The Philosopher’s Stone

Imagine Isaac Newton toiling away in a dark room attempting to find the process which could transform lead into gold. This was the basic philosophy of alchemy and the pursuit thereof during the 5th to 18th centuries evolved into what we know today as modern science and chemistry.

Whereas the search for the “philosopher’s stone” in alchemy has been abandoned, a new alchemy based on the principles of science has been evolving, namely the search for the ultimate superconductor.

In the 1900s scientists discovered that some materials can conduct electricity perfectly, without loss of heat or emittance of light. These materials are called “superconductors”.

There was only one (major) problem. In order to conduct electricity perfectly they had to be either cooled to very low temperatures or be subject to very high pressures in a lab, which is not all that practical for commercial use. Fast forward to 24 July 2023. On this day, researchers (controversially) published a paper that claims to have found a room temperature and ambient pressure superconducting material, which they named LK-99.

What does this mean? It means that if proven to be true, this material could revolutionize the world.

  • Energy transmission and storage would be transformed, leading to energy transmission over long distances with minimal loss
  • Faster and more energy efficient trains using magnetic levitations would be commonplace
  • Ultrafast and energy-efficient supercomputers would be in each mobile phone user’s pocket
  • Sustainable energy solutions would become more powerful and efficient
  • Greenhouse gas emissions would be considerably reduced
  • Healthcare would become more accessible and portable with more efficient magnetic resonance imaging (MRI) machines

However, not all is as it seems. There is currently much controversy surrounding the announcement of the discovery. Not only did a researcher involved in the supposed discovery publish the research paper without the approval of his co-researchers, he also did so excluding some of their names. So whilst this announcement could lead to a Nobel Prize for the researchers involved, it could also be just be the alchemy we know of old.

To establish the truth, other researches are rushing to be the first to replicate the study with a Chinese laboratory being the first to announce that they could. Not surprisingly, but amusingly, there are laboratories live streaming their replication tests on Twitch (typically used for live-streaming video games!)

If researchers manage to replicate the findings of the original study, it will surely be the discovery of this century thus far. 

As investors we are hard-wired to believe in stories. The key takeaway from this article is to ask the question, is this discovery alchemy or is it real science?

The same holds true for investment markets. When we evaluate an investment opportunity, it is important to distinguish whether we are buying a fictitious story (alchemy) or whether we are investing in a truly valuable opportunity (a true superconductor). We do this by evaluating the facts. If LK-99 is found to be the true room temperature, ambient pressure superconductor it is purported to be, then whoever patents or invests in it early, will have likely made one of the best investments available this century.

2 August 2023