Monthly Archives: November 2014

Worldwide Oil Reserves

1,687,300,000,000 is the massive number that is the total number of barrels of oil that are in the ground. This number is known as the proven reserves of oil.

The 12 nations that make up OPEC have the lion’s shares of this.

Algeria                  12,200,000,000
Angola                  12,700,000,000
Ecuador                 8,400,000,000
Iran                        157,000,000,000
Iraq                        150,000,000,000
Kuwait                  101,500,000,000
Libya                      48,500,000,000
Nigeria                  37,100,000,000
Qatar                     25,200,000,000
Saudi Arabia       265,900,000,000
UAE                       97,800,000,000
Venezuela          297,600,000,000

Total:                   1,213,900,000,000

So OPEC’s 1,213,900,000,000 out of the total of 1,687,300,000,000:
1,213,900,000,000 / 1,687,300,000,000 = 71%.

Thus OPEC “own” 71% of the world’s oil reserves. That is the real big oil.

The Brunner Investment Trust.

The Brunner Investment Trust was formed from the Brunner family’s interest in the sale of Brunner, Mond & Co, the largest of the four companies which came to form ICI in 1926.
ICI (Imperial Chemical Industries), demerged to form Zeneca (which is now the AstraZeneca plc), and the remaining part was slimmed down ICI that moved from bulk chemicals to speciality chemicals, that then was acquired by the Dutch Akzo Nobel.

The Top Ten Holdings are:

3.4% Royal Dutch Shell “B” Shares
3.0% HSBC
2.5% GlaxoSmithKline
2.4% BP
2.2% Microsoft
2.1% Vodafone
1.9% Roche
1.8% Monsanto
1.7% AbbVie
1.7% Xchanging

Top Ten equates to 22.7% of the total investment.

The Trust has been managed since inception by Kleinwort Benson which is now Allianz Global Investors. Investors in the Brunner Investment Trust who have not only received 42 years of dividend payments, but have enjoyed a rising dividend over the same period.


A yield of 2.7%


The National Grid

The UK National Grid []is the company that moves power from the power stations into the network known as The National Grid. The electricity is then distributed to end users via the local distribution network operators (DNO’s).


A £35billion company, a member of the FTSE-100

Equity investors are getting a 4.5% yield on the investment.

With a company with such massive cash flows (selling electricity has that benefit…), it is able to issue massive amounts of debt.


The total level of Debt is just over £21bn, with bonds maturing over an average of 12 years.
So few short term cash calls for debt repayment. 65% issued in US Dollars and 35% issued in UK Sterling.

OPG Power Ventures plc

OPG Power Ventures plc is the London listed power company, that is generating electricity in India.


A £376m company, it is a non-trivial business, that is generating power in the emerging economic super power of India.


The principal business of the Company is developing, owning and operating power stations in India. The electricity generated from OPG Power Ventures power plants is sold principally to public sector undertakings and heavy industrial companies in India or in the short-term market.

The investment arm of the UK insurance giant UK Prudential, M&G Investment Management own 12.5% of OPG Power Ventures plc.

When you look at the fundamentals of India, the currency has fallen from £1 to 80 Rupees to £1 to 100 Rupees, this 20% devaluation means, Indian investment is now very attractive, as things are 20% cheaper when spending in a foreign currency.
More importantly, India needs infrastructure investment, to meet the demands of the growing middle class.

The Internet of Things

The Internet of Things is something that is attracting a lot of coverage in the technology and mainstream press.

In essence it describes how real world objects can be connected to the internet. Imagine that, a household boiler connected to the internet. One could command and control the central heating, so you come home, and your house is warm, as 45mins earlier you used the internet via the web or smartphone app to allow the heating to be activated.

It’s here all ready.

The ability to bring greater control of everyday items has vast potential


Cisco think this market could be worth US$19 Trillion (that is over 100% of annual GDP) by 2020 (that is less than 6 years away…). Cisco expect that the number of connected devices are to hit 25 Billion by the end of 2015 (that is 14 months away…) and that will balloon to 50 billion by 2020.

The efficiencies that being to control things remotely will bring huge economic benefits to the world.

UK HM Government October 2014 borrowings…

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In October 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office ( to raise cash for HM Treasury :-

21-Oct-2014 2¾% Treasury Gilt 2024  £3,000.000 million
16-Oct-2014 0 1/8% Index-linked Treasury Gilt 2024  £1,400.000 million
07-Oct-2014 3½% Treasury Gilt 2045  £2,473.537 million
01-Oct-2014 2% Treasury Gilt 2020  £4,399.890 million

When you add the cash raised:-

∑(£3,000.000 million + £1,400.000 million + £2,473.537 million4,399.890 million ) = £11,273.43 million

£11,273.43 million = £11.273 Billion

On another way of looking at it, is in the 30 days in October, HM Government borrowed:-

£375 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2024, 2045 and 2020. All long term borrowings, we are mortgaging our futures, but at least “we are in it together….

Bank of Japan: The Monetising of Debt

The Bank of Japan last week announced another round of Quantative Easing.


The announcement on the 31st October is incredible.

…….effective from November 4, 2014. In principle, the Bank will announce the “Outline of Outright Purchases of Japanese Government Bonds” on the last business day of every month. The next announcement will be on November 28, 2014.
1. Amount to be Purchased Approximately 8-12 trillion yen per month in principle….

Yes you read that correct.

What this means is that The Bank of Japan will now from November buy 8-12 Trillion Yen of (Japanese Government Bonds) JGB each month, but the government only actually issues (sells) about 5 Trillion Yen of Bonds a month.  No one will ever say but what is happening is pure debt monetisation.

[1 Trillion = 1,000,000,000,000]

so 8 Trillion YEN = 8,000,000,000,000 YEN = £44,567,200,341 GBP

That is forty-four billion, five hundred sixty-seven million, two hundred thousand, three hundred forty-one.

= £44 Billion = £44,000 Million.

So each month the Bank of Japan will spend £44 Billion = 8 Trillion YEN each month on buying Japanese Government Bonds (JGB’s)

To put things into context the Gross Domestic Product (GDP) is £3.06 Trillion.

So if the Bank of Japan executes this plan for say 6 months, this calculates:-

£44 Billion x 6 months = £264 Billion.

In 6 months of Bank of Japan purchases that equate to £264 Billion is equivalent to 8% of Annual GDP.

these numbers are huge. What will the Bank of Japan do with all these bonds that is owns ?

It will never be able release them on the open bond market, as it will flood the market and the prices of existing bonds will slump. The end game of this global policy of flooding the market with cheap capital is impossible to predict, but what are the unintended consequences ?