Another All-Time High
You Can Profit from Bad Corporations
For years, corporations have put profits over people. Coal companies blow the top off mountains, chemical companies release poisonous fumes, social media companies run psychological experiments without consent…
But perhaps one of the most hypocritical companies was Volkswagen. In the United States, at least, VW sold itself as some pseudo-hippy, tree-hugger, eco wagon — a paragon of Gaia-worshipping environmentalist wrapped up in a German-engineered people's car.
They touted a Jetta TDI — a clean diesel that got 58 mpg.
But around 2012, troubling evidence began to emerge that diesel exhaust was silently killing thousands of people every year.
One of the first warnings came from the European Environment Agency.
The agency found that nitrogen dioxide (NO2) from diesel fumes had caused around 71,000 premature deaths across Europe in just one year.
That’s why in 2012, the World Health Organization (WHO) declared diesel exhaust a cause of lung cancer…
Putting it in the same dreadful category as asbestos and mustard gas. But hey, better gas mileage, right?
Wrong. Volkswagen executives admitted they had been rigging diesel emissions tests since 2008.
In the wake of that outrage, VW was forced to recall 550,000 vehicles and pay over $25 billion in settlement fines. Turns out VW had set up emissions controls on its diesels to activate during testing but not on actual roads.
Result: The vehicles met U.S. standards for oxides of nitrogen emissions (NOx: a pollutant formed when nitrogen dioxide combines with nitrogen oxide), but under real driving conditions, they spewed out up to 40 times more NOx than during the tests.
Adding to Volkswagen’s hypocrisy is the fact it had been running a “clean diesel” campaign for years.
Talk about being two-faced...
By contrast, NOx emissions from gas-powered cars are virtually nonexistent.
In the wake of this, diesel cars in the EU are being phased out — fast — with France and the UK proposing to outlaw their sale by 2040.
Don’t Come Around Here
Mayors of leading cities are banning diesel. These include the mayors of Paris, Madrid, Athens, and Mexico City. All of them have announced they will outlaw diesel vehicles from their city centers by 2025.
Political leaders around the world are taking steps to crack down on diesel to reduce smog.
These include the C40 group of global megacities, which totals 90 cities worldwide.
Diesel, as a percentage of all cars on the road, has gone from 55.7% in 2011 to 49.5% in 2016. And that figure is projected to go as low as 9% by 2030, according to a study by AlixPartners.
UBS is even more pessimistic. The Swiss investment bank believes diesel will almost completely disappear from the market within 10 years.
Last year Volvo announced it would no longer develop any new-generation diesel engines due to rising compliance costs.
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The bottom line is VW’s admission of guilt and the allegations against other auto manufacturers have triggered diesel’s death spiral.
This is bad news for diesel makers but good news for those companies that make gasoline and electric cars, as well as those companies that supply the raw materials for them.
Take palladium, for instance. The Palladium ETF (NYSE: PALL) has been on fire.
You see, palladium can be used in the same ways as platinum — industrial uses and sometimes for jewelry settings — but at a cheaper price point. Only a few countries mine for the stuff, and the biggest consumer is the automobile industry, for catalytic converters.
Diesel engines don’t use catalytic converters.
This sudden and dramatic shift has put a lot of pressure on palladium miners and other companies to boost production. And, as you can see from the price of palladium, which is now above the super-cycle price of 2013, demand has outpaced supply.
What you may not know is that there are other metals that are also moving up. The good news is that the money hasn’t dropped down to the miners yet. But it will, and soon.
I'm finishing up the research for a special report that will be out in a few months detailing how you can profit from the death of diesel. Keep an eye out. This profit opportunity will be large, and it is just getting started.
All the best,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.
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