Kris Sayce’s Money Weekend Market Digest: 02 March 2013

Before we go through this week’s digest, an announcement. As you know, we’ve been bullish on this market for months. And despite the recent rally and the continued volatility, we still see a lot of good value on the Aussie market (not just in small-caps either).

Well, you’ll be pleased to know that we’ve put our money where our mouth is. Because we’re so convinced of the value and opportunities on the market that we’ve decided to invest in our business. We’ve done that by hiring an assistant research analyst to help us scour the market for beaten-down stocks and breakthrough innovators.

So, please welcome Samuel Volkering (he prefers Sam). You’ll see Sam’s name in Money Weekend, Money Morning, Australian Small-Cap Investigator, and a new project we’re working on — we’ll have more details on that soon.

Until then, on with today’s digest…

ENERGY: Breakthrough in ‘Battery’ Technology
 

To be fair this breakthrough really isn’t a battery as we know it. It should be and will be referred to as a power cell.

Think about this. You probably have a phone. And if you do, every night you’ll plug it in to a wall socket. You use electricity from the grid to recharge your phone so that it will last you through the next day. Where does the electricity come from? Typically the power company burns coal to generate the electricity. You get the idea.

Burning coal is the number one way to generate electricity worldwide. But it’s not great for the environment.

This is where the power cell breakthrough enters the scene. This breakthrough was discovered by Dr. Zhong Lin Wang and his team from Georgia Tech University. They’ve harnessed physical movement, or as the boffins refer to it, kinetic energy.

The Kinetic Energy Recovery System (KERS) isn’t new. Formula One has used it since 2008. But KERS is a two-step process. You have to generate the energy and then store it in a battery.

The great thing is with Dr. Wang’s power cells it’s a simple one-step process. Literally. Put the cell in a shoe, go for a walk and you generate and store the power in the cell. The scalability of this breakthrough is even more exciting.

A one cubic metre cell in the sea, charged by the ocean’s movements, could hold 30,000 watts of energy. More than enough to power your home for 38 days.

Multiply that out and you can say ‘bye bye’ to burning coal, build no more wind turbines, and potentially even see the end to solar technology.

According to Dr. Wang this technology will be ready for mainstream commercialisation within the next three to five years. So keep watching this space.

GOLD: What if Gold isn’t What it Used to Be?
 

Gold continues to trade in the doldrums. After rallying back to USD$1,600, it fell again yesterday, trading around USD$1,585.

So, what’s the problem with gold? Why isn’t it soaring? After all, central banks are printing money like it’s going out of fashion. Isn’t this the perfect environment for gold to boom?

You’d think so. But investor psychology isn’t always rational. Investors don’t always behave as you, as an individual, think they should (just ask Murray Dawes, our chief technical analyst; a big part of his analysis is studying, predicting and balancing the probabilities of how traders and investors will react to a stock).

We don’t mind if the gold price falls. We see gold as an insurance policy against a long term collapse in the global money system. So when the gold price falls it cheers us in two ways: first, it suggests that the collapse won’t happen just yet, and second it gives us the chance to top up our insurance at a cheaper price.

If that isn’t a win-win we don’t know what is.

But gold isn’t just about the theory of money and whether it’s good or bad for central banks to print money. Gold in some ways is now just like any other tradeable assets — in the case of the Aussie market, it’s a four letter code that you can buy and sell through your stockbroker…just like you can buy and sell bank, mining or retail shares.

You can trade gold on the Australian Securities Exchange (ASX) using the ETFS Physical Gold ETF [ASX: GOLD]. It’s a pretty liquid market with more than $2 million traded each day. Of course the big market is in the US where the SPDR Gold Trust [NYSE: GLD] trades more than USD$400 million per day!

That means to a large degree, gold is just like any other tradeable asset right now. As Rick Santelli points out in this video on CNBC:

‘When I was trading gold, the newspapers used to have on the front page of the Tribune, the gold watch, the silver watch. People were taking antique silver sterling that was passed down and melting it. It is not the same now. If you trade paper, the notion of many who trade gold – the ‘Ayn Randers’ – if the financial world comes to an end, they’re going to have gold. If you’re playing in ETF’s, you’re going to have a piece of paper… So it takes away some of what I perceive are the driving forces behind the run-up in the early stages after the [financial] crisis.’

As usual, Rick Santelli is the only one worth listening to on CNBC, and he makes a great point. If gold is now a ‘paper’ asset where people trade it without any intention of ever taking delivery of the gold, can we say it’s a safe haven anymore?

In the old days when people would have gold certificates or when cash was redeemable for gold there was always the understanding that someone someday would want to collect and hold their gold bars.

That’s something you can’t say for the thousands of traders who buy and sell the gold ETF on the New York Stock Exchange every day. Maybe gold has changed. It’s worth thinking about anyway.

And while you’re thinking about it, we’ll go and buy some more…

TECHNOLOGY: Is This the Next Great Leap Forward in Wearable Computing?
 

Here’s an example of the wild speed in which the technology world moves forward. In 11 months we’ve gone from smartphone, to smartglasses, to smartwatches and now the next frontier, smart armbands.

This ground breaking piece of kit is called MYO (www.getmyo.com). It will allow you to simply use the action of your arm, hand and fingers to get your gadgets to do what you want. Think, ‘Luuuke use the force,’ in an armband.

Source: MYO

 

So, how is MYO different to current motion controlling devices?

To put it simply the current devices use a camera to see you. By contrast, MYO uses the muscle activity and motion in your forearm to control your linked devices. You can check it out by watching the video here.

Let’s imagine the possibilities… Flick from one TV station to the next with a swipe of your finger. Even better, open that germ ridden public toilet door with a swipe of your hand rather than trying to find the least wet spot to push. Or imagine the ease for a video editor piecing together a whole film with the smoothness of an orchestra conductor.

It’s a mime artist’s dream come true. And if the technology catches on, it’s the end of the computer mouse.

The potential to develop this is huge. We’ll show you what we mean…

Within the year you could have a MYO on your arm and Google Glass on your head. You might look like a squash player from the future, but you’ll be seamlessly connected to the world physically and digitally. And playing some serious online squash.

As you can see this kind of innovation in wearable computing continues to drive the technology revolution. We can’t wait to see what comes next. Note: Flying cars are still not coming.

HEALTH: How to Use Your Smartphone to Save Your Life
 

It’s likely someone you know has diabetes, or early onset of diabetes. The occurrence is increasing at an alarming rate. The frustrating part is it’s completely preventable. Diet and lifestyle are the key contributing factors to Type 2 diabetes. But did you ever consider that your smartphone can help you prevent this terrible disease?

The noise about the evils of your online and mobile data falling into the wrong hands is growing. And you should be worried. But think about the benefits that your data might actually hold.

Without knowing it, you’re potentially sitting on a treasure chest of your own information.

And it’s because some smart guys at the MIT Human Dynamics Lab have looked at the ‘Big Data’ from a group of smartphone users (obtained with permission we might add) and their behavioural patterns. The man leading this charge is Professor Alex ‘Sandy’ Pentland.

You see Prof. Pentland and his team have collected all the data from the smartphones in their test group. The type of data they collected included; where people went, how active they were, what routes they took day to day, who they called and for how long. They also looked at where and how often people ate or drank at particular restaurants, pubs and bars.

What they found were mini-communities within larger communities. These mini-communities were highly repetitive in their behaviours. We like to call it ‘Sheep Theory’.

This data was analysed and used to accurately predict when people were getting sick and what particular moods they experienced. Notably they could also determine when the users were at risk of early onset of Diabetes. And which mini-communities were at higher risk than others.

We don’t know about you, but we’d like to know if the social groups we spend time with or the groups we’re a part of are vulnerable to early onset of diabetes. We think that armed with this kind of personal data, it’s possible to implement changes to bad behavioural patterns

MINING: It’s Only Bonkers Until it’s Proven to Work
 

While most people worried about the prospects of a meteor crashing into their house a few weeks back, one group of…well, we suppose they’re entrepreneurs…were thinking of something else.

They were thinking about the chance to make money from asteroids (that’s what a meteor is called before it enters the Earth’s atmosphere).

According to the Christian Science Monitor:

‘The space rock set to give Earth a historically close shave this Friday (Feb. 15) may be worth nearly $200 billion, prospective asteroid miners say.’

That’s right, ‘asteroid miners’. We’re not kidding.

The firm that one day plan to mine passing asteroids is Deep Space Industries. Right now it doesn’t have the space mining capability. That means it had to let the supposedly $200 billion 2012DA-14 pass by without shooting a rocket into space with a payload of drills, trucks and a method to return back to earth.

The Christian Science Monitor report states:

‘Deep Space Industries wants to use asteroid resources to help humanity expand its footprint out into the solar system. The company plans to convert space rock water into rocket fuel, which would be used to top up the tanks of off-Earth satellites and spaceships cheaply and efficiently.

 

‘Asteroidal metals such as iron and nickel, for their part, would form the basis of a space-based manufacturing industry that could build spaceships, human habitats and other structures off the planet.’

We love this story because it seems so completely bonkers. But that’s the great thing about progress and science, almost everything seems bonkers before it happens — think radio, TV, cars, skyscrapers, mobile phones, prosthetic arms, bionic eyes and ears.

But when people with a vision make something happen and it becomes commercially successful, you hear the common refrain, ‘If only I’d thought of that.’

Who knows, maybe we’ll hear the same things said about asteroid mining twenty years from now.

Kris Sayce and Sam Volkering

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From the Archives…

The Biggest Crisis to Hit the Stock Market Since the Last One
22-02-2013 – Kris Sayce

My Wife and Warren Buffett
21-02-2013 – Kris Sayce

How a Share Trader Approaches the Market
20-02-2013 – Murray Dawes

The Poster-Child for the US Shale Gas Revolution
19-02-2013 – Dr. Alex Cowie

The Two-Dimensional Diamond That’s Set to Turn Your World Upside Down
18-02-2013 – Dr. Alex Cowie

Kris Sayce

Kris is never one to pull punches when discussing market developments and economic events that can affect your wealth. He’ll take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money. Kris is also the editor of Microcap Trader — where he reveals the best opportunities he’s discovered in the markets.

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