Gold for the Masses

Articles first published in The Financialist in June 2015.

​Gold for the Masses
 
For the price of lunch for two, savers can choose to invest in something much longer lasting: physical gold. Britain’s Royal Mint recently launched an online trading service called “Signature Gold,” which allows investors with limited funds to buy tiny portions of gold bars.

The purchases are based on total cost rather than a fixed weight, which is how gold is normally sold. That means that instead of buying a one-ounce gold bar from the Royal Mint, which currently costs £758 ($1,182), they can pay as little as £20 ($31.25) for a small fraction of a bar.

Buyers don’t get to store their shiny investment at home, but they still have full legal title to it and the right to sell it at any time. And they can rest assured their sliver of gold is being kept safe – police from the Ministry of Defense guard the Royal Mint at all times. (June 2015)


The Palm Oil Wild Card
 
It’s been a rough few months for palm oil prices. Cheap crude has slashed demand for biodiesel, the U.S. soybean crop (which provides an alternative to palm-derived oil) is expected to report record production this year, and Indian output of edible oils is booming. But El Niño may soon reverse the trend of falling prices.

Over the last 30 years, palm oil prices have surged after the Pacific Ocean weather pattern takes hold. That’s because El Niño can cause droughts in important palm production areas such as Indonesia, which in turn reduces output. The severe El Niño in 1997-98 reduced palm oil yields by 17 percent, and prices jumped from some 1,500 Malaysian ringgit ($400) in 1997 to 2,500 ringgit ($665) in 1998, according to Credit Suisse.

In fact, palm oil prices have increased between 7 percent and 125 percent during the last six El Niños. Stock prices for plantation companies rose between 6 and 25 percent during the last six events. And this time? It depends how severe El Niño turns out to be. Credit Suisse calls it a “wild card.” (June 2015)


Corporate Energy Independence
 
Energy independence is no longer just an ambition of sovereign nations—corporations are striving for it too. Large companies are increasingly developing and operating their own renewable energy plants, some with the goal of fully powering their operations with green electricity.

Take Wal-Mart, which developed its first on-site solar project in 2005. By the end of 2013, the company had 335 renewable energy projects in operation throughout the world, generating 2.2 billion kilowatt hours of power—24 percent of Wal-Mart’s total electricity needs. Others are even further down the road to self-sufficiency. Mexican supermarket chain Soriana said this month that it plans to spend $260 million to build two wind farms in the northern state of Tamaulipas.

The farms are expected to generate enough electricity for more than 300 Soriana stores, bringing the total number of its renewable-powered stores to 506 out of 674. And Swedish furniture maker IKEA announced this month that it was on track to reach its goal of powering 100 percent of its operations with renewable energy by 2020. (June 2015)