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Uranium U-Turn
By Dr.
Russell McDougal
A lot of the hot money has been flushed
out of the uranium sector over the past four months. Trees don’t grow to
the sky. This is a particularly volatile market niche. Is the bull
market in uranium over or have we just seen a healthy correction? Are
heady profits still available?
Uranium soared from $14 to $135 in a scant two-and-a-half years. That is
a bull market for the record books. The really early players that bought
up the few tiny uranium stocks then available made life-changing
profits. As is always the case, the momentum players and hedge funds
climbed aboard late in the game. The froth was clearly evident and a
painful price had to be paid.
Uranium hit a recent low of $75 (not
shown on this chart) and has since bounced back up to $90. I have
previously opined that $75 should be pretty close to the downside of this
correction. The bigger and more important picture is that the uranium
bull isn’t going away for years and years. Let’s revisit some uranium
fundamentals.
Uranium was locked in an extended bear
market for decades. There were extremely large aboveground supplies
available to come to market. These supplies were largely in government
hands. Now they’re mostly gone, and this market has reverted to more
normal supply and demand criterion. That’s the story of the graph above.
The world consumes about 180 million
pounds of uranium per year. But only 110 million pounds are produced.
There is an extreme bottleneck of production. It takes seven to 10 years
to find and bring an economic uranium discovery into production. Very
little supply relief is scheduled to come on line until 2011 or later.
The term “peak oil” means global oil
reserves and production are in decline. Don’t doubt it. The planet
remains dependent upon oil because we didn’t bother to ask a kindergarten
class for a better energy strategy over the past three decades.
In reality, nuclear energy is the one
factor that has a chance of alleviating the global energy supply crunch.
It is safe, clean, and relatively cheap. The injuries and deaths
associated with producing and utilizing nuclear power are miniscule in
comparison to any other fuel source. Also, don’t equate nuclear power
with nuclear bombs! Nuclear power is quickly becoming “green.”
There are currently some 200 nuclear
plants being planned, designed, or permitted worldwide. They need to be
considered in light of the present supply crunch.
Did I mention “global warming?” Nuclear
power is the most obvious solution to this potential catastrophe. Other
forms of alternative energy are years or decades away from having a
significant impact.
Apparently, the oil lobby and industry
has had undue elitist influence for the past 30 years. It didn’t have to
be that way. The French, for example, have developed nuclear power that
now supplies 70 percent of their energy needs.
What has the U.S. done? The fascist
political philosophy is inbred with crony business relationships and
authoritarian central government. “Big Oil” is completely intertwined
with government policy. Hello.
The point of this editorial is that
uranium has seen a significant correction and is now set to continue its
bull run. You will want to be aboard. There are now more than 500
uranium exploring companies. That is a ridiculous number, and only a
small number of them are competent to discover or produce uranium. The
challenge and opportunity is to identify the premier players.
Lightning tends to strike in the junior
resource sector. One of the uranium positions in my
Resource Windfall Speculator
portfolio came out with an exciting news release recently - a potential
“discovery” in Alaska. Here was the result:
This small uranium explorer has backed off some since this
spike. Nevertheless, you can see the power in such exploration stocks
when they start finding the goods.
This is exactly what is so exciting about speculating in
small-cap resources. They are fuses waiting to be lit. This company has
been in the portfolio only since mid-August and has already shot up nearly
70 percent.
Resource Windfall Speculator
now holds 12 small-cap resource explorers, including another uranium
explorer ready to perform likewise.
Make sure you’re aboard the uranium bull.
Invest Resourcefully,
Rusty
P.S. To let me know what you thought of today's article, send an e-mail
to:
feedback@investorsdailyedge.com.
[Ed. Note:
Dr. Russell McDougal has dedicated years of study and investing in the
natural resources exploration sector. During that time he has closed out
DOZENS of gains of 500%... 1,000%... 2,000% and more! Currently he is
sitting on multiple thousand percent winners, including one stock that is
up a whopping +5,000%. And for a select group of investors, Rusty has
agreed to share his secrets of success... and his top stock
recommendations.
Click here to learn more... ] |
