Investing in Nuclear Fusion
Fusion Breakthrough Could set off a Nuclear Bull Market
When I was in the ninth grade, I had a physics teacher who was, by all accounts, an ex-federale.
That is, he had retired from “public service” and become a teacher to keep his mind sharp in his later years.
Although he never told us exactly what he did while working for the government, I always suspected it had to do with nuclear physics — or at least something to do with energy — since he talked about it all the time.
His name was Dr. Veese, and during our nuclear physics unit, he told us this: “It may not happen in my lifetime, but perhaps during yours, you'll probably get to see it.”
After years of working on classified projects for the government and decades of studying physics, Dr. Veese was confident that our generation would live to see economically viable nuclear fusion.
And some groundbreaking news last week in the nuclear market may have proven him right.
Here's the gist of it...
Fusion Could Power 100,000 Homes
Lockheed Martin (NYSE: LMT), another longtime government employee, announced findings from its normally top-secret research.
Last Wednesday, the company said that it had made a technological breakthrough and that a new nuclear fusion reactor in development could be ready for commercial use in about 10 years.
In the next 20 years or so, there will be a 40% to 50% increase in energy use, and global governments will be working harder than ever to reign in fossil fuel spending.
So other than fuels like coal, oil, and gas, the best method for cost-effective power will be nuclear energy.
And in terms of power generation, fusion is by far better than the fission reactors we use today.
In fact, the fuel used in fusion reactors, deuterium-tritium, creates about 10 million times the energy that coal and other fossil fuels do, all without huge amounts of nuclear waste you see coming out of traditional reactors.
In case you didn't know, fission — what is used in our current reactors — works by splitting atoms to release energy.
Fusion does the opposite...
Atoms are super-heated until they collide and combine, releasing three to four times more energy than fission reactions.
Tom McGuire, the head of Lockheed's groundbreaking project, says that within 10 years, its reactor could fit on the back of an 18-wheeler and produce an astounding 100 megawatts of electricity.
That's enough electricity to power 75,000 to 100,000 homes in the U.S.
Obviously, such an efficient and powerful technology will be heralded by environmental lobbyists and investors alike...
Now, I would be doing you an injustice if I didn't mention that there are some who are skeptical of Lockheed and McGuire's claims.
MIT professor Ian Hutchinson says, “As far as I can tell, they aren't paying attention to the basic physics of magnetic-confinement fusion energy.”
Truthfully, I don't blame the professor — after all, he has years of experience in the nuclear sciences. But he also wasn't involved in the process of developing the technology with Lockheed, so he hasn't seen all of the research.
He may also be bogged down by his years of nuclear studies, which, from what I can tell, all but write off nuclear fusion as a pipe dream.
He does add: “Of course we'd be delighted if a real breakthrough were possible.”
So maybe he's still hoping Lockheed is onto something.
In any event, we at Energy and Capital have followed nuclear energy closely since our inception, and this news both excites and disappoints us...
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Investing in Fusion Now?
We are thrilled by the potential market performance of fusion technology, since it is so powerful and efficient.
But we are less than thrilled with the speculative 10-year timeline given by Lockheed.
Even as contrarian investors who like to buy when the market isn't paying attention, this is still too far off for us to spend money on it.
However, now that the story is floating through the financial press, it should help wake up the bulls on other forms of nuclear.
Although Japan still has yet to restart its reactors, and although Germany and Italy have continued to shun the already established fission process, we think nuclear is facing an uptrend that could send prices closer to their pre-Fukushima levels.
The chart above shows the price of the Global X Uranium ETF, a good barometer for uranium stocks, before and after its post-Fukushima beating. If prices can go to pre-2011 levels, you could see more than six times your money.
However, based on the research of my colleague Christian DeHaemer, we don't see uranium as the next big bull market for nuclear.
Instead, his Crisis and Opportunity readers just banked a quick 53% gain on a thorium fuel company. And as we speak, he's diligently vetting a few other opportunities in the thorium nuclear energy industry.
While you wait for his next report, I suggest you take a look at another one of his energy plays that could boost your portfolio with similar gains.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
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