There is nothing like a little downtime to catch up on some old reading. Headlines that looked interesting a couple of weeks ago but for which one didn’t have the time to review previously now get their due. So imagine my enthusiasm reading this little headline from Forbes, Seven Looming Financial Bubbles. To save you the trouble of reading the article, here were the seven bubbles identified: Gold
- Emerging markets
- College tuition
- Exchange traded funds
How interesting! I won’t comment on all of these but let’s pick three we talk about regularly on MetalMiner: gold, China and copper. Gold first. When gold really start looking spiky several weeks ago, I asked Stuart if he wanted to cover it to which he replied, “Gold is a yawn. It’s only where it is because of the dollar and fears of inflation. Enough said. Though admittedly, the emergence of GDP growth, Chinese monetary policy and the development of expansive cities but oops nobody can afford to live or work there!
Copper has had a stunning year, unfortunately not due to demand or market fundamentals but rather one of the other seven bubbles Forbes cites, exchange traded funds. We have gone so far as to describe the copper market as having reached irrational exuberance. We could also concur with the fact that exchange traded funds have also reached exalted bubble status.
But quite frankly, we think Forbes missed two key bubbles and I’d like to call them out here:
- Electric vehicles
- Wind energy
We’ll cover this in a follow-up post but the issue with electric vehicles for me has to do with the whole notion of plugging in our cars at night during “off peak hours, for re-charging. Guess what? If we all plug in at night, there won’t be any such thing as “off peak, so much for savings. Again, I refer to total cost of ownership. It will be a very long time before any all-electric vehicle pays for itself over a conventional car.
I’m not sure where to begin on wind. I’ll start with the big ones. First, wind doesn’t reduce energy dependency. It’s renewable yes, but one can’t close down any existing power plant because wind can’t actually replace energy sources that are currently used to guarantee a baseload. When the wind doesn’t blow, after all, we need to get power from somewhere (e.g. coal, nuclear, natural gas etc). In addition, there is so much free money floating around, “renewable energy credits along with funding to build wind farms (all investors have about another 4 years to continue with the feeding frenzy) and finally, the idiotic “power mandated amount of wind energy a state as dumb as my own would require be part of an energy procurement plan You might also enjoy a list of what Illinois has to offer anyone interested in developing a wind farm.
Quick, get me a pin!