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Fossil Fuels Are Toast – But Real Assets Are Still The Place To Be With all the oil-related headlines we’re exposed to each day, you might assume that “black gold,” along with other fossil fuels like coal and natural gas, matter to humanity’s future. You’d be wrong. Like Keynesian economics and fiat currencies, fossil fuels are near the end of their run. From here on out, solar is the story. The following chart shows the decline in the cost of solar power and the resulting surge in solar installations through 2015. The relationship is clear: as prices plunge demand surges — in both cases exponentially. Pretty impressive, right? But nothing compared to what happened in 2016: And here’s one more chart showing how China — that insanely polluted coal burning urban dystopia — is leading the way on solar:
If this sounds outrageously aggressive, consider what happened to Kodak, the dominant player in film photography for most of the 20th century. Early digital cameras were expensive and complicated and therefore not an obvious threat. But their prices plunged and film photography died. Here’s that process translated into Kodak’s share price: Also recall that Nokia was once the dominant maker of cell phones. Then Apple introduced the iphone and phones that just made calls were pushed off the stage. This fate awaits most of today’s fossil fuel companies. The only question is when the death spiral begins. Why is something like this appearing on a gloom-and-doom blog? Because one of the basic tenets of sound-money investing is that during periods in which society is destroying its fiat currencies, real assets will tend to outperform financial assets. So swap your government bonds (and certainly your bank stocks!) for farmland, well-chosen rental houses, gold, silver, and energy assets. For the past century that last category was dominated by oil wells, coal mines and the stocks of the companies that owned them. But if the above trends continue – and it’s a near certainty that they will, given the torrent of advances in solar panels and batteries pouring out of labs around the world – then “energy assets” of the future will likely be solar and wind farms, advanced battery makers and the like. So the thesis remains the same while technology causes the names to change.
DollarCollapse.com is managed by John Rubino, co-author, with GoldMoney’s James Turk, of The Money Bubble (DollarCollapse Press, 2014) and The Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street(Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He currently writes for CFA Magazine.
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