Sunday, July 16, 2006
The news out of the G-8 Summit taking place in Russia is
that the majority of the countries (all those not named Germany) endorse the
implementation of Nuclear Energy as a means to reach energy self-sufficiency.
This would also act as a means of lessening these Nations' dependence on imports
to meet their energy needs (excluding Russia of course) as Europe and the US see
their own personal energy supplies dwindling. This news is viewed by us as
extremely positive as it shows that the leaders of the free (and we use this
word sparingly knowing that Russia is included) world are tuned in to the need
to diversify their sources for energy. Although it will take years to see a
dramatic increase in consumption of uranium due to the time to build the
infrastructure needed, this should be bullish for uranium stocks Monday morning
here in the US and Canada as well as in Australia which will be opening in 4
This statement should lend some credibility to the Bush
Administration's bid to get a new generation of nuclear power complexes underway
within the next few years and hopefully pave the way for a new nuclear building
boom for the country. This appears to be one small battle won in an uphill
struggle for the nuclear industry, but we think that it will be a very
significant triumph when we look back years from now. This simply adds to our
belief that for the next 5 years we want to focus on, and be significantly
invested in nearly all things Uranium. We have said it before and will restate
it, look for many of these stocks to double at least every two years for the
next 5 and then the party will start shortly after that.
The leaders of this world are urging this switch to uranium
from oil due to oil reaching nearly $80 recently and we continue to believe that
it will increase. Will we see $100 oil, YES! Will we see $100 uranium,
ABSOLUTELY! Our bet is that oil will force the price of uranium up, so we must
say that oil will hit the $100 threshold first, followed by uranium thereafter.
When oil hits $100 it will be a wake-up call to the world and they will then
realize that oil is rather expensive and inefficient in respect to uranium.
Whether leaders of the world or leaders of the corporations/markets of the world
realize this first is anyone’s guess, but one of these two will be the driving
force behind uranium passing oil in terms of price. Uranium could truly trade at
double oil's market price and still be more economical than oil as an energy
source! Also, should our market thesis be off-base or simply wrong (which we
highly doubt) in 2014 the market will have a rude awakening when the Russians
are freed from their obligation to sell their uranium on the market at market
prices or contract prices previously arranged. This will leave a large gap to
fill in the marketplace and we suspect that prices will continue to rise due to
our doubt that the world will have enough new mines brought online within the
next 8 years to replace current stockpiles.
The market has not been kind to those of us who have been
risk takers over the past 3 months as other risk takers were squeezed out.
However, stick to your guns and trust your head in these situations and work up
the courage to buy the market leaders like Cameco, Paladin and SXRuraniumone
when they become 'cheap' (we use this in relativity terms- relative to what they
have been trading at). We view this as a winning trading strategy in rough times
which will be very rewarding, especially as the leaders of the world are coming
around to the notion that nuclear power is going to be the only true way to free
themselves of the troubles with oil (socially, economically, environmentally,
and geopolitically).This will take place as uranium is much more efficient than
oil right now and current reactors use only 5% of the fuel fed to them. This
means that 95% of the fuel is then stored today as “waste,” but once the
reactors become more efficient will become a “treasure”.