Uranium Miners: A Once In A Lifetime Contrarian Opportunity
It has long been a guiding principle of Gold Stock Trades that requires constant reiteration. "To know how to wait is the great secret of success." At one time in the history of the United States there were great Americans who had little education, but they were endowed with a native intelligence. Will Rogers was one of them. One side of his family was pure Cherokee, the other side was plain hard scrabble Cowboy. When asked from where he got his material, he would look you in the eye and say, "Shucks, I just read the newspapers." Speaking about investing he would say, "Invest in inflation its the only thing that's going up." These words were written in a time very similar to that of today. Political dishonesty, crony capitalism and downright immorality were features of the everyday landscape of his time.
Taking a leaf from Roger's modus operandi we come across two significant developments involving nuclear energy. Russia and The United States have reached an agreement of safe, compact, economically viable development of the nuclear (NLR) industry globally. Thus two former adversaries are joining in the peaceful growth and development of nuclear power. This serves to vindicate the watchful, waiting policy of Gold Stock Trades in refusing to be panicked by the scare stories of the media. Our ongoing faith in nuclear energy's future continues to be upheld by history.
Part of the Russo-American entente is the assistance that they will be giving in the building of reactors in such countries including Vietnam, Bangladesh, Turkey among others. These are tough economic times. Emerging nations can benefit immensely from such an economical, clean carbon source of energy. Note that the media hysteria leveled at nuclear energy is virtually absent in the developing world. After all its difficult to sell refrigerators unless they are wrapped in the shrill repetition of doomsday scenarios.
Don't be so quick to nuke nuclear (URA). If you want power for growing major industrial nations, nuclear is the only viable option. The media was wrong in circulating horror stories of nuclear's demise.
Germany (EWG) has been reduced to being a client nation ironically receiving nuclear energy from France and Russia. Look at the German economy whose economy has been affected adversely from closing down reactors. Poor Merkel has lost six consecutive regional elections to the Green Party. She is running scared, not smart. In doing so she is depriving the Eurozone with the assistance that a once productive, nuclear Germany was providing to the rest of the continent.
On the other hand, Japan (EWJ) has elected a new Prime Minister who states that Japan can't survive as a major industrial nation without nuclear power. He is saying like it is and is not swayed by the strident voices of the environmentalists. Angela might well note this instead of caving in to an anti-capitalist opposition bent on reducing Germany to impotence.
What about those voices who claim that Germany will now become a demonstration model to the world extolling the benefits of solar (TAN), wind, coal (KOL) and gas(UNG) in lieu of nuclear energy? Noda states that the costs of the switch over would be ruinous to Japan. Merkel seems oblivious as to the source of capital for such huge projects. She would be well advised to have lunch with Noda of Japan, Wen of China and replicate the all important agreement entered into by the United States and Russia to furnish safe, economical, clean and compact nuclear power to the world.
Despite the underlying fundamentals, some of the prices of uranium mining equities are astonishingly cheap. For commodity investors looking for value there is no sector that has been so pummeled into oversold and ridiculously undervalued situations. Our focus is on U.S. near term producers and believe the bargain basement values now presented comes rarely once in a generation. This is partial vindication of what Gold Stock Trades has been printing for the past months. Cameco, the largest publicly owned uranium company, warns that there will be a shortfall in the availability of uranium as the world increasingly reveals the supply shortage for nuclear ore. Companies have been frustrated raising capital for new projects. Increasingly, this has limited potential supply. Add to this the ending of the Russian HEU Agreement in 2013, which will further limit uranium supplies to the United States, which happens to be the largest consumer of uranium for its nuclear reactors.
Remember that Cameco (CCJ) has just backed away from the Hathor deal after Rio Tinto (RIO) trumped their bid. Hathor has made fantastic gains since the takeover battle began. We expect other near term uranium producers to make similar mover. Cameco has stated publicly that this will not deter them in their ongoing quest for producing nuclear ore right here in the United States. Stay tuned as I will be publishing an update on uranium miners which appear to be making key reversals in 2012.