The Goldwatcher

Riversimple Open Source Technology Fuel Cell Prototype: London June 2009

The Goldwatcher Chapter  ‘The End of Cheap Oil, Chindia and other Tipping Points to Instability‘ associates with the question ‘Will alternative energy come to the rescue?’  The Chapter ends with the comment: ‘..The balance of global economic power is slipping away from the US and other western consuming economies. Conservation could improve the economic balance but unfortunately it is not being taken seriously. Discussion on this subject will be continued on The Goldwatcher blog.’

Through last year The Goldwatcher agenda was hijacked by the global financial crisis , near global financial meltdown  and subsequent G20 salvage initiatives following the  collapse of the Casino Capitalism House of Cards.  These developments are  reviewed in the two part comment prepared for Stock Research Portal.   Part One addresses  pre April 2009  events and Part Two comments on developments after the April 2009 G20 leaders summit. The Economic Jihad being waged against the US and western economies is covered in the previous blog.

The ‘Riversimple’ hydrogen fuel cell car and open source technology:

Claiming fuel consumption equivalent to 360 miles per gallon  Riversimple, a fledgling British company, last week unveiled their prototype two-seater hydrogen fuel cell car.  They claim to be ’dedicated to making highly energy efficient vehicles using a radical new approach to personal mobility.’ Information on the development of the Riversimple prototype  in collaboration with Oxford University, Cranfield University  and a Shanghai company Horizon Fuel Cell Technologies. is accessible on the company website.  The British BOC Group PLC and the Piech family of Porsche founder Ferdinand Porsche  supported and funded research. 

Riversimple’s approach to open source technology has exciting potential.  Following the open source model they are inviting  ’the community’ to  develop vehicles and,  to manage cooperative relationships,  have established an Open Source Foundation.

Transition Towns:

Riversimple’s  open source approach fits well with the established and rapidly growing  Transition Towns community networks addressing the consequences of climate change and peak oil.  Their prototype is still only a tiny step on a formidably lengthy road.  But it’s a step in the right direction and, with community support following the open source model, progress could be rapid. 

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‘Topple the economy and you topple the Crusaders:’

The above graphic ’Fire of Jihad’ appears on the  cover of the online magazine ‘Al Yaqeen.‘  The symbols in the graph of the burning World Trade Center Towers  reflect the sharp decline in post 9/11 US economy.

The section in Chapter One of the Goldwatcher ‘Insight into the Post 9/11 World and the Jihad against America’ ends with the comment ’as investors we have to draw the line between the pre 9/11 world when the US was at peace and the post 9/11 world with the US at war…’

A recent article ‘War by Other Means : Econo Jihad’ addresses the sinister economic side of the conflict. The article by Professor Gabriel Weimann published by Yale Global  reveals how Al Qaeda has been tuning strategy to do maximum damage to the western economy. Even as far back as 2002,  Weimann writes,  ‘Al Qaeda claimed its strategy was to reduce America to economic ruin.’

Jihadi Internet chatter now suggests ‘both exultation about the economic crisis gripping the west and a call for what can be labeled an “Econo-Jihad,” targeting Western financial systems and economic infrastructure. The mantra is ‘Topple the economy and you topple the Crusaders.”

Insuring against the consequences of Econo Jihad:

An insurance salesman should have no difficulty convincing us we need protection against risks flowing from the econo-jihad.  And that’s where gold comes in. The section ‘Crisis and Financial Market Risk Insurance’ in Chapter One explains why,  for protection against ‘the unthinkable’,  we have to own and posess gold.  Stateless money that keeps its value even in the worst of times. 

I expect the Western economy will have the strength to resist this metastisis of terrorism and also think President Obama will prove to be a formidable protector of the interests of the U.S.  and her allies. But so what? 

When it comes to protecting our security  it doesn’t matter what you or I think.  What matters are the serious consequences that will follow if  unthinkable scenarios play out and why gold is essential insurance against real risks to our financial security. These  include risks to the stability of all fiat currencies including the dollar.

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Volatile markets:

Oil at about $70, more than 100% above its price a few months back,  and gold sliding as it fails to breach the psychologically important $1000 threshold illustrate current market uncertainties and volatility.  Oil prices usually respond to grass roots supply and demand realities. However now the IEA and other organisations continuously revise secular forecasts. This suggests statistical information being used may be unreliable,  inadequate or outdated and speculation affecting oil prices.

On January 22nd this year The Goldwatcher posted on price prospects for 2009 and a year ago in 2008 The Goldwatcher posted on gold under $700 0r over $1000. Both posts are worth considering now. An earlier 2008 post $1000 Gold : What’s next also discusses gold as a contrarian investment and other factors that come into play when psychological thresholds are being challenged.

The grass roots supply and demand fundamentals for gold and the technical picture appear to be weak.  At current high prices demand in India has collapsed. The price is vulnerable  if investors and speculators stop buying and without support from industrial users corrections could be steep. 

On the other hand the geo-political case for gold is exceptionally strong. With Mr. Ahmanidejad  in office for another four years Iran is likely to become a serious nuclear threat.  North Korea is already a serious nuclear threat.  Mr. Netenyahu is back in office with the same ideas that accompanied his last failed term of office. And,  while the war in Iraq may be scaling down,  conflicts in Afghanistan are scaling up as  initiatiaves to destroy Al Qaeda and the Taliban are getting nowhere fast.

Most telling for the gold price, of course, are the multi trillion dollar fiscal boosts introduced to revive economies and the inflation that may come in their wake.

Too far too fast: 

Titled  ‘Too Far Too Fast’   last week Barrons published a mid term roundtable update with comments from  their  contributors.  Some noted the $ has fallen,  yields on Treasuries have been rising dramatically and market ’insanity might be ending’ 

A key theme for the roundtable contributors was the consequences likely to follow  shifting of debt and leverage from the private sector to governments .  Some contributors advised buying gold now while others, expecting a mid term market correction, advised buying gold when it had corrected.

Gold, the consumer capitalism house of cards and challenges to $ hegemony:

The Two articles contributed for Stock Research portal in April and May are  now posted on Goldwatcher pages. Part One addresses  developments pre the April G20 London Summitt and Part Two addresses post April developments including challenges from China and Russia to the privileged role of the $ in the monetary system,  gold sales by the IMF and gold price prospects.