Institute predicts that total industrial demand for silver will grow 27% through 2018, compared with 2013 levels. The electrical and solar sectors will account for more than half of this growth. (You can check out the Silver Institute's entire forecast here: "Glistening particles of industrial silver.")
While these new sources of demand are steadily increasing, new sources of supply are gradually decreasing. According to the Silver Institute, mined supplies of silver peaked last year and are on a downward trajectory.
Bottom line: Silver investors will want to keep a close eye on trends in the solar sector.
More broadly, investors of all types will want to keep a close eye on the entire renewable energy sector. That's the message Sean Brodrick, The Oxford Club's natural resources specialist, delivers in today's Non-Dollar Report.
Sean lays out a compelling case for investing in this fast-growing sector, while also mentioning a few specific ways to do it.
Ride the Renewable Energy Boom!
The next energy revolution is here, and you can invest in it.
The 2015 Energy [R]evolution report says renewable energy could provide 85% of the world's power in 15 years. By 2050, it could provide 100% of the world's power.
That's a big deal. For one thing, if the world follows this plan, fossil fuels would be phased out. And the report says that global CO2 emissions would be stabilized by 2020 and would approach zero in 2050.
And don't think I'm going to get on a climate change high horse. The bottom line is, the air your children and grandchildren breathe - as well as the water they drink and the fish they eat - will be much cleaner. Ol' king coal is a dirty fuel, and pumps enormous amounts of toxic pollutants, including mercury and uranium, into the atmosphere.
And it's not just gasoline-powered cars that could go the way of the dodo. A third of emissions come from the electricity sector. We're already seeing this shift in the U.S. utility sector. Though a lot of new power plant capacity has been added, the last new coal plant in the U.S. was built in 2013.
Sure, America could build more coal plants in the future. A big new coal plant was just built in Europe, and Asia is planning on adding more coal power too. But look at the kind of power capacity U.S. utilities have added lately...
Despite falling prices, expansion of gas-fired capacity is falling. Wind is growing, as are both small and big solar plants.
So this green shift is going to cost an arm and a leg, right? Nope. Costs are falling so quickly that, according to the report, for the first time, the path to 100% renewable is cost-neutral.
The investment costs for the switch to 100% renewables by 2050 is about $1 trillion a year, according to the report. But because renewable energies don't need fuel, the average fuel cost savings are $1.07 trillion a year.
And it also means more jobs. By 2030, renewable energy will account for 87% of the jobs in the energy sector, the report says. The authors estimate there will be 9.7 million people working in solar PV.
Meanwhile, jobs in wind power will grow to more than 7.8 million. That's twice as many as there are employed in oil and gas today.
Of course, these are projections. And there will be bumps in the road, like the expiration of U.S. renewable energy tax credits at the end of next year.
Follow the Big Boys Into Renewables
It's not too early to start picking winners and losers. I have four for you today.
With advancements in smart grid, energy storage and data analytic technologies, there will be plenty of ways investors can make money.
And you'll be in good company. On Monday, six companies, including Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), Citigroup (NYSE: C) and Morgan Stanley (NYSE: MS) pledged to cooperate to raise investments in renewable energy.
These firms urged governments to push clean power sources ahead of talks at the Sustainable Innovation Forum in December.
Four Picks for the Future
Many of the new technologies are still working out the kinks. Let me tell you about four things you can invest in that are producing power - and profits - now.
Total SA (NYSE: TOT) plans to invest $500 million a year in renewable energy. What's more, Europe's second-largest oil and gas company recently sported a whopping 6.4% dividend yield.
Total increased its renewable presence with a majority stake in SunPower Corp. And that's my second pick...
SunPower Corporation (Nasdaq: SPWR) is one of the top manufacturers of high-quality, high-efficiency solar panels. SunPower is a big player in both residential- and utility-scale solar. Both segments are growing quickly; SunPower should win either way. And earnings are soaring - up 124.6% in the past year, and projected to grow 12.5% next year.
SunPower is trading near 52-week lows, a victim of the market turbulence. If you want to go bargain shopping in solar power, this is a good place to start.
Tesla Motors Inc. (NASDAQ: TSLA) is known for its electric cars, but it is also rolling out excellent batteries for use with home solar systems. It announced its 7-kilowatt-hour and 10-kilowatt-hour models of its "Powerwall" on May 1.
Tesla has a new $5 billion battery production site outside Reno, Nevada, called the Gigafactory that goes live next year. It is expected to cut the costs of Tesla's batteries - which sell for $250 per kilowatt hour now - in half. Tesla doesn't make a profit now, but earnings are projected to soar next year.
And if you prefer ETFs to individual stocks, consider investing in wind power with the First Trust ISE Global Wind Energy ETF (NYSEArca: FAN). It gives you international exposure as well, because U.S.-based companies are only 12.3% of First Trust's holdings. Its top holdings include Vestas Wind Systems, Iberdrola, China Longyuan Power Group and Nordex - all foreign companies.
First Trust has a total expense ratio of 0.70%, and it sports a 3.1% dividend yield.
The renewable energy boom is just starting. Be sure you're on board when it leaves the station.
All the best,
Sean Brodrick
For The Non-Dollar Report
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