Baltimore, MD--The recent record prices for uranium are only the beginning. The growing nuclear industry will ensure the demand for yellowcake. And by next year, we're going to see uranium break over $255 a pound.
I got fired up this weekend. And after I tell you about it, I know you'll be just as mad.
Instead of enjoying the sunshine last Saturday, I was stuck in a stuffy conference room. The stuffiness refused to leave, even though the windows were wide open.
As if that weren't enough to give me a headache, I was also surrounded by a group of skeptics. I mean, these guys were bears to the core. I overheard one mention how gold was going to drop below $500 per ounce. Another was talking about oil plummeting.
Trust me, this was not our kind of people.
The topic of uranium came up. Somebody mentioned how uranium jumped ten bucks last week to $135 a pound. Then the gentleman next to me gave his two cents. "It had a good run up to now, but over the next few years? That hype is over now. I expect we'll see prices start falling shortly. They'll be back to $50 a pound in the next ten years."
My sudden roar of laughter made the room go silent.
"Oh yeah, I forgot," he continued, "you still think uranium could hit over $500 a pound. Nonsense." I was able to laugh his jibe off easily. But then he laughed at me as if I were a child. I couldn't let that go.
You see, he wasn't just laughing at me . . .
He was laughing at you.
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I remember back in April when hundreds of readers responded to my suggestion of $500 uranium. Everyone agreed that uranium's bull market has just started.
That day at the conference room, I wasn't going to sit there and let them insult us.
Our Nuclear Future
The signs of our nuclear future are all around us. We just have to pay attention to the world.
First off, however, we need to realize that our global energy situation is about to make a monumental change. Peak oil is looming on the doorstep (many experts argue it's already here). Don't forget our daily addiction to 85 million barrels of oil. We'll have to make that up when the oil stops flowing.
But I'll get to nuclear power in a second. Let's jump right into uranium.
Right now, uranium mines are only producing 62% of the global demand. The balance is coming from sources such as government stockpiles, used reactor fuel that has been reprocessed, and uranium from nuclear weapons and depleted uranium stockpiles.
The uranium coming from those nuclear weapons is running out fast. Within a few years, uranium production will have to make up for that loss. That doesn't sound very promising, considering it can't even meet our current demand!
Back in April's Energy and Capital, we saw exactly how many new nuclear power plants will be built within the next ten years.
There's two important things to note about nuclear power plants.
The first is that they offer a cleaner way to generate electricity on an enormous scale (nuclear plants have no harmful emissions). We need energy on a global scale. Most alternative fuels don't come close to generating that much. France gets over 70% of its electricity from nuclear power. China also recognizes this potential, signing a deal for Australian uranium producers to supply their plants. China expects to generate all their future electricity from nuclear plants.
The second note about nuclear power plants is that they are simply more economical than fossil fuel power plants. Nuclear power is less expensive compared to fossil fuels or any other form of electrical generation.
Here's what it comes down to.
Uranium prices right now are cheap. The truth is that uranium is only 5% of the cost of running a nuclear reactor. Oil powered plants spend roughly 40% of their money for fuel.
The thing is, when uranium hits $255 per pound in 2008, it'll still be cheap for these plants.
Yesterday I read about an analyst predicting that uranium will fall to $70 per pound in ten years.
Personally, I think it'll break $500 a pound in half that time.
Bull Investors
A specific problem arises for us--how can we invest in this bull? Now that yellowcake is on a hot streak, everybody is trying to get in. We've seen a considerable number of companies jumping into the market.
Any intelligent investor can see the red flags waving. It's true that there will be a lot of companies raking in the profits, but finding those can be difficult.
But the readers of the Pure Energy Report have already netted a staggering 138% on just one of their uranium plays. Believe me, they aren't close to being done, either.
When I was finished talking in the room, I was completely taken by surprise. The same guy who had just insulted you and me--adamant that uranium prices would fall to $50 a pound--was staring at me. I had a feeling he was contemplating some sort of jab again.
"Well, I guess there's a chance it could be up that high by next year," After I heard that, I smiled again, then turned to the guy who called for oil at $30 a barrel next year.
By the time I left, the stuffiness had cleared out and the rest of the day turned out to be fine.
Until next time,
Keith Kohl
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