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An outstanding October!
Lots of weakness lately... basically sector wide weakness.
For the week: -2.27%
-1.92% is the scorecard for the week...
Taking a breather this week...
My friends, for the week: +3%!!!
Largely unstoppable.
Charts are unreal! Onward!
Lately, this has been following the broad markets down.
4X return if action was taken immediately after reading the i-Box article from Sol Palha... amazing timing...
What a remarkable reversal today!
Still strong market support...
An outstanding week is an understatement!
I added an article from Sol Palha... he was dead on!!! AND, this still looks great.
Nice add. Channeling here is great. Nimble swing traders can make bank on a very low risk investment here.
I added the portfolio capital distribution to the i-Box... still looks solid.
Onward and upward...
This fund has a beautiful weekly uptrend that shows no signs of stopping...
Yes... the sector and the individual stocks are bouncing off the MA50 as they correct... cool!
Coal (Stocks) On Fire
Written By Julian Murdoch
The new feature up at Hard Assets Investor examines why coal stocks are up 50% on the year, even though prices have plummeted, and what KOL's future might hold.
From Hard Assets Investor (excerpt):
"Last summer, I wrote about the prospects for getting into the coal market. At the time, I pointed out that "just because coal is up 140% does not mean that Joe's Coal Mine is all of a sudden 140% more profitable." And indeed, like so many bull markets of that halcyon summer, the bull market in coal came to a crashing halt, and brought down with it coal stocks, as well as the only coal-focused exchange-traded fund in town at the time, the Van Eck Market Vectors Coal (KOL).
The story has been pretty straightforward and painfully familiar: The global economy tanked, including China, and thus energy and steel demand for coal dried up. At least, that's what happened to the demand for the spot coal that shows up on charts. The reality from the coal company's perspective is that long-term contracts drive the bottom line, and those long-term contracts are negotiated based on real supply and demand - how many boatloads of the stuff go from point A to point B, and on what schedule.
One theory for the big pop in coal prices is that it was driven by the participation of speculators taking long positions, and it's quite possible that some of those longs are now out of the market. That speaks to a potential bottom in coal prices, a theory that was at least hinted at in our interview with Howard Gatiss, CEO of coal marketing giant CMC, in January.
So if coal has found a bottom, does that mean it's time to consider the coal miners themselves?
It might just be too late."
The full article is up at http://www.hardassetsinvestor.com/features-and-interviews/1/1559-coal-stocks-on-fire.html.
COAL: RESOURCES AND FUTURE PRODUCTION
http://www.peakoil.net/files/EWG-Coalreport_10_07_2007.pdf
Peak coal: sooner than you think
by Richard Heinberg
Published May 21 2007 by Energy Bulletin / Online Opinion
Archived May 21 2007
http://www.energybulletin.net/node/29919
Coal provides over a quarter of the world's primary energy needs and generates 40 per cent of the world's electricity. Two thirds of global steel production depends on coal.
Global consumption of coal is growing faster than that of oil or natural gas - a reverse of the situation in earlier decades. From 2000 to 2005, coal extraction expanded at an average of 4.8 per cent per year compared to 1.6 per cent per year for oil: although world natural gas consumption had been racing ahead in past years, in 2005 it actually fell slightly.
Looking to the future, many analysts who are concerned about emerging supply constraints for oil and gas foresee a compensating shift to lower-quality fuels. Coal can be converted to a gaseous or liquid fuel, and coal gasification and coal-to-liquids plants are being constructed at record rates.
This expanded use of coal is worrisome to advocates of policies to protect the global climate, some of whom place great hopes in new (mostly untested) technologies to capture and sequester carbon from coal gasification. With or without such technologies, there will almost certainly be more coal in our near future.
According to the widely accepted view, at current production levels proven coal reserves will last 155 years (this according to the World Coal Institute). The US Department of Energy (USDoE) projects annual global coal consumption to grow 2.5 per cent a year through 2030, by which time world consumption will be nearly double that of today.
A startling report: less than we thought!
However, future scenarios for global coal consumption are cast into doubt by two recent European studies on world coal supplies. The first, Coal: Resources and Future Production (PDF 630KB), published on April 5 by the Energy Watch Group, which reports to the German Parliament, found that global coal production could peak in as few as 15 years. This astonishing conclusion was based on a careful analysis of recent reserves revisions for several nations.
The report's authors (Werner Zittel and Jörg Schindler) note that, with regard to global coal reserves, "the data quality is very unreliable", especially for China, South Asia, and the Former Soviet Union countries. Some nations (such as Vietnam) have not updated their proved reserves for decades, in some instances not since the 1960s. China's last update was in 1992; since then, 20 per cent of its reserves have been consumed, though this is not revealed in official figures.
However, since 1986 all nations with significant coal resources (except India and Australia) that have made the effort to update their reserves estimates have reported substantial downward revisions. Some countries - including Botswana, Germany, and the UK - have downgraded their reserves by more than 90 per cent. Poland's reserves are now 50 per cent smaller than was the case 20 years ago.
These downgrades cannot be explained by volumes produced during this period. The best explanation, say the EWG report's authors, is that nations now have better data from more thorough surveys. If that is the case, then future downward revisions are likely from countries that still rely on decades-old reserves estimates. Altogether, the world's reserves of coal have dwindled from 10 trillion tons of hard coal equivalent to 4.2 trillion tons in 2005 - a 60 per cent downward revision in 25 years.
China (the world's primary consumer) and the US (the nation with the largest reserves) are keys to the future of coal. China reports 55 years of coal reserves at current consumption rates. Subtracting quantities consumed since 1992, the last year reserves figures were updated, this declines to 40 to 45 years. However, the calculation assumes constant rates of usage, which is unrealistic since consumption is increasing rapidly. Already China has shifted from being a minor coal exporter to being a net coal importer. Moreover, we must factor in the peaking phenomenon common to the extraction of all non-renewable resources (the peak of production typically occurs long before the resource is exhausted).
The EWG report's authors, taking these factors into account, state: "it is likely that China will experience peak production within the next 5-15 years, followed by a steep decline." Only if China's reported coal reserves are in reality much larger than reported will Chinese coal production rates not peak "very soon" and fall rapidly.
The United States is the world's second-largest producer, surpassing the two next important producer states (India and Australia) by nearly a factor of three. Its reserves are so large that America has been called "the Saudi Arabia of coal". The US has already passed its peak of production for high-quality coal (from the Appalachian Mountains and the Illinois basin) and has seen production of bituminous coal decline since 1990. However, growing extraction of sub-bituminous coal in Wyoming has more than compensated for this.
Taking reserves into account, the EWG concludes that growth in total volumes can continue for 10 to 15 years. However, in terms of energy content US coal production peaked in 1998 at 598 million tons of oil equivalents (Mtoe); by 2005 this had fallen to 576 Mtoe.
Confirmation: a second study
The EWG study so contradicts widespread assumptions about future coal supplies that most energy analysts would probably prefer to ignore it. However, an even more recent study, The Future of Coal, by B. Kavalov and S. D. Peteves of the Institute for Energy (IFE), prepared for European Commission Joint Research Centre and not yet published, reaches similar conclusions.
Unlike the EWG team, Kavalov and Peteves do not attempt to forecast a peak in production. Future supply is discussed in terms of the familiar but often misleading reserves-to-production (R/P) ratio. Nevertheless, the IFG's conclusions broadly confirm the EWG report.
The three primary take-away conclusions from the newer study are as follows:
"world proven reserves (i.e. the reserves that are economically recoverable at current economic and operating conditions) of coal are decreasing fast";
"the bulk of coal production and exports is getting concentrated within a few countries and market players, which creates the risk of market imperfections"; and
"coal production costs are steadily rising all over the world, due to the need to develop new fields, increasingly difficult geological conditions and additional infrastructure costs associated with the exploitation of new fields".
Early in the paper the authors ask, "Will coal be a fuel of the future?" Their disturbing conclusion, many pages later, is that "coal might not be so abundant, widely available and reliable as an energy source in the future". Along the way, they state "the world could run out of economically recoverable (at current economic and operating conditions) reserves of coal much earlier than widely anticipated". The authors also highlight problems noted in the EWG study having to do with differing grades of coal and the likelihood of supply problems arising first with the highest-grade ores.
All of this translates to higher coal prices in coming years. The conclusion is repeated throughout the IFE report: "it is true that historically coal has been cheaper than oil and gas on an energy content basis. This may change, however ... The regional and country overview in the preceding chapter has revealed that coal recovery in most countries will incur higher production costs in future. Since international coal prices are still linked to production costs ... an increase in the global price levels of coal can be expected ..."
As prices for coal rise, "the relative gap between coal prices and oil and gas prices will most likely narrow", with the result that "the future world oil, gas and coal markets will most likely become increasingly inter-related and the energy market will tend to develop into a global market of hydrocarbons".
Implications for climate policy
Evidence that coal resource limits may constrain CO2 emissions would seem to be good news for climate protection advocates. However, the latter may be wary that industry-led opponents of emissions-reduction policies will seize on this new data to argue that governments needn't do anything about emissions, since rates of coal extraction will decline in any case.
Nevertheless it makes more sense for climate activists to embrace the news and use it to advantage, rather than to deny or marginalise it. They can argue that, even if society finds steep voluntary cuts in the use of coal to be economically onerous, there is really no alternative: declines in production will happen anyway, so it is better to cut consumption proactively than wait and be faced with shortages and price volatility later.
The findings of the 2005 USDoE-funded Hirsch report (PDF 1.17MB) (Peak of World Oil Production: Impacts, Mitigation and Risk Management) regarding society's vulnerability to peak oil apply also to peak coal: time will be needed in order for society to adapt proactively to a resource-constrained environment. A failure to begin now to reduce reliance on coal will mean much greater economic hardship when the peak arrives.
The new information about coal tells us that even if the economic price for carbon reduction is high, we have no choice but to proceed. There is no "business-as-usual" option, even ignoring environmental impacts, given the resource constraints. Nations that are currently dependent on coal - China and the US especially - would be wise to begin reducing consumption now, not only in the interests of climate protection, but also to reduce societal vulnerability arising from dependence on a resource that will soon become more scarce and expensive.
The reports' findings are not uniformly encouraging for climate matters, though. The IFE authors suggest that price increases for coal may discourage deployment of technologies to capture and bury carbon to reduce greenhouse gas emissions: in poorer countries, "producing cheap and affordable electricity is more important than producing environmentally friendly electricity".
A wake-up call on coal
Taken together, the EWG and IFE reports deliver a shocking message. For a world already concerned about future oil supplies, uncertainties about coal undercut one of the primary strategies - turning supposedly abundant coal into a liquid fuel - that is being touted for maintaining global transport networks.
The sustainability of China's economic growth, which has largely been based on a rapid surge in coal consumption, is thrown into question. And the ability of the US to maintain its coal-powered electricity grids in coming decades is also cast into doubt.
In summary, we now have two authoritative studies reaching largely consistent conclusions with devastating implications for the global economy. Surely these studies deserve follow-up reviews of the data by the International Energy Agency. If the EWG and IFE conclusions hold, the world will need to respond quickly with an enormous shift in the directions of energy conservation and development of renewable sources of electricity.
Climate concerns are already drawing some nations in these directions; however, even nations leading the efforts may not be proceeding fast enough. For China and the United States, the world's two most coal-dependent countries, the message could not be clearer: whether or not global climate concerns are taken seriously, it is time to fundamentally revise the current energy paradigm.
Richard Heinberg is the author of eight books including The Party's Over: Oil, War and the Fate of Industrial Societies (2003), Powerdown: Options and Actions for a Post-Carbon World (2004), The Oil Depletion Protocol (2006), and Peak Everything: Waking Up to the Century of Declines (in press). He is a Core Faculty member of New College of California and a Fellow of the Post Carbon Institute, and is widely regarded as one of the world's foremost Peak Oil educators.
Futures, I noticed you're on a few commodity and environment related ETF boards. (I have starter positions in SLX and TAN and a larger position in FAN)
Any you are particularly bullish on? Would you suggest waiting for a market correction before taking a position or adding (to SLX)?
Thanks for swinging by with that...
** KOL/MGEG Video Chart 5/4/09 ** BY ClayTrader
KOL - the Coal sector ETF - is in bullish environment now also - providing good overall context for the coal sector as a whole...
MGEG woke up today with above average volume and had bullish price reaction too... still plenty of upside left in the chart - $4.05 is the next key resistance level...
Link to video - http://investorshub.advfn.com/boards/playvideo.aspx?v_id=340
Today's action is incredible... everyone is jumping in!!!
The Coal ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Stowe Coal IndexSM. The Index provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry. As such, the Fund is subject to the risks of investing in this sector.
Coal companies in general are breaking out...
P&F chart shows bullish price objective at $24 +
Global Energy Consumption Rises as Supplies Lag; Coal Still the Fastest Growing Fuel in the World
http://www.greencarcongress.com/2008/06/global-energy-c.html
Energy Nominee Softens Views on Coal, Nuclear Power
By STEPHEN POWER
WASHINGTON -- Physicist Steven Chu, President-elect Barack Obama's choice to run the Department of Energy, softened previously critical comments about coal and nuclear power, and distanced himself from earlier statements that U.S. gas taxes should be higher.
Testifying before a Senate panel considering his nomination, Mr. Chu warned of "dramatic, disruptive changes to our climate system in the lifetimes of our children and grandchildren" if the U.S. and other nations don't speed up efforts to reduce emissions of greenhouse gases. Making vehicles and buildings more efficient -- rather than increasing access to oil on federal land -- is the best step for reducing U.S. dependence on foreign oil, he said. "I do not underestimate the difficulty of meeting these challenges, but I remain optimistic," Mr. Chu said.
Mr. Obama has pledged to cut U.S. greenhouse-gas emissions 80% from 1990 levels by 2050, through new legislation. He also seeks to double over three years the amount of wind, solar and geothermal generating capacity, currently around 25,000 megawatts -- steps that have aroused skepticism and resistance from some industries.
In a speech Tuesday in Washington, the CEO of ConocoPhillips, James Mulva, called for being "realistic about the cost of green energy," and suggested policy makers were in danger of "inadvertently creating unattainable public expectations."
Lawmakers who attended the hearing of the Senate Committee on Energy and Natural Resources praised Mr. Chu's credentials, which include a Nobel Prize. Many said his nomination was all but a certainty. But the lawmakers also pressed Mr. Chu with competing demands, and he responded by toning down or qualifying previous statements made when he was running the Lawrence Berkeley National Laboratory.
Republicans demanded that Mr. Chu be a more forceful advocate for nuclear energy. Mr. Chu promised to accelerate the disbursal of loan guarantees that his agency is authorized to give to companies seeking to build nuclear reactors.
In response to Democrats' unease about the expansion of nuclear plants, Mr. Chu said his agency needed to develop a better plan for waste disposal than the Yucca Mountain depository in Nevada, a multi-billion-dollar facility that has ballooned in price and is years behind schedule. He also said more research needs to occur before he would support commercial development of reprocessing technology.
Lawmakers from states with big coal-mining interests challenged Mr. Chu on his stance toward coal, which generates about half of U.S. electric power. Mr. Chu two years ago referred to the expansion of coal-fired power plants as "my worst nightmare." On Tuesday, he offered Senators a more upbeat assessment of coal's future, calling it a "great national resource." He said he was optimistic his agency could help develop technology capable of capturing and safely storing the greenhouse-gas emissions from coal plants, and indicated he would oppose a "hard moratorium" on the construction of coal plants that lack such technology, as some Democrats have advocated.
Last September, Mr. Chu told The Wall Street Journal in an interview that "somehow we have to figure out how to boost the price of gasoline to the levels in Europe." But when asked about that statement Tuesday, Mr. Chu said raising the federal gas tax was "not an option" and that making vehicles and homes more efficient was a better step. "What the American family does not want is to pay an increasing fraction of their budget, their precious dollars, for energy costs, both in transportation and keeping their homes warm and lit," he said.
Renewable Energy Reality: We're Dependent on Coal
by: David Fessler January 11, 2009
David Fessler
The Obama administration has made a big deal about renewable energy. Over the next several years, the new President has plans to spend roughly $150 billion promoting and enabling its growth. And with $700 billion flowing from the United States into OPEC's pockets every year, I don't think you'll get much of an argument from anyone about the timeliness or the need for renewables.
But even with massive amounts of capital investment – and widespread adoption by utilities and end users – renewable energy will still only account for roughly 10% of world energy output by 2030, an increase of only three percentage points from today's estimated 7% contribution. Depending on whom you talk to, however, that estimate is wildly optimistic.
The stark reality of worldwide energy production is a dirty, four-letter word: coal. Since the beginning of the 21st century, its worldwide consumption has outpaced any other fuel source, growing nearly 5% per year. This, too, in the face of prices that have escalated every year since 2000.
Consider 97% of that growth has occurred in emerging market countries, most notably China and India. They've respectively accounted for 66% and 19% of the total increase.
To keep up with the demand, world coal production is projected to increase by nearly 60% by 2030. Every major coal producing country will see huge increases in its coal output: China will almost double its output, India's will more than double and Russia's will rise almost 75%.
What about reserves... is there enough coal out there to meet this huge increase in consumption? The answer is yes. World reserves are more than adequate, with China, Russia and the United States accounting for 60% of them.
Presently, China's a net exporter of coal, but that will change in a year or two. By 2030, China will be importing 88 million tons of the black rock a year. India will be importing a staggering 220 million tons per year, overtaking Europe to become the second-largest importer.
All this is of great benefit to U.S. coal producers, who have seen their exports surge nearly 45% in 2008 alone. They will continue to see increasing exports of coal to China, India and other emerging market countries.
Large investments will be needed on the prospecting side – to identify economically viable deposits – and on the mining side to develop new projects once identified. Total investment in coal-supply infrastructure is expected to be $730 billion through 2030, with 91% of that going to mine development and mining equipment, and the rest for port expansions and shipping upgrades.
Mining Coal's Profits
The safest direct coal play is the Market Vectors Coal ETF (KOL), which tracks the performance of the Stowe Coal Index. This gives investors a means of tracking the overall performance of companies engaged in the coal industry. This is a relatively new ETF and it gives investors exposure to the major players in the industry including:
Arch Coal (ACI) – One of the largest coal producers in the United States.
Peabody Energy (BTU) – The largest private sector coal company in the world, with majority interests in 31 coal operations located throughout the United States and Australia.
Bucyrus International, Inc. (BUCY) – A world leader in above and sub-surface mining equipment.
Another safe coal bet is Joy Global, Inc. (JOYG) – essentially a carbon copy of Bucyrus. Joy's wholly owned China Mining Machinery subsidiary recently acquired Wuxi Shengda, a Chinese manufacturer of long wall shearing machines used in underground mining operations in China.
Speaking of China, the second-largest coal producer in China, Yanzhou Coal Mining Company (YZC), owns eight working mines – including one in Australia – with many others under construction. The seven working mainland mines have almost two billion tons of proven reserves. That's enough to run China's power plants for five-and-a-half years.
Of course the negative aspects of increased coal usage are increased greenhouse gas generation. Right now coal is responsible for 42% of greenhouse gasses emitted worldwide. The International Energy Agency estimates that will increase to 46% by 2030, even with aggressive implementation of new carbon capture and storage technology.
Coal is a dirty four-letter word when it comes to energy generation. And unfortunately, even under the best-case scenario, the world will have to depend on it for years to come. Investors would be wise to consider some form of exposure to coal as part of a well-balanced energy and infrastructure portfolio.
Toxic coal ash piling up in ponds in 32 states
http://www.usatoday.com/news/nation/environment/2009-01-09-coal-ash_N.htm
By Dina Cappiello, Associated Press
WASHINGTON — Millions of tons of toxic coal ash is piling up in power plant ponds in 32 states, a situation the government has long recognized as a risk to human health and the environment but has done nothing about.
An Associated Press analysis of the most recent Energy Department data found that 156 coal-fired power plants store ash in surface ponds similar to one that ruptured last month in Tennessee. On Friday, a pond at a northeastern Alabama power plant spilled a different material.
TVA: Coal waste pond ruptures in Alabama
Records indicate that states storing the most coal ash in ponds are Indiana, Ohio, Kentucky, Georgia and Alabama.
The man-made lagoons hold a mixture of the noncombustible ingredients of coal and the ash trapped by equipment designed to reduce air pollution from the power plants.
FIND MORE STORIES IN: George W. Bush | United States Senate | Ohio | Georgia | Indiana | Kentucky | Environmental Protection Agency | Energy Department | D-Calif | Barbara Boxer | Tennessee Valley Authority | House Natural Resources Committee | Rep. Nick Rahall | Matthew Hale | Office of Solid Waste
Over the years, the volume of waste has grown as demand for electricity increased and the federal government clamped down on emissions from power plants.
The AP's analysis found that in 2005, the most recent year data is available, 721 power plants generating at least 100 megawatts of electricity produced 95.8 million tons of coal ash. About 20% — or nearly 20 million tons — ended up in surface ponds. The remainder ends up in landfills, or is sold for use in concrete, among other uses.
The Environmental Protection Agency eight years ago said it wanted to set a national standard for ponds or landfills used to dispose of wastes produced from burning coal.
The agency has yet to act.
As a result, coal ash ponds are subject to less regulation than landfills accepting household trash, even though the industry's own estimates show that ash ponds contain tens of thousands of pounds of toxic heavy metals. The EPA estimates that about 300 ponds for coal ash exist nationwide.
Without federal guidelines, regulations of the ash ponds vary by state. Most lack liners and have no monitors to ensure that ash and its contents don't seep into underground aquifers.
"There has been zero done by the EPA," said Rep. Nick Rahall, D-W. Va., chairman of the House Natural Resources Committee. Rahall pushed through legislation in 1980 directing the EPA to study how wastes generated at the nation's coal-fired power plants should be treated under federal law.
In both 1988 and 1993, the EPA decided that coal ash should not be regulated as a hazardous waste. The agency has also failed to take other steps to control how the waste is stored.
"Coal ash impoundments like the one in Tennessee have to be subject to federal regulations to ensure a basic level of safety for communities," Rahall said.
The Tennessee spill was at a Tennessee Valley Authority plant covered 300 acres in a slurry of coal ash and water, destroying homes and tainting waterways and soil with high levels of arsenic.
The utility reported a second leak Friday at a pond at a northeast Alabama power plant that was storing gypsum, a material trapped in air pollution control devices that is different from the sludge that spilled in Tennessee. Some of the gypsum reached a nearby creek before the leak was stopped.
The spills have renewed a 20-year-old debate about whether stricter regulations are needed to govern them.
Rahall and Democrats in the Senate are also calling for tighter controls, including a requirement for ash ponds to be lined.
"The federal government has the power to regulate these wastes, and inaction has allowed this enormous volume of toxic material to go largely unregulated," said Sen. Barbara Boxer, D-Calif., who chairs Senate committee that oversees the EPA.
In March 2000, the agency highlighted the risks posed by wastes in landfills and ponds. In an early draft of its proposal for a national standard, the EPA concluded that the wastes "have the potential to present danger to human health and the environment."
It also warned that the number of cases of contamination nationwide was likely to be underestimated because of poor state records and the lack of groundwater monitoring.
At the time, the agency said storage ponds posed an even greater risk than landfills when it came to leaks and spills.
"Surface impoundment controls occur at a significantly lower rate," the EPA concluded. And the pressure exerted by water "increases the likelihood of releases."
In 2006, the EPA once again found that disposal of coal waste in ponds elevates cancer risk when metals leach into drinking water sources.
The agency, which had set 2006 as a target for issuing a proposed regulation, says it is still working toward a national standard. A top EPA official also said there has been no "conscious or clear slowdown" by Bush administration officials who have run the agency since 2001 and often sided with the energy industry on environmental controls.
"It has been an issue of resources and a range of pressing things we are working on," said Matthew Hale, who heads the agency's Office of Solid Waste.
Over the years, the government has found increasing evidence that coal ash ponds and landfills taint the environment and pose risks to humans and wildlife. In 2000, when the EPA first floated the idea of a national standard, the agency knew of 11 cases of water pollution linked to ash ponds or landfills. In 2007, that list grew to 24 cases in 13 states with another 43 cases where coal ash was the likely cause of pollution.
The leaks and spills are blamed for abnormalities in tadpoles. The heads and fins of certain fish species were deformed after exposure to the chemicals.
Hale said the national standard would require monitoring for leaks at older, unlined sites and require the company to respond when they occur.
The industry already runs a voluntary program encouraging energy companies to install groundwater monitors. Industry officials argue that a federal regulation will do little to prevent pollution at older dump sites.
"Having federal regulations isn't going to solve those problems," said Jim Roewer, executive director of the Utility Solid Waste Activity Group, a consortium of electricity producers. "What you have to look at is what the current state regulatory programs are. The state programs continue to evolve."
Despite improvements in state programs, many states have little regulation other than requiring permits for discharging into waterways — as required by the federal Clean Water Act.
In North Carolina, where 14 power plants disposed of 1.3 million tons in ponds in 2005, state officials do not require operators to line their ponds or monitor groundwater, safety measures that help protect water supplies from contamination.
Similar safety measures are not required in Kentucky, Alabama, and Indiana.
And while other states like Ohio have regulations to protect groundwater, those often don't apply to many of the older dumps built before the state rules were imposed.
"The solution is readily available to the EPA," said Lisa Evans, an attorney for Earthjustice, an environmental advocacy group. "We wouldn't like it, but they could say that municipal solid waste rules apply to coal ash. They could have done that, but instead they chose to do absolutely nothing."
thnx french style! Materials including coal up.. r u in ?
GL2u
MONDAY, JANUARY 5, 2009
GETTING TECHNICAL
Energy Stocks Get Energetic
By MICHAEL KAHN | MORE ARTICLES BY AUTHOR
Oil, coal and even solar power ETFs are attracting buyers again after a brutal bear market.
WITH THE PRICE OF CRUDE oil cascading down from $147 to $35 per barrel in just five months last year, many had given up on this commodity. Their argument stems from the global economic slowdown and the attendant "demand destruction" has been thrown around quite liberally.
The market's emotional pendulum swung too far to the greed side early last year and then too far to the fear side in the final quarter. Even if we never see those peak prices again, energy markets are technically oversold and ripe for a rally. That means we can look forward to a reversion to a mean price that is higher than what we see today.
The same is true for stocks of energy companies and one look at the Sector Select SPDR energy ETF (XLE) bears this out (see Chart 1).
Chart 1
From a peak over $91 a share in May 2008 to a low of $39 in October, this ETF clearly had a rough few months. It settled into a trading range after the decline, in which it still resides today. But unlike the broad market, it did not set a lower low in November. In other words, the bears attacked other parts of the market and left energy alone, relatively speaking.
Chart watchers consider this positive performance relative to the market a harbinger of better things to come for the sector. Indeed, the ETF was up Monday as the market was down. At $51 a share, the ETF is now knocking on the ceiling of its trading range.
Further, money continued to flow into the ETF over the past few months as evidenced by on-balance volume analysis. This indicator keeps a running tab of volume traded on days when prices rise -- supposedly thanks to increased demand -- less volume on days when prices fall -- supposedly on increased supply. When on-balance volume rises we can surmise that demand is beating supply and that bodes well for an eventual upside breakout from the trading range.
When oil-based energy faltered last year, so, too, did the incentive to move to other sources. Witness similar price collapses in natural gas, uranium for nuclear power, coal and their related stocks.
The Market Vectors-Coal ETF (KOL) sports a different chart than that of the SPDR energy ETF but it shows several reasons to believe that it has already seen its worst levels (see Chart 2).
Chart 2
While it did set its lowest level in November, it has been in a rising trend ever since. And during last week's low volume trading for the market as a whole, the coal ETF saw rising prices on volume that was above its own 50-day average. http://investorshub.advfn.com/boards/board.aspx?board_id=11590
Solid price action on solid volume is a technical positive. So is a 73% gain over that period vs. a 26% gain for the Standard & Poor's 500. This may not be a true bull market but for those looking to play what I expect to be a multi-week advance already in progress, this ETF does seem to be a good choice.
In the alternative energy arena, the Claymore/Mac Global Solar Energy ETF (TAN) was one of the brightest lights in the market last week. After falling more than 80% from its peak in 2008, the solar ETF is up 70% from its November nadir (see Chart 3).
Chart 3
To be sure, despite the mathematical trickery, this remains one beaten down sector. But the facts of money flowing back into the sector, a rising trend from November, a move above the key 50-day moving average and nice gains Monday when the rest of the market was weak tell us that investors are coming back.
For those looking for a bit more diversity in the alternative energy area, the Powershares Wilder Hill Clean Energy ETF (PBW) has a similar chart to that of the solar ETF (see Chart 4). The clean energy ETF covers solar, wind, and other "green" energy companies and also sports such positive technical features as a move above its 50-day average, rising trend and rising on-balance volume. http://investorshub.advfn.com/boards/board.aspx?board_id=8307
Chart 4
The bottom line is that the energy market, whether conventional or alternative, is set up nicely to lead stocks higher. Again, I must stress that this is no buy-and-hold bull market but for those looking for a short-term trade of just a few weeks, the opportunity in energy stocks and ETFs seems very good.
There's Plenty to Dig About Coal
By NAUREEN S. MALIK
The sector has hit a multi-year low, but there are diamonds in the rough.
HARDENED INVESTORS HAVE DRIVEN down shares of commodity prices. But the pressure on coal stocks, trading around their lowest levels in recent years, could create some portfolio diamonds for long-term investors.
At a Glance:
Peabody Energy (BTU)
[BTU]
Stock Price: $22.75
52-Wk High: $88.69
52-Wk Low: $16
Market Cap: $6.06 billion
Est. 2008 EPS: $4.53
2009 P/E: 5x
Est. Long-Term EPS Growth: * 51%
Est. ('09/'08) EPS Growth: 42%
Revenue (trailing 12 months): $5.9 billion
Dividend Yield: 1.1%
Chairman/Chief Executive Officer: Gregory H. Boyce
Headquarters: St. Louis, MO
* Based on analyst estimates looking ahead three to five years.
Sources: Thomson Reuters, Barron's Online
The near-term outlook for the global economy isn't pretty. Widespread liquidity constraints have stymied the record run on coal prices. U.S. inventories have risen in response to lower demand for both thermal coal used to generate electricity and metallurgical coal for steelmaking.
Major U.S. coal producers, though, will see their revenues and earnings rise because roughly 85% of U.S. coal being produced in 2009 has already been locked into pricier contracts than 2008.
Stocks of the six largest companies in the industry have cratered 70% to 85% over the past six months while the Standard & Poor's 500 index is down about 30%.
The leading U.S. coal companies are trading just as cheaply or at sharper discounts than the smaller publicly traded operations. The top four U.S. coal miners -- Peabody Energy (BTU), Arch Coal (ACI), Massey Energy (MEE) and Consol Energy (CNX) -- are trading at their lowest valuation multiples since they went public over the past decade or so.
Coal has "historically been a good barometer" of economic health, and right now the industry is facing considerable headwinds, says Evan Smith, co-manager of the Global Resource Fund (PSPFX).
Next year, he predicts, "you are going to see lower or even negative electricity demand" in because of lower power needs from U.S. industry, empty housing and a drop-off in demand from emerging markets.
The U.S. has about 270 billion tons of coal reserves, or roughly a quarter of the world's total, says Johnson Rice analyst William Burns, and more than 90% of the coal produced in the U.S. is used to produce electricity. Coal prices vary widely depending on quality, but it is the cheapest form of energy. Natural gas is going for around $5.08 per million British thermal units, compared with the coal equivalent of less than $1.
Analysts are forecasting that contracted coal prices and company earnings will decline in 2010; only 40%-50% of the coal is contracted for that year. Asian demand, particularly from China, will be a leading indicator. Those annual contracts are typically decided by the end of the first quarter of the calendar year.
Asia will drive most of the future demand because it has plenty of room to grow. Electricity use in Asia now is merely a fraction of what Americans consume: The U.S. annually consumes 13.1 thousand kilowatt hours per capita versus 1.4 and 0.9 thousand kilowatt hours in China and India, respectively, according to the International Energy Agency
Certainly, coal stocks won't snap back anytime soon, but "the longer-term opportunity is very attractive down here," says Smith.
More money is, or will be, printed in the U.S. to fund financial bailouts, infrastructure spending by the Obama administration and other economic stimuli. This "is going to be reflationary and we see historically [that] coal equities respond very well" in these periods, Smith adds.
Dan Rice, managing director of BlackRock's global-resources team, says, "Anytime you can buy companies two to three times enterprise value/Ebitda [earnings before interest, taxes, depreciation and amortization] and they have an asset base that you can't duplicate, you should be able to make very good money."
Rice's top picks are Peabody, the industry king, Consol and Massey, which are among the lowest-cost producers with solid balance sheets. Peabody is the most diversified player, with growing exposure to Australia -- a direct beneficiary of Chinese demand. Last year, the company spun out its older Appalachian mines with legacy costs as Patriot Coal (PCX). (See Weekday Trader, "If Coal Is King, Buy the King of Coal," Feb. 14, 2008)
Consol is particularly attractive because it is buying its own stock as well as those of CNX Gas (CXG), the natural-gas producer it spun off in 2006. Massey "has the best coal on the market," giving it a $10 price advantage, says Rice.
U.S. coal stocks are reflecting $50-$55 as the long-term price for a ton of coal, compared with Rice's outlook of $60-$65 per ton. Coal prices could start to recover in the second half of 2009, and every $10 rise in prices means a doubling of the price of coal shares, he adds.
U.S. coal analyst Shneur Gershuni of UBS says that pricing will be tough for 2010 contracts, but "we do think there is going to be a significant pricing increase come 2011 because of the supply coming off the market and demand coming back."
Coal stocks have been lumpy over the past several months, and the volatility will likely continue for several months. "We are going to look for bottoms in the volatility cycles as opportunities to add positions," says Gershuni.
Thanks to the bull cycles in 2004-2005 and 2007, the leading coal companies have plenty of cash on their balance sheets, says Johnson Rice's Burns. Most of the top publicly traded coal companies will benefit as U.S. supply is cut in the U.S. and smaller coal mines are shut down. Costs are easing as well.
He expects coal exports, which have risen from 59 million tons in 2007 to 80 million-85 million tons in 2008, to flatten at best in 2009.
These moves should help expand margins at companies "on the lower end of the cost curve" that also have most of their production contracted for 2009, says UBS' U.S. coal analyst Shneur Gershuni. Based on these factors, he says Peabody, Alpha Natural Resources (ANR) and Arch look the most attractive in the shorter term.
BlackRock's Rice notes that the market is undervaluing contracts that some of the companies have signed. Contracts rolling off now were signed at around $55 a ton but the coal is contracted for $95-$105 for the next year or two, translating into big earnings gains. James River Coal (JRCC), for instance, "will lose a buck a share in 2008 and make $4 a share in 2009," he says. Similarly, Consol's earnings-per-share will go from $4 in 2008 to $6.50-$7 in 2009.
James River's stock has almost tripled since touching a low of $5.05 in late November; Steelhead Partners, already a 10% owner of the company's stock, snapped up even more shares last week.
Meanwhile, Massey's valuation is attractive but it could take longer than peers to recover. It is one of the U.S.'s largest producers of metallurgical coal and lower steel demand is more economically sensitive than electricity demand. (See Weekday Trader, "A Coal Stock That Deserves More Respect," Sept. 17, 2008
But overall, because of supply-demand fundamentals, thermal coal mined out of the Appalachian region by companies such as Massey and International Coal will hold up better than other U.S. coal. (See Weekday Trader, "Small Coal Miner, Big Potential," Dec. 17, 2008)
Looking at coal stocks is almost counterintuitive these days, but valuations are compelling for investors looking to build a portfolio with a longer-term outlook.
Suspect the coal mess in TN has something to do with KOL's price being down... http://www.cnn.com/2008/US/12/23/tennessee.sludge.spill/index.html
KOL News--Latest Headlines
http://www.globalcoal.com/news/coalnews.cfm
With a decisive close > 14, I believe we have the start of a positive trend change Paullee...
King Coal or King Saud
http://seekingalpha.com/article/109697-king-coal-or-king-saud
That's the choice America needs to make. You can sugar-coat it any way you like, you can tell me there are scores of other "nuances," you can wail that neither are good choices environmentally -- then you can leave your well-heated office, get in your SUV and drive to your well-heated home where you can turn on your computer, watch television, do the laundry, read a book by incandescent or that god-awful fluorescent light that Congress has decided we must buy, or any of a dozen other activities that require electricity or fuel. Americans are not going to live in unheated igloos. We are not going to take public transportation powered by solar panels on the roof (at least not this year.) We are not going to stop computing, watching television, reading, or doing the laundry.
Coal prices have been tumbling even more than oil and gas prices. The common wisdom is that since the President-elect said during the campaign that he would destroy the coal industry, then we'd all better sell our coal stocks and buy solar and wind energy companies. I say "horsefeathers."
Let me put it this way: "When a President with a reputation for sweeping reform meets an industry with a reputation for being essential to the well-being of the country, it is the reputation of the industry that will survive." (Apologies to Warren Buffett!) If we are serious about weaning ourselves from smarmy foreign sources of energy, then we must proceed with all haste to exploit our 200 years worth of coal. It may be dirty today, but by extending existing technological research, we could have clean liquefied coal way faster than we could put a man on the moon, something we did, ah, yes, some 39 years ago… I would ask our new President a simple question: "Do you want King Coal or the Kingdom of Saud?" There is no other choice this year, this month, this day.
Solar is, thankfully, becoming cheaper and more efficient. But with the umbrella of high oil prices fast fading into distant memory, there will be less incentive, and less profit, in continuing this essential research. Ditto for nuclear. Wind power is becoming cheaper, too, but wind, hydroelectric, biomass and geothermal will never supply more than a fraction of the energy we need. Still, politicians have an affinity for hot air so expect them to continue to bloviate endlessly about wind power.
If we really want to do something about energy efficiency, we should spend our research dollars and innovation in the area of storage and transmission. The wonder of it all is that you can be served by a utility fired by natural gas that has a peak overload when you go to turn on your computer at 9 p.m. on the Pacific Coast and you'll never know it. That's because your utility is tied in to a rickety patchwork of electrical grids that allows them to buy 5 seconds or 5 hours of power from a utility across the continent where it is now midnight and everyone there has shut down for the night.
It doesn't matter if the power plants that create this electricity create it from nuclear, solar, gas, wind, geothermal, biomass or oil -- once it is converted into electricity it is readily transported at a speed and cost taking the raw material via truck or railcar cannot begin to compete with. Rather than regulate utilities county by county and state by state, we could locate wind-generated power plants where the wind is, solar plants where the sun always shines, coal plants next to the coal fields, etc.
To do this requires taking the crazy-quilt patchwork utility executives have stitched together out of necessity and creating instead a true national grid. One of those massive power lines you see as you drive about can carry about 1% of the nation's average electrical load. If we were to string them together in a truly national grid -- and add another 20,000 miles or so to reach into every nook and cranny -- we could have a remarkably efficient way to generate electricity and tell Venezuela, Iran, Nigeria and even our dear friends the Saudis, "No thanks, we don't need as much oil this year as we did last year."
Which brings us back to King Coal. Since coal is used more than any other fuel to provide electricity, and electricity is the most efficient way to move power around the country, and since the US has more coal than any other nation in the world, I say we'd be particularly stupid not to play to our strength. Hence my decision to double down on our investments in companies like Natural Resource Partners (NRP) and Penn Virginia Resources (PVR). Neither have any liability for operations since they don't operate but merely own or lease the land on which others extract the coal. They collect royalties which allow them to pay great double-digit dividends, and enjoy earnings that will increase every year that we continue to use electricity. I'm OK with that. But then, I'm a geopolitical analyst by training and experience as well as a financial analyst.
I know how I answer the question, "Do you want King Coal or the Kingdom of Saud?" King Coal, thank you.
Disclosure: Long NRP and PVR.
The sectors, ETFs, stocks I'm in are in my profile.
frenchee; thnx,, every sector i needed. r u in any? preference?
Gold, Coal ETFs Poised to Break Out?
http://www.etftrends.com/2008/12/gold-coal-etfs-poised-to-break-out.html
Are there new positionings in coal and materials for a new round of recovery in 2010?
KOL starting to move. NCOC on fire...
Don't you talk bad a bout Santa!
It's official>>Single digits>>Santa will have NO coal for the bad kids!
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http://www.vaneck.com/index.cfm?cat=3192&cGroup=ETF&tkr=KOL&LN=3_02
Fund Holdings as of 2009/11/27 | |||||
Number | Holding | Ticker | Shares | Market Value | % of net assets |
1 | Peabody Energy Corp | BTU | 772,620 | $34,427,947.20 | 8.61% |
2 | China Coal Energy Co | 1898 HK | 20,184,095 | $33,593,351.24 | 8.40% |
3 | China Shenhua Energy Co Ltd | 1088 HK | 6,388,908 | $30,932,859.92 | 7.74% |
4 | Consol Energy Inc | CNX | 668,720 | $30,687,560.80 | 7.67% |
5 | Bumi Resources Tbk PT | BUMI IJ | 91,593,500 | $22,959,510.38 | 5.74% |
6 | Bucyrus International Inc | BUCY | 404,450 | $20,893,887.00 | 5.22% |
7 | Yanzhou Coal Mining Co Ltd | 1171 HK | 10,525,961 | $20,601,676.28 | 5.15% |
8 | Joy Global Inc | JOYG | 383,676 | $20,534,339.52 | 5.14% |
9 | Walter Industries Inc | WLT | 255,842 | $17,683,799.04 | 4.43% |
10 | Arch Coal Inc | ACI | 833,921 | $17,612,411.52 | 4.42% |
11 | Massey Energy Co | MEE | 460,119 | $17,295,873.21 | 4.33% |
12 | Alpha Natural Resources Inc | ANR | 436,651 | $16,330,747.40 | 4.08% |
13 | Adaro Energy Tbk PT | ADRO IJ | 64,119,715 | $11,353,191.31 | 2.84% |
14 | Exxaro Resources Ltd | EXX SJ | 908,662 | $11,217,142.58 | 2.81% |
15 | Fushan International Energy Group Ltd | 639 HK | 11,822,067 | $10,509,493.64 | 2.63% |
16 | Tambang Batubara Bukit Asam Tbk PT | PTBA IJ | 4,347,000 | $7,271,465.16 | 1.83% |
17 | Felix Resources Ltd | FLX AU | 459,419 | $7,095,221.67 | 1.82% |
18 | Centennial Coal Co Ltd | CEY AU | 1,999,044 | $5,948,969.65 | 1.49% |
19 | Hidili Industry International Development Ltd | 1393 HK | 5,186,307 | $5,727,542.20 | 1.43% |
20 | MacArthur Coal Ltd | MCC AU | 652,823 | $5,519,417.41 | 1.38% |
21 | Aquila Resources Ltd. | AQA AU | 585,727 | $5,250,377.25 | 1.31% |
22 | Patriot Coal Corp | PCX | 402,526 | $5,216,736.96 | 1.30% |
23 | Straits Asia Resources Ltd | SAR SP | 3,106,200 | $4,997,772.24 | 1.25% |
24 | Indo Tambangraya Megah PT | ITMG IJ | 1,610,552 | $4,625,839.26 | 1.16% |
25 | New Hope Corp Ltd | NHC AU | 1,199,355 | $4,595,033.50 | 1.15% |
26 | Riversdale Mining Ltd | RIV AU | 646,872 | $3,700,358.73 | 0.93% |
27 | Western Canadian Coal Corp. | WTN CN | 1,352,131 | $3,377,459.85 | 0.84% |
28 | Whitehaven Coal Ltd | WHC AU | 784,123 | $3,032,327.53 | 0.76% |
29 | International Coal Group Inc | ICO | 688,683 | $2,961,336.90 | 0.74% |
30 | Coal & Allied Industries Ltd. | CNA AU | 39,127 | $2,781,043.45 | 0.70% |
31 | James River Coal Co | JRCC | 148,658 | $2,781,391.18 | 0.70% |
32 | Indika Energy Tbk PT | INDY IJ | 7,543,000 | $1,712,696.21 | 0.43% |
33 | Gloucester Coal Ltd | GCL AU | 229,552 | $1,321,183.28 | 0.33% |
34 | FreightCar America Inc | RAIL | 64,168 | $1,179,407.84 | 0.30% |
35 | UK Coal PLC | UKC LN | 846,444 | $960,968.28 | 0.24% |
36 | Cash | 961,310 | $961,326.23 | 0.24% | |
37 | Mitsui Mining Co Ltd | 3315 JP | 811,500 | $903,753.32 | 0.23% |
38 | Fuel Tech Inc | FTEK | 94,794 | $854,093.94 | 0.21% |
39 | Darma Henwa PT Tbk | DEWA IJ | 37,815,500 | $597,753.29 | 0.15% |
40 | Felix Resources Ltd-In Speci | FLXXE AU | 355,673 | $28,565.89 | 0.01% |
Van Eck in the News -http://www.vaneck.com/index.cfm?cat=321&LN=3-09
The Daily and Weekly Views | Announcement when this fund was started in September 2008 - http://www.vaneck.com/sld/vaneck//offerings/press_releases/KOL%20Launch%20Press%20Release.pdf | |
Country | 1980 | 1990 | 1995 | 2000 | 2003 | 2005 | 2006 |
Bermuda | 0.29 | 0.43 | 0.46 | 0.55 | 0.58 | 0.61 | 0.62 |
Canada | 309.6 | 433.63 | 466.38 | 504.48 | 528.13 | 541.25 | 529.95 |
Greenland | 0.14 | 0.19 | 0.23 | 0.26 | 0.27 | 0.28 | 0.28 |
Mexico | 56.66 | 100.22 | 122.05 | 167.25 | 171.76 | 189.98 | 195.91 |
United States | 2,094.45 | 2,837.08 | 3,163.96 | 3,592.36 | 3,662.03 | 3,810.98 | 3,816.85 |
North America | 2,461.15 | 3,371.59 | 3,753.11 | 4,264.95 | 4,362.82 | 4,543.15 | 4,543.66 |
France | 236.75 | 324.44 | 369.02 | 411.93 | 437.3 | 451.81 | 447.27 |
Germany | - - | - - | 483.48 | 505.04 | 532.5 | 545.76 | 549.06 |
Turkey | 21.84 | 47.84 | 68.39 | 98.57 | 110.43 | 129.01 | 141.46 |
Russia | - - | - - | 714.23 | 717.29 | 745.18 | 779.44 | 819.59 |
South Africa | 85.52 | 144.71 | 161.69 | 180.73 | 199.85 | 211.19 | 201.88 |
China | 261.49 | 549.34 | 876.43 | 1,177.89 | 1,678.77 | 2,195.10 | 2,528.95 |
India | 97.9 | 219.88 | 318.28 | 375.39 | 428.18 | 483.29 | 517.21 |
Japan | 523.72 | 776.49 | 896.62 | 946.3 | 936.6 | 979.82 | 982.46 |
The US has been generating over 49% of its electricity from coal for decades now and despite all the noise, we do not think this figure is going to change substantially soon. From 1980 to 2006, US electricity consumption has increased by 89%, which means that coal consumption increased by a similar magnitude, for the percentage of electricity generated from coal has remained somewhat steady throughout the years. The idea that solar, wind and other sources can immediately replace coal is a fallacy; it would take years for us to replace coal plants with a mixture of nuclear, solar and wind power plants. This would not address future demand and so bottom line, while coal is dirty, it is here to stay for years to come.
The two main players now are China and India; china now consumes more coal now than any other country in the world; to put this in perspective, China now consumes more coal than US and the Entire European union combined. Last year China consumed 2.62 billion tons, an increase of over 160% from 2000, when it consumed only 1 billion tons. By 2010, it is estimated that China will use approximately 3 billion tons; currently, China alone consumes roughly 1/3 of the worlds total coal output. Roughly, 70% of China's electricity is generated from Coal (1.93 trillion kilowatts), and it is still constructing roughly one new coal power plant a week. Even Though China has embarked on one of the most aggressive nuclear power plants building sprees ever, when all these plants are built, they will barely supply 5% of Chinas total electricity needs. Thus it's fairly easy to assume that coal will remain a major driving force of the Chinese economy for decades to come.
India is the 6th largest generator of electricity in the world, and it's also ranked as the 6th largest consumer worldwide. Over the past decade consumption has increased by over 64% and its projected increase in electricity consumption of 8-10% annually is one of the highest in the world. As with China and the United States, coal provides a major portion of India's electricity; currently, 69% of India's electricity is generated from coal.
In 1996 India consumed 295 million tons of coal; by 2005 the figure had jumped to over 465 million tons. From 2000 to 2005 India's coal usage increased by 5.5% a year; if we use the same projection, then in 2006 it consumed 490 million tons, in 2007 it consumed 516 million tons, in 2008 it consumed 544 million tons and by 2011 it will be consuming roughly 637 million tons; this off course is based on the assumption that consumption will continue to increase at a pace of 5.5% per annum and not spiral upwards.
The EIA Projects that India and China will account for 34% of the world's total increase in energy consumption worldwide and 85% of the world's total projected increase in coal usage between 1995 and 2020. China and India have increased their power output by 1000% and 500% respectively since 1980 and at the rate China is going; it will eventually surpass the United States. The only way it's going to be able to increase its output in a significant way it's to embrace every single source of energy out there and that includes coal.
These two countries are already operating well below optimal capacity; in fact, rolling black outs are the norm in both these countries and thus the question does not fall into the" if" category but the must category when it comes to the construction of new power plants. No matter how aggressively they build new nuclear, solar, or hydroelectric plants, they will still need to continue building coal fired plants in order to meet demand, which continues to increase at a record pace.
Hence even if by some miracle the U.S. could implement some plan in record time that would cut down the need for new coal plants, it would in no way affect long term prices because most of the world's electricity is still derived from coal.
There are several ways to play this sector, some more rewarding than the others, but the simplest way if you are bullish, would be to purchase shares in KOL, the coal ETF. As market conditions are currently far from normal, individuals should refrain from taking huge bites, but instead deploy their money in bits and pieces. Finally, one needs to take the long term view, for the short term ride is bound to be volatile.
Copyright © 2009 Sol Palha
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Sol Palha | Tactical Investor | 38-11 Ditmars Blvd. Astoria, NY, 11105 | Email | Website
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