Three months ago, it snowed in Cairo, Egypt for the first time in 112 years.
2013 was the largest one-year temperature drop ever recorded in the United States.
The extent of the Antarctic sea ice is at record highs.
It's the Real Inconvenient Truth-right now the world is getting colder. And it's likely to get even colder for the next 20 years-before a new, stronger cycle of sunspots begins, as they have for eons. They are statistically very, VERY accurate.
But there's more, and it's A Sad Truth: there is ample evidence that suggests private scientists and public servants have been manipulating the basic raw data that most everyone relies on to calculate climate change. (This story has great timing as the IPCC-International Panel on Climate Change-just released Part 5 of their most recent major assessment on climate science (even they can't bring themselves to call it Global Warming anymore).)
There are some investment trends that come out of this new Truth, and some of it is as simple as get long snowmobile makers and get short lawn mowers. One trend is that Global Cooling should bring more seasonality in oil and gas prices, making energy ETF and commodity traders happy.
All of this is part of a new ground-breaking study completed by Unit Economics, an investment think-tank from Boston. They are a non-partisan group with no axe to grind on this issue; like me, they are here to make money for their clients. Show us a trend and we'll figure out how to profit from it.
In Part I, you'll understand the big swings in temperature the earth has experienced in the last million years, and the last thousand years, and the last 50 years. In Part II I'll explain how sunspot activity directly correlates to ALL these temperature changes. And I'll give you a hot, near-term investment trend to capitalize on this cool idea.
And in Part III, I'll show you how some original research by Unit Economics has uncovered some disturbing data about the integrity of Global Warming science. And really, all they're doing is adding to an already big pile.
BACKGROUND AND CONTEXT
Satellites first started measuring earth's temperature in 1979. Over the next 20 years, temperatures did rise, by roughly 0.5 degrees Celsius (0.9°F). In the 15 years since, that trend has reversed-rendering the total temperature increase since 1979 a mere 0.35°C (0.6°F), well within the range of statistical noise.
The real culprit for climate change is simply-the sun, through a complicated but predictable set of cycles.
Those cycles predicted today's cooling trend - and they predict it will continue for another two decades and may well lead to the coldest period on earth in the last 1,200 years.
The Earth, the Sun, and the Temperature
The earth's cycle around the sun stretches and contracts, creating 100,000-year temperature cycles. Our planet also slowly tilts one way and then the other, resulting in 41,000-year temperature cycles.
We know this because scientists have several methods to estimate historic weather, an effort that has produced this general result:
A few things jump out.
1. The 100,000-year temperature cycles are very apparent - and the current one is peaking.
2. The timeframe of this chart covers ice ages and tropical periods, which means it takes only a small change in global temperatures - only two to four degrees - to separate a very warm world from a very cold one.
3. Through the cycles of the last 800,000 years, the average global temperature is creeping upwards.
4. The magnitude of each cycle seems to be increasing.
Now, this chart should be taken with a grain of salt because the methods we use to conjure these numbers are not perfect. But at least the chart lets us put recent climate changes into historic context - a context that deserves a closer look.
The key takeaway is that the earth has been through some very warm periods and some pretty cold ones. Take the years between 800 and 1200 AD, for example. During these 400 years it was so warm that vineyards spread across central England and bountiful harvests almost doubled Europe's population.
Then it all changed. By the mid-1300s England's vineyards were gone and sea ice expanded so much that polar bears crossed to Greenland. This short cold snap was truncated in about 1400, when warmer weather returned for 150 years. Get the idea? Up, then down, then up, then down. And then came the Little Ice Age.
Lasting from 1550 right until 1850, the Little Ice Age froze Austria's vineyards, forcing parched Austrians to switch from wine to beer. Winter fairs were held on the frozen Thames River for 20 years (you've all seen the paintings) and Hudson Bay was littered with ice chunks in mid-summer.
This period of time was so cold it earned the moniker The Dalton Minimum-a reference to the very low number of sunspots then. In the year 1816, storms dumped snow across New England and Quebec in June, lake ice lasted until August in Pennsylvania, and failed crops led to food riots in Britain and France.
So when you get asked, is the world warmer over the last 200 years, since the Industrial Revolution started? Yes, but it has squat to do with industry. That just happens to co-incide with the smallest sunspot activity in "modern" times.
Eventually the world started to warm again. From 1890 to 1934 central Europe barely saw any snow. Another warm spell from 1942 to 1953 had scientists predicting the death of Europe's glaciers, a forecast invalidated when the world once again cooled.
Here's some interesting data as we get closer to the present day:
1. Temps continued to fall from 1953 until the mid-1970s - despite rising CO2 levels. This was during the single most industrializing time on earth-and temperatures fell while CO2 levels rose.
2. Another point: if CO2 emissions cause global warming the layer of the atmosphere 5 to 10 km (3-6 miles) above the earth where CO2 interacts with sunlight should be warming more quickly than the earth's surface. In fact, temperatures at these levels have been unchanged since accurate balloon measurements became available 50 years ago.
3. There has been a large outcry about the decline of Arctic Ice. While Arctic sea ice extent is just above average levels, Arctic sea ice is near record thickness: the volume of ice in the Arctic last fall was 50% higher than 12 months prior, following a very cold summer in 2013 in which temps climbed above freezing only 45 days compared to an average of 90 days.
I bet you didn't read about that.
4. There's a lot of ice at the other end of the globe too. In eight of the last ten years global sea ice extent has bested the 30-year average, aided by an Antarctic sheet that in October hit its highest extent since record keeping started in 1979.
5. The Northern Hemisphere had its second, third, and fourth highest snow extents on modern record in 2010, 2011, and 2013. In the United States 2013 brought the largest year-over-year drop in temperature on record and the winter is on track to be labeled the third coldest in 200 years.
Evidence of this cooling is everywhere - even if politicians and the media try to pretend it isn't. Of course, the media has short memories. Only 40 years ago, in mid-1974 Time magazine ran a cover story entitled "Another Ice Age?" noting a 12% increase in New Hampshire snow cover in 30 years.
Conclusion: over the last 1,200 years the earth has been through several pretty extreme temperature swings. What gives?
The answer lies with the sun. Cold periods coincide with solar minimums, which generally happen every 150 to 200 years. Warm periods coincide with solar maxima, which happen every 700 years or so.
If history is any guide, the world will continue its current 15 year cooling trend for another 20 years potentially. In fact, there is a good chance the earth is about to go into one of its coolest periods in the last 250 years.
In a new report by Boston-based Unit Economics, they explain how sunspot activity is the key to understanding earth's temperature. Sunspots have very predictable and accurate cycles. The last sunspot peak was March 2000 in the sunspot cycle that ended in 2008.
What does near term global cooling mean for energy investors? Among other potential trades, CEO Nathan Weiss suggests grain crops for the next two years should provide bumper harvests, keeping supplies high and prices low-which is great news for ethanol stocks. (Yes I am long ethanol ;-))Unit Economics says the best way to assess solar activity is through sunspot activity. (I'm going to get a little technical here so you may have to re-read a couple paragraphs.)The sun is a ball of circulating plasma. Sometimes the circulations become so energetic that plasma escapes, ejecting out into space, where it cools rapidly and is pulled back by the sun's gravitational pull.
From earth, the cooler returning plasma appears darker than the rest of the sun, creating a sunspot. And the more active the sun, the more frequent its spots.
A more active sun also has another important characteristic: a stronger magnetic field.
Grade 9 science shows that a magnetic field forms when electricity runs through the coils of an electric motor. Well, in the same way, the circulation of charged plasma creates a magnetic field around the sun. When those circulations ramp up, the magnetic field strengthens.
A stronger magnetic field means fewer particles from outside our solar system (cosmic rays) make it to earth. However, that actually makes for a warmer world.
The reason is clouds. Cosmic ray particles actually seed cloud formation. When the sun is not very active, lots of particles penetrate its relatively weak magnetic field and make it to earth. Those particles seed lots of clouds, creating a cloud layer that reflects the barrage of particles back into space.
Of the solar energy that reaches (and warms) our atmosphere, about 30% are reflected right back into space, largely thanks to clouds. Thus the cloudier it is, the colder our world.
When the sun is active (more sunspots) and its magnetic field strong, fewer cosmic ray particles means less cloud cover and a warmer planet.
That's the theory - and the data backs it up. Look at these three charts:
It seems clear solar activity plays a major role in global temperatures.But the best news is yet to come: solar activity follows surprisingly stable - and thus predictable - cycles. The shortest solar cycle averages 11 years in length. Other concurrent cycles have durations of 22, 53, 88, 106, 213, and 420 years.Cycles also vary in intensity. Shorter cycles are more intense. That's because total solar electromagnetic output is pretty consistent from one cycle to the next, and so shorter cycles have higher peaks.
Combining these cycles and their intensities, scientists created a model of solar activity that fits historic sunspot observations quite well - and tells us what to expect from the sun in the future.
The bottom line is that the current lull in solar activity is highly likely to persist for another 19 years. Yup, lots of cosmic particles will create lots of clouds and keep the earth cool for the next two decades.
Moreover, we are going through one of the quietest periods of solar activity in known history - and it may well herald another Dalton Minimum-the sunspot low of the last 1000 years from 1650-1850 that is the reason we have all the paintings of skating on the River Thames in London England.
Remember that long solar cycles are much less intense than short ones. Scientists time cycles from trough to trough, so a new cycle starts when solar activity begins increasing after years of decline. The duration of the decline - the time from peak to trough - gives good hints as to the nature of the next cycle.
Solar cycles that don't get underway until more than 92 months after the previous peak reach less than half the intensity of those that kick off before 92 months have passed. Delayed cycles are also much longer. The current cycle, dubbed Solar Cycle 24, did not really get going until early 2010 - 126 months after the peak of Solar Cycle 23.
The weakest solar cycle of modern times was Cycle 5, which lasted from 1796 to 1830-that was the Dalton Minimum. Temperatures were a full 2 degrees lower than average and history books talk of summers that never arrived. Solar Cycle 5 started 123 months after the peak of Solar Cycle 4.
The sun is also very quiet these days. We are supposed to be in the midst of an upswing in solar activity but the best guess puts the peak of Solar Cycle 24 at between 33.75 and 40.5 sunspots per year (after accounting for our ever-increasing ability to detect sunspots today compared to two hundred years ago). Solar Cycle 5 peaked at 49.2 sunspots.
As NASA solar physicist David Hathaway puts it, describing the great plasma conveyor belt of the sun: "It's off the bottom of the charts… We've never seen speeds so low."
BOTTOM LINE-Sunspot activity is suggesting we are moving into a time of lower temperatures on Earth this solar cycle. (You can see the times of the sunspot cycles here: http://en.wikipedia.org/wiki/List_of_solar_cycles)
There are two intriguing investment implications from this sunspot theory. Grain production is obviously impacted by weather and climate. The world is now into Year 7 of the current sunspot cycle. In a statistical review of grain prices in the last few solar cycles, Unit Economics found that Year 4-2011-was the peak for grain prices. Corn was up 57% that year and wheat was up 21%.
But this year-2014-should be the top growing year for these crops; bumper harvests are to be expected, keeping agricultural commodity prices low. This should be continued good news for US ethanol producers-Green Plains Renewable Energy (GPRE-NASD), Pacific Ethanol (PEIX-NASD), and REX American Resources (REX-NYSE). They already have great stock charts.
(In the long run (five or so years out) - shorter growing seasons resulting from colder weather will send grain prices higher)
The second bit of data crunching Unit Economics did was much more macro-oriented. In simplistic terms, when temperatures
decline by 0.25 degrees Celsius in a year vs. the 5 year rolling trend, the stock market generally declines. And the opposite holds true: when temperatures increase by 0.25 degrees against the trend, market action is positive.
Wait, you say. All of this seems to make sense…but what about everything I've hear for the last 20 years about our warming planet?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: The Oil and Gas Investments Bulletin is a team of writers. This article was written by Keith Schaefer, Editor/Publisher. We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article. The author of this article has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.