Email of the day
Comment of the Day

June 15 2011

Commentary by Eoin Treacy

Email of the day

on sunspots and potential cooling:
"It was really great meeting you in person and getting to spend such high quality time with you. Alex and I both got a lot out of the Chart Seminar, and I hope we can return for another round sometime in the near future.

"The American Astronomical Society is meeting this week in Las Cruces, New Mexico, and 3 new papers have been presented today that all support the theory that the sunspot cycle is headed for at least a substantially reduced maximum, and likely at least several full cycles of reduced activity. This raises the possibility that we are moving into a Solar Minimum, during which time we would have very low sunspot activity, and therefore reduced solar radiation.

"(This source is reliable for describing the papers presented, though the site is crammed with junk ads. The video is a little cheesy in style, but explains flow theory pretty well.)

"Many scientists who actually study sunspot activity (including this one) have concluded that we have a substantial body of evidence pointing to sunspot activity as a substantial catalyst for global warming and cooling. The Maunder Minimum, a period of near-zero sunspots, lasted from 1645 to 1715. Studies from various parts of the world, but especially Europe, show a very cold period during that time. The winter fairs on the Thames (the River Thames Frost Fairs) took place each year on the deeply frozen over Thames, for example. During the 1964-1977 (cold times) period we had a modest reduction in sunspots; during the 1978-2007 (warm times) we had high activity. More info is available at Wikipedia. You can explore sunspot history here.

"Other periods of low sunspot activity have occurred, as documented in the Wiki article, and also corresponded with periods of global cooling.

"As pointed out in the article on, having 3 separate studies concluding we are likely heading for a period of at least lower sunspot activity is VERY significant. This would imply the potential for a large and powerful global cooling influence which could last for a very extended period of time. Coupled with a cool PDO, we could have very cold winters and short summers for the next 25-30 years. If we are entering a Minimum, that time frame could be substantially extended (we won't know this for at least 20 years).

"The implications of this are dramatic, affecting energy utilization and agriculture in big ways. In particular, a colder period for the planet will reduce the growing seasons for latitudes greater than 20-25 degrees. As any third grade farm kid can tell us, if you shorten the growing season you reduce the amount of food that can be grown."

Eoin Treacy's view Thank you for this informative email and for your valuable participation at the recent London Chart Seminar. Your experience as the chief science officer at a Fortune 500 company added a perspective to the discussions which was truly revelatory. You and your son are part of a trend where successful investors have been bringing their offspring along to the seminar in an effort to accelerate their learning experience in the markets. I look forward to seeing you both at a future event or perhaps we can catch up if we take the seminar to the US West Coast next year.

I have long been suspicious of arguments that simply dismiss the role of sunspots in climate change. Intuitively, since almost all energy on the planet originally came from the sun, doesn't it make sense that changes in the sun's energy output might have an influence on our planet?

Solar flare observations go back for hundreds of years so in 2009 I attempted to indentify chart facts in the cycles. My conclusions were posted in Comment of the Day on April 28th 2009. The reports released yesterday corroborate my cyclically-based assumption that the current solar cycle is probably going to have a lower peak that the previous one.

As you point out, it will be 20 years before we can say with any confidence that a solar minimum has been formed. However, from the perspective of an investor let's look at some long-term inflation-adjusted charts for agricultural commodities. Corn, soybeans, wheat, oats, cocoa, coffee, orange juice, sugar, feeder cattle and cotton have broken multi-decade inflation adjusted downtrends.

There are a range of reasons that can be attributed to this impressive price action. Inclement weather is one. However, additional developments such as biofuels, historically low stockpiles, increased demand from a newly affluent global middle class and speculation among others are also important. Regardless of the reasons behind the price action, the commonality which is evident supports the view that a secular trend change has occurred.

Since commodities are characteristically volatile, we can expect large swings both up and down. However, demand is likely to remain dominant over a secular horizon which suggests that despite volatility, rallies will be larger than reactions for the foreseeable future.

Also see Comment of the Day on November 20th 2009 for an additional interesting article on sunspots).

Subscribers may find this additional article of interest which was also kindly forwarded by the above subscriber.

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