Oil Prices Picks up from Weekly Lows amid Libya Turmoil

By HY Markets Forex Blog

Oil prices were seen trading higher on the last day of the trading week, as prices rebound from six-month low of around $92 per barrel. While recent data showed a rise in US stockpiles and the turmoil in Libya continues to weigh on the country’s oil supplies.

West Texas Intermediate contracts for December advanced 0.21% higher to $92.49 a barrel on New York Nymex at the time of writing, while the European benchmark Brent dropped to $110.61 a barrel at the same time in London.

Oil Prices – Libya Crises

Libya’s crises has raised concerns as other OPEC countries is expected to boosted crude exports by mid-December by 3% at its next meeting  next week.

Libya’s oil output dropped from 1.45 million bpd recorded last year to 450,000 bpd in October. Libya is the biggest hold of crude reserves in Africa.

The country’s Prime Minister Ali Zaidan pleaded to the armed militants to stop blocking the oil fields and reopen ports.

Civil servants and the private sector staffs in Libya went on strike on Tuesday, reacting to the conflict between the army and Islamists.

Oil Prices – US Stockpiles

Organization of the Petroleum Exporting Countries (OPEC) is expected to keep its crude production quota unchanged at its next meeting, scheduled for December 4 in Vienna and expected to increase its shipments by 700,000 barrels per day to 24.05 million barrels in the period to December 14, reports confirmed.

Recent data released showed that the US stockpiles climbed 2.95 million barrels to 391.4 million in the week ending November 23, the highest level since June, reports from the Energy Information Administration (EIA) confirmed.

The EIA also reported a rise in crude production by 45,000 barrels a day to 8.02 million barrels per day in seven days ended November 22, the highest level since January 1989.

Additional data from the American Petroleum Institute showed that crude inventories rose by 6.92 million barrels for the week ended November and gasoline supplies edged up 201,000 barrels in the same week.

 

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Gold Bearish on Fed-Tapering Speculations

By HY Markets Forex Blog

Gold futures  rose slightly on Friday; while gold traders’ sentiment this month was bearish with the yellow metal heading towards the biggest monthly fall since June and first annual fall since 2000 on speculation that the Federal Reserve (Fed) will begin to taper its stimulus soon.

Gold Futures for February delivery climbed 0.74% higher on the New York Mercantile Exchange, standing at $1,247.10 an ounce as of 8:29am GMT, while Silver futures gained 1.36%, settling at $19.96 an ounce at the same time. The yellow metal lost more than 5% in November and dropped more than 25% this year, which will mark its first annual fall since 2000.

Metal traders continue to worry over the ongoing speculations over the possibility that the Federal Reserve could begin to scale-back on its quantitative easing program soon as the US economy is showing signs of an improvement. Minutes from the Federal Reserve signaled that the US central bank policy-makers expect the tapering to starts as soon as December.

Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, came in at 843.21 tones on Thursday, dropping to its lowest level since January 2009. The loss in outflows since the beginning of this year reached 450.

Last week, Hedge-fund Manager John Paulson, said he personally wouldn’t invest more money into his gold fund due to the inflation possibly accelerating.

The US dollar index, which measures the strength of the US dollar against six major currencies, eased 0.09% to 80.511 points.

The US markets were close on Thursday due to the Thanksgiving holiday.

Gold Prices – China Demand

According to a government data released, gold imported from China reached 129.9 metric tons in October, the second highest on record; compared to 109.4 tons recorded in the previous month.  China consumer demand reached 955.9 tons in the first ten months this year, doubling the amount seen in the previous year.

Analysts’ forecasted approximately 3.6 tons of gold were bought on the Shanghai Gold Exchange on Friday.

 

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AUDUSD May Reach 0.9205 Before Turning Lower: Elliott Wave Forecast

AUDUSD is again at the lows but we see very slow and choppy price action at the lows so we suspect that wave B), which is a corrective leg, is still unfolding. A strong bullish divergence on the RSI support the idea that low, even if just temporary, is near. We are tracking a possible flat in wave B) with wave C in view that may reach 0.9205.

AUDUSD 4h Elliott Wave Analysis

AUDUSD Elliott Wave

Written by www.ew-forecast.com

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Friday Charts: Black Friday, Worthless Dollars and Why 3,907 Stocks Vanished Overnight

By WallStreetDaily.com

If you overate on Thanksgiving Day (I did!) and aren’t operating at peak mental capacity this morning, then you’re in luck.

It’s Friday, which means it’s time to impart some financial insights and wisdom with the help of a few graphics.

Minimal words and lots of pictures shouldn’t be too taxing. I promise. And here’s the proof…

A Black Friday Trading Alert

I alluded to it on my recent CNBC appearance… This is not the time to be blindly buying retail stocks!

While deep discounts might be easy to come by for shoppers on Black Friday, historically, profits aren’t so easy to nab for investors.

“Contrary to conventional wisdom, although retailers derive an outsized share of their annual sales over the next month, their stocks have typically underperformed,” says Bespoke Investment Group.

They’re not kidding.


From Thanksgiving to Christmas, the S&P 500 Index averages a gain of 1.7%, with positive returns 77% of the time.

Meanwhile, the S&P 500 Retail Group averages a gain of just 0.8% over the same period, with positive returns only 54% of the time.

Bottom line: If you’re looking for a good deal right now, look somewhere other than the average retail stock.

Bye, Bye, Bye… Or Not!

Ever hear the one about the U.S. dollar losing its status as the world’s reserve currency in the aftermath of the Great Recession? Me, too.

While pundits might make a convincing argument, ignore them. The data tells the true story.

Turns out, the dollar’s share of global reserves has barely budged since 2009, even after adjusting for valuation changes.

Want more proof of the dollar’s staying power?

This fun factoid should do the trick: During the most recent U.S. government shutdown, foreign banks actually increased their U.S. Treasury holdings, according to analysis by Morgan Stanley (MS).

Bottom line: Leave the “bye, bye, byes” to ‘N Sync. The U.S. dollar isn’t going anywhere.

Or as Morgan Stanley’s Foreign Exchange Strategist, Evan Brown, says, “We believe that the dollar’s status as a primary reserve currency is unlikely to be challenged anytime soon – mainly due to a lack of alternatives.”

The Great Price-to-Earnings Ratio Debate

The one bubble talk I’ve shied away from over the last two weeks involves good old-fashioned stocks. I can’t resist any longer.

While everyone’s debating how high of a price-to-earnings ratio is too high, here’s an overlooked graphic germane to the discussion.

Since 1997, nearly 4,000 stocks vanished from existence, according to the World Federation of Exchanges.

Where have they all gone? Private, mostly.

Jason DeSena Trennert, Chief Investment Strategist at Strategas Research Partners, says the drop in stocks is “highly correlated” to the rise in assets under management by private equity firms.

Making matters worse, they’re not being replaced via initial public offerings, thanks to the onerous and costly Sarbanes-Oxley regulations passed in 2002, which discourage companies from going public.

Despite the disappearing acts, though, the total market value of all publicly traded stocks since 1997 increased 2.4%, to $21.4 trillion.

Bottom line: More money is chasing after fewer opportunities, which naturally leads to higher prices and price-to-earnings ratios. It’s simple supply and demand at work. May the bull march on!

That’s it for this week. But before you go, let us know what you think about the fate of the U.S. dollar, stock market bubbles, and our random 1980s and 1990s pop-culture references by sounding off here.

If we’ve made you a smarter or richer investor, we don’t mind hearing about that, either.

Ahead of the tape,

Louis Basenese

The post Friday Charts: Black Friday, Worthless Dollars and Why 3,907 Stocks Vanished Overnight appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Friday Charts: Black Friday, Worthless Dollars and Why 3,907 Stocks Vanished Overnight

Ichimoku Cloud Analysis 29.11.2013 (GBP/USD, GOLD)

Article By RoboForex.com

Analysis for November 29th, 2013

GBP/USD

GBPUSD, Time Frame H4 – Indicator signals: Tenkan-Sen and Kijun-Sen are still influenced by “Golden Cross” (1); Kijun-Sen is horizontal, other lines are directed upwards. Ichimoku Cloud is going up (2), Chinkou Lagging Span is above the chart, and price is on Tenkan-Sen. Short‑term forecast: we can expect support from Tenkan-Sen and price to grow up.

GBPUSD, Time Frame H1 – Indicator signals: Tenkan-Sen and Kijun-Sen are influenced by “Golden Cross” (1); Tenkan-Sen and Senkou Span are directed downwards, other lines are horizontal. Ichimoku Cloud is going up (2); Chinkou Lagging Span is on the chart, and price is on Kijun-Sen. Short‑term forecast: we can expect support from Senkou Span A and growth of price.

GOLD

XAUUSD, Time Frame H4 – Indicator signals: Tenkan-Sen and Kijun-Sen are close to each other inside Kumo Cloud, they may intersect and form “Golden Cross” (1); Tenkan-Sen and Senkou Span A are directed upwards, Senkou Span B is moving downwards, Kijun-Sen is horizontal. Ichimoku Cloud is going down (2), Chinkou Lagging Span is above the chart, and the price is on Senkou Span A.  Short‑term forecast: we can expect attempts of price to stay above Kumo.

XAUUSD, Time Frame H1 – Indicator signals: Tenkan-Sen and Kijun-Sen are close to each other inside Kumo Cloud, they may intersect and form “Golden Cross” (1); Senkou Span B is horizontal, other lines are directed upwards. Ichimoku Cloud is closed (2), Chinkou Lagging Span is above the chart, and price is above Kumo. Short‑term forecast: we can expect price to return to cloud’s broken border.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

 

 

 

 

Japanese Candlesticks Analysis 29.11.2013 (EUR/USD, USD/JPY)

Article By RoboForex.com

Analysis for November 29th, 2013

EUR/USD

H4 chart of EUR/USD shows bullish tendency; closest Window is support level. Three Line Break chart and Heiken Ashi candlesticks confirm ascending movement.

H1 chart of EUR/USD shows bullish tendency within ascending trend. Three Line Break chart and Heiken Ashi candlesticks confirm ascending movement.

USD/JPY

H4 chart of USD/JPY also shows bullish tendency within ascending trend. Three Line Break chart and Heiken Ashi candlesticks confirm ascending movement.

H1 chart of USD/JPY shows ascending trend; Shooting Star pattern indicates correction. Three Line Break chart shows ascending movement; Heiken Ashi candlesticks confirm that correction continues.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

 

 

USDJPY stays within a upward price channel

USDJPY stays within a upward price channel on 4-hour chart, and remains in uptrend from 97.63. Support is located at the lower line of the channel, as long as the channel support holds, the uptrend could be expected to continue, and next target would be at 1.0350 area. On the downside, a clear break below the channel support will indicate that consolidation of the longer term uptrend from 96.94 is underway, then pullback to 100.50 area could be seen.

usdjpy

Provided by ForexCycle.com

5 Stocks to Buy and Hold–Forever

By The Sizemore Letter

Forever is a long time, particularly in the stock market.  The Wall Street Journal archives are full of stories of companies that were once the toast of the town…only to fall into irrelevance or bankruptcy.

Enron, Lehman Brothers, BlackBerry (BBRY) and JC Penney (JCP) are all fine examples of companies that were once leaders in their respective industries. Enron and Lehman Brothers are long dead, and BlackBerry and JC Penney are currently fighting for their lives and may not survive 2014.

Related: JC Penney on Express Train to Oblivion and BlackBerry Chiefs Walk Away – You Should Follow

So how do you know which stocks are “buy and hold forever” stocks and which are at risk of going the way of BlackBerry or Penney?  There are no rules that are guaranteed to work 100% of the time, but these guidelines will get you close:

  1. The company is a leader in its respective industry.
  2. The industry is not particularly susceptible to technological disruption.
  3. Demand for the company’s products is relatively immune from fickle consumer tastes.
  4. The company has a “black swan proof” balance sheet with modest amounts of debt.
  5. The company has a long history of prudent shareholder-friendly actions, such as paying and raising the dividend.

The first bullet is actually the least important, as all of the spectacular blowups I mention above were once industry leaders.  But I include it because, when combined with the other four points, we get the makings of a quality “buy and hold forever” list.

You will notice that banks, retail stores, and technology companies are conspicuously absent from the list.  There is a good reason for that.  With few exceptions, technology companies tend to have short lives, and those that stick around for the long haul do so by adapting.  Apple (AAPL), for example, transformed itself from a struggling computer maker to the dominant consumer electronics company.  But for every Apple, there are a lot more like BlackBerry—companies that fell victim to technological disruption and failed to adapt in time.

Likewise, because they are by nature highly-leveraged and subject to macro shocks, banks are a no-go on the buy-and-hold-forever list.  And finally, JC Penney is a warning to all retailers, even well-managed ones like Wal-Mart (WMT) and Target (TGT).  Penney was once an innovative leader too; its catalogue business was the precursor to online shopping as we know it today.  Wal-Mart and Target were the disruptors that wrecked Penney’s business.  And unless they continue to adapt to fend off competition from Amazon.com (AMZN), they will eventually succumb to Penney’s fate as well.

So, with no further introduction, let’s jump into the list.

1. Diageo

I’ll start with global drinks giant Diageo (DEO), one of my very favorite long-term holdings.

Diageo meets all of our criteria; it’s the leading premium spirits company in the world,  its products are as close to technology proof as you’re going to get, its liquor brands span across all tastes and preferences, its business is robust enough to survive economic shocks, and Diageo is a Dividend Achiever par excellence.

I once, tongue in cheek, argued that Diageo was the ultimate 12- to 18-year play in reference to its premium scotch brands:

Anyone can start an exclusive new vodka brand given a sufficient pool of capital. Consider the example of Grey Goose. American billionaire Sidney Frank created the brand in 1997 and sold it to Bacardi just seven years later for a quick $2 billion. Had he opted instead to create a new scotch brand, he would not have lived long enough to enjoy its success. When the late Mr. Frank passed away in 2006, his first batch of scotch still would have needed another five years or more of aging to be taken seriously.

Diageo’s dominance of scotch via Jonnie Walker and its other brands is a competitive advantage that won’t be disappearing any time soon.  Diageo also gives you access to the consumers of tomorrow; the company currently gets 42% of its sales from emerging markets, and it will soon get more than half.

The stock currently pays a dividend of 2.7%.  I recommend you buy Diageo, instruct your broker to reinvest the dividends, and hold on to it—forever.

2. Unilever

Next on the list is Anglo-Dutch consumer goods and packaged foods company Unilever PLC (UL).

If you’ve ever set foot in a supermarket anywhere in the world, then you are familiar with Unilever’s brands.  Among many others, they include: Axe, Ben & Jerry’s, Bertolli, Dove, Lipton, St Ives, VO5, and Vaseline.  If there was ever a set of products that was unlikely to fall to technological obsolescence or a black swan event, it would  be Unilever’s.

But while its products may be mundane consumer staples in the West, Unilever has excellent growth prospects abroad.  Unilever gets nearly 60% of its revenues from emerging markets, and while that has hurt the company this past quarter, it ensures that it has a bright future as living standards continue to rise.

Unilever has one of the strangest share structures of any company on the planet.  It’s listed in both London and Amsterdam as two separate companies, Unilever PLC and Unilever NV (UN), respectively, and both trade in the U.S. as ADRs.  Back in the 1930s, management found it easier and cheaper to do a “business merger” rather than a “legal merger” between the British and Dutch companies that today make up the Unilever Group.

Don’t be distracted by any of this.  For all intents and purposes, UL and UN are the same.  The only effective difference is that UN is subject to 15% withholding taxes on dividends in the Netherlands, whereas UL is not.  This matters, as the dividend is an important part of Unilever’s returns.  The company has raised its dividend every year for over 25 years and currently yields 4.0%. For this reason, I recommend UL over UN.

3. Heineken

Next on the list is global megabrewer Heineken (HEINY).  Beer is no longer much of a growth industry in the West, but demand is stable.  And in many emerging markets, beer is still a phenomenal growth opportunity and an excellent way to invest in rising incomes among the new global middle class.

Heineken gets about half of its revenues and 64% of its sales by volume from emerging-market countries, and it has excellent positioning in Africa, the last real investing frontier of any size. Africa already accounts for 22% of Heineken’s sales by volume and 14% of revenues, and this percentage will only increase with time as African consumer trade-up from home brews to branded beer.

Prices are considerably higher in developed countries, which explains the gap between revenues and sales by volume.  Heineken sells less beer in the West, but it charges more for the beer it sells.  As incomes rise in emerging markets, expect this gap to close.

30 years from now, Microsoft (MSFT) and Apple may no longer exist, or if they do you can bet that they will look vastly different than they do today.  But 30 years from now, beer drinkers the world over will still be cracking open bottles of their favorite brews.

Heineken trades for a reasonable 17 times earnings and pays a modest 1.8% dividend.  Buy it and hold it…forever.

4. Realty Income

Moving away from consumer brands, I want to highlight my favorite long-term REIT holding, Realty Income (O), a conservative triple-net REIT that owns things like pharmacies, gyms and distribution centers.  Realty Income is very selective in both the properties it chooses and the tenants responsible for paying the rent.

Realty income has a 44-year track record as a landlord.  It owns 3,800 commercial properties in 49 states and Puerto Rico, all of which are leased under long-term leases typically of 10-20 years. To spread the risk, Realty Income’s tenants are spread across 200 companies and 47 industries.

Realty Income has been a dividend-paying and dividend-raising monster since going public in 1994.  In 19 years, it’s made 519 dividend payments and hiked the dividend 73 times. Importantly, unlike many of its brethren in the REIT space, Realty Income sailed through the 2008-2009 meltdown without a scratch.  Not only did it maintain its dividend throughout, Realty Income actually raised it.

I have no idea what the world will look like 30 years from now.  But I have no doubt in my mind that the three rules of real estate will be the same then as today: location, location, location.

Realty Income has taken a beating of late, as have most income-oriented investments.  Fears of rising bond yields and Fed tapering have scared away would-be investors.  Use this as an opportunity.  Buy Realty Income, enjoy its 5.6% dividend, and hold—forever.

5. Nestlé

Last on the list is the Swiss confectionary giant Nestlé (NSRGY).

Nestlé sells food and nutrition products; everything from baby formula and chocolate milk to instant coffee and packaged food. These are the kinds of products that tend to have stable demand, even in a recession. Times would really have to be hard for a person to forgo ice cream or chocolate candy.

Nestlé currently yields 3.1%, and as you have come to expect, that dividend is growing. Nestlé has grown its dividend every year since 1996, and its dividend has grown at a 12.5% annual clip since 2001. (Note: these rates are in the company’s reporting currency, the Swiss franc.)

Few companies in the world have as global a footprint as Nestlé. The company is active on every inhabited continent, and it gets 30% of its sales from fast-growing emerging markets. This is expected to be as high as 45% by the end of this decade, meaning that Nestlé has ample room for continued growth.

I cannot be certain of much is this world, but of this I have no doubt: 30 years from now, Nestlé will still be in business, and the company will be selling a lot more food and drink products than it is today. Its dividend will also be a lot higher.

This article first appeared on InvestorPlace.

Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. Click here to receive his FREE weekly e-letter covering market insights, global trends, and the best stocks and ETFs to profit from today’s exciting megatrends.

This article first appeared on Sizemore Insights as 5 Stocks to Buy and Hold–Forever

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Resource Stock Investors: Let’s Get Back to Basics…

By MoneyMorning.com.au

It’s a bad time for the resources industry.

Who says?

Everyone says. So it must be true.

But what if it isn’t true?

We’re glad you asked. Everywhere you look, folks are writing off the resource sector and Australian resource stocks.

But what if, rather than being the death of Australian resource stocks, this was actually the time to invest?

The latest news from mining giant Rio Tinto [ASX: RIO] may suggest things aren’t so bad after all…

Yesterday Rio Tinto announced:

Rio Tinto has set out its breakthrough plan to optimise the growth of its world-class iron ore business in Western Australia. Mine production capacity will rapidly increase towards 360 million tonnes a year (Mt/a) at a significantly lower capital cost per tonne than originally planned.

It’s hard to pick any holes in that news.

That’s a big increase in production. Rio forecasts to export just 265 million tonnes this year. So that’s a one-third increase.

If the increased production came without the margin improvement we would have wondered if Rio was just trying to dump iron ore on the market before a potential fall in iron ore prices.

But right now that doesn’t seem to be the case. In fact, the iron ore price has been surprisingly strong in recent months.

Record Imports for China

The following chart shows the recent state of play:


Source: Index Mundi
Click to enlarge

The iron ore price peaked in 2011. It fell to the recent low point towards the end of last year. Although the chart doesn’t show it, the iron ore price fell below US$90.

Things got so bad for the iron ore producers that Fortescue Metals [ASX: FMG] appeared to be in serious danger of falling foul of its debt covenants. That could have put Fortescue into a real financial fix.

Fortunately for them, they managed to refinance their debt and the share price has more than doubled since.

Now, as with any commodity price, the current price doesn’t always reflect the future price. Things can change. The big buyer of iron ore is still China. No one can guarantee that China will keep buying.

But if the September import numbers are anything to go by, it doesn’t look like China is about to stop iron ore imports or steel production. As Mining.com reported:

China imported a new all-time high of 74.58 million tonnes of iron ore during last month (September), up 8% from August and up a surprisingly robust 15% compared to last year.

So much for the end of the resources boom.

Back to Basics for Resource Investing

Importantly, this news comes at a time when most people are still extremely negative on resource stocks.

And look, we get that. As bullish as we are on the market, we get it why people are nervous. Resource investors have seen their fair share of booms and busts over the past 10 years.

Then of course there’s the view of resource guru Rick Rule (a view we completely agree with) who says that probably 600 of the resource stocks listed on the ASX are worthless.

The tricky part is to figure out just which ones are worthless and which have value. That’s no easy task.

But even so, we’ve assigned that job to Diggers and Drillers resources analyst Jason Stevenson. He’s on the case now figuring out which stocks investors should buy as they rebuild their resource stock portfolio.

In truth it’s a case of going back to basics. We asked Jason to run his slide rule over two types of resource stock – blue-chip and speculative.

We want to know which blue-chip Aussie resources stock is the ‘best of breed’ on the market right now. We want to know which Aussie resources stock an investor should buy if they’re starting a portfolio from scratch. Jason will share his view with readers in the next issue of Diggers and Drillers.

But that’s not all. We also want to know which speculative stock is the best to own. As we said above, Rick Rule says 600 Aussie resource stocks are worth nothing. It’s up to Jason to filter through the other roughly 600 resource stocks to pick out the winners.

There have been plenty of false dawns for resources stocks this year alone. But if a resources stock rebound is on the way, we want to make sure you’re in the best position to make the most of it.

Cheers,
Kris+

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By MoneyMorning.com.au

A New Spin on Fracking

By MoneyMorning.com.au

Today I’d like to share my latest thoughts on the matter. And please remember, I have no hidden agenda here. I found myself in the midst of America’s energy comeback several years ago – at the heart of which are technologies like fracking.

I’ve spent countless hours kicking rocks on drill sites, sitting down with engineers in board rooms and reading lengthy research – and you can rest assured the comments below are my honest, ‘dining room table’ feelings.

That said, let’s get down to the latest frack talk!

First up, if you’re unfamiliar with what fracking is it’s a process used by oil and gas drillers to unlock shale formations. A quick search on the pros/cons of fracking and you’re bound to find ample backup for both camps.

However, from my experience I see a lot more egregious lies coming from the environmental side than the ‘big oil’ side. Today I’d like to set the spin aside, and keep the record straight.

The latest anti-fracking item that arrived in my inbox was from MoveOn.org…. they wrote:

Tap water so contaminated you can light it on fire. Cancer-causing chemicals released into drinking water sources. Air pollution. Economic damage. Climate change. These are just some of the effects of hydraulic fracturing

[Please read the paragraph above again, for effect.]

Ahem. That paragraph is fully-laced with lies. Anti-frackers apparently need to do their homework or wash their mouths out with soap – whichever comes first is fine by me. With the paragraph above, it’s almost amazing someone would put their name on it. Of course it was signed ‘Victoria, Manny, Maria, David, and the rest of the team’ so maybe the accountability is spread thin at MoveOn.

Looking at just that recent example…

Let’s Set the Record Straight, Shall We?

First off, tap water has never been contaminated by fracking nor has fracking caused tap water to light on fire. This is a lie and was propagated by the Gasland documentary. But if you Google such things as ‘Gasland debunked’ you’ll realize the example of any lightable tap water was not, whatsoever, related to fracking.

Plus, it’s the same answer for chemicals released into drinking water sources. There has been absolutely no known incident of freshwater contamination. And just think about that, there are thousands of shale wells being drilled per year – add em up over the years and we’re talking about much more than 10,000 wells. In which, no attributable freshwater contamination has occurred. None. Zero. Zilch.

As for ‘air pollution’, that’s a standard issue. Drill rigs, truck traffic and other related industry action will cause regular amounts of air pollution. That’s just the case with any industrial action. There’s also the case of flaring natural gas, that’s certainly an air pollution issue, too. But, again, that has nothing to do with fracking like the sentence above implies.

As for ‘economic damage’, that’s downright laughable. The benefits to America’s economy from the rebirth of oil and gas are clear. Hundreds of thousands of jobs created or improved, more manufacturing, increased US exports, cheap residential energy and relatively stable oil prices (for stable gasoline prices) – add it all up and America’s energy renaissance is a huge shot in the arm to the economy.

Last but not least ‘climate change’. This is also a very strange reference, but typical of environmental spin. Here’s the thing: fracking has unleashed massive amounts of cleaner-burning natural gas.

And in recent years – directly tied to more energy efficiency and cleaner burning natural gas – the US has been lowering its total CO2 levels. So to say that ‘fracking’ is increasing the risk of climate change is categorically wrong. If anything it’s helping move the needle in the right direction as a bridge fuel.

Add it all up and I think the pendulum has swung a little far in favour of the environmental side of things. And this is coming from a guy that double majored in college, one major being Environmental Economics. Lots of hippies/environmentalists in those classes, to be sure! But nowadays many of the herd has gone astray – the facts are stripped away for agenda-seeking fiction.

Getting back to my water pollution comment above, here’s what I mean…

Recall, fracking never set tap water ablaze, it’s also never (and I mean NEVER) been associated with contaminated fresh water.

Fracking happens 7-10,000 feet below the earth’s surface, while the water table and clean water sources rarely stretch below 500ft. That means there’s over 5,000 feet (approximately a mile) of impermeable rock in between these fracking operations and water sources. (See the nearby image for reference.)

I was onsite with a big oil company a few years ago asking about how much power each ‘frack stage’ has, as in ‘what’s the reach of the fracture that’s created?’ The geologist/engineer on site said the fractures can stretch, on average, 150ft from the horizontal section of the well.

When I asked if they could ever ‘frack’ all the way up to the surface he essentially laughed and said ‘we wish’. All joking aside, these fracking operations are happening well below fresh water aquifers and other water sources, to an extent that contamination won’t likely occur.

The main concern, from my perch, would be that drilling crews and surface operations need to be careful above ground, because they could do more contamination above ground with a leaky car engine or spill then you could with a fracking stage.

It’s funny, today is Thanksgiving and I remember clearly last year when my family members called me to the table after dinner to explain this situation to them. All it took was a little common sense and explanation to show that America’s shale boom is no more a threat to the environment than any other industry – but yet its economic benefit is unexpectedly huge.

Add it all up and the environmental pendulum has swung too far, to the point where groups like MoveOn or others will blatantly lie just to get more people to slap a ‘stop fracking now’ sticker on their bumpers or make a donation. It’s disgraceful.

Here’s another quick anecdote to prove my point…

Years ago we made a video to explain fracking, and posted it on Youtube. Now remember, I don’t have any agenda with this stuff. My point was to make sure that investors, like you and me, knew what they are actually buying in to.

I’m a firm believer in making sure you know what a company does before you invest in it. Accordingly, I wanted to share what I learned about America’s new shale revolution – fracking in particular – with anyone interested. Again, there’s no hidden agenda here. I don’t work for ‘big oil’. I’m just a dude that likes investing in moneymakers – and I like to know HOW the money making works.

Here’s the Takeaway

So the video gets uploaded into the ether of the internet. And wouldn’t you know it we start getting all kinds of hate brewing in the commentary, and ‘dislikes’ galore.

Again, I don’t know who these folks are, or what they are smoking – but the plague seems to be contagious. One comment reads ‘Propaganda in its purest form‘. While another says, ‘this is not the entire truth sir, the negative facts are being censored big time. In other words, its bullshit.

The commenter is probably referring to the ‘facts’ you’ll find in your MoveOn.org email box.

Yikes.

In the meantime, I frequently muddy my boots and talk to the guys that are doing this oil and gas work all the time. They are all very smart folks. There’s a lot of geology, geophysics, engineering, math and science involved in today’s oil industry.

Frankly I’d love to get some of the geologists/engineers/scientists I’ve talked with in a room with a lot of the gung-ho environmentalists – I think we’d have a very lopsided discussion (in favour of the smart oil and gas folks!)

That’s all I’ve got for today, I thought I’d share some of my dinner table insight – to make sure if any conversation bubbles up at your table you’ll have some talking points to back up America’s energy comeback.

In the meantime, let’s give thanks for cheap, abundant energy and the technology that makes it possible. Otherwise we’d be eating raw turkey on a cold autumn day!

Matt Insley
Contributing Editor, Money Morning

Publisher’s Note: A New Spin on Fracking originally appeared in The Daily Reckoning USA.

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By MoneyMorning.com.au