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« URANIUM-STOCKS: A Stock Picking Contest Update | Main | Uranium, gold and the markets »
Sunday
Mar182007

Uranium Stocks: Is this the Future?

This is an exercise in ‘Futuring’ a method of going forward over the next two years and trying to visualise the events and trends that will play a part in our investment strategy. Our conclusion could be a million miles away from reality and in time make us look rather foolish but that is a chance we are prepared to take. We have listened to a number of economists and financial pundits and are quit disappointed that their idea of a forecast is to take the price of uranium today and add another $5.00 to come with their revised forecast. Surely your pet cat could do that.

We will try to extrapolate the current trends regarding the supply and demand factors for uranium and therefore uranium stocks.

So what have we got to consider? Well the supply and demand situation is out of kilter in the order of about 2:1. Which means there is only one pound of uranium to feed two hungry mouths both demanding a pound each. There are new nuclear plants coming on line this year and the year after which is the time period that under consideration. Each of these new power plants requires a stockpile of uranium in the order of 2.5 years supply, another mouth to feed. The utilities will require their continuous uninterrupted supply to be maintained as they cannot close or take a ‘time out’ as this is not possible with nuclear power plants. We came across another new fund being formed, which intends to raise $100.00 million for the purpose of investing in uranium stocks. We know that is not uranium but it is indicative of the interest lurking under the surface looking for an angle to play. A straightforward investment in uranium itself may be more appealing as it is more straightforward and the fund manager could perceive uranium as being the easier route to take. So we are already in a tight spot regarding the demand, which we see as intensifying as these funds that are speculators with huge amounts of cash to invest take an interest.

These activities could be dwarfed by the actions of just one man. No not Warren Buffett, although if he took an interest in uranium then the market would certainly jump.

The man we have in mind is Jin Renqing, who?



jin18mar07

Well he is a graduate of the Financial Department of the Central Institute of Finance and Banking, Beijing and a former Vice Mayor of Beijing and was appointed Minister of Finance for the Chinese government in March 2007. The Chinese government have already signalled to the financial world that they intend to implement a plan that will lessen their exposure to the US dollar and give their reserves a more balanced spread. And Jin is the man with that responsibility. We all know that we are talking over a trillion dollars which grows every day as China peddles its goods across the globe. So if Jin decides that China will need a small portion of its energy needs from nuclear energy then the biggest mouth in the world has just dropped in for tea. This man alone could double the price of uranium in a very short period of time.

So lets talk about the weather. We listened to a meteorological office broadcast yesterday for Britain and they were saying that 2007 could be the hottest summer ever recorded and its not like them to be as cavalier about their business as we are about ours, but just imagine those air conditioning units doing overtime.

Now throw in the possible disruption to the oil supplies, a dash of inflation and the dollar falling out of bed, it’s not a pretty sight is it?

The price of Uranium as it stands today:


Uraniunpricemar07










CONCLUSION AND PREDICTIONS

For debating purposes we put forward this conclusion with the full intention that it is provocative and stimulating. Whether you agree with us or not does not really matter however getting involved does matter. If the coming together of the above circumstances happens simultaneously then we humbly suggest that the following could be the result.

The price of Uranium as it could be over the next two years.
Futuranium18mar07



From time now to the end of 2007 we could see an increase from $91 to $150/lb, followed by a further increase from $150 to $200/lb in 2008, with the possibility of $500/lb later on. Our prediction of $200/lb has been on the table for some time now (Since Uranium was $64) and we are sticking with it.


There exists a reasonable possibility that we could get a decent head wind and uranium stocks could easily perform like Formula One cars on a good day.

This could be the chance of a life time or a trendy dinner party topic that goes nowhere, so don’t be bashful or shy, have your say whether you agree with us or not.


18 March 2007


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Reader Comments (5)

"We came across another new fund being formed, which intends to raise $100.00 million for the purpose of investing in uranium stocks."...
could you give some details about this new fund (is it a mutual fund ... or is there any other mutual-uranium-fund)?
i am looking for such a fund - because in the case of PINETREE the difference between NAV (estimated 8 to 10 can-$ per share /public this week ???) and share-price (21-22 c$) is too big for me !!!
juergen from berlin/germany

March 20, 2007 | Unregistered Commenterjuergen

Juergen, This a quote from the web site of the Middlefield Group (www.middlefield.com)

"Uranium Focused Energy Fund - IPO Closing March 20, 2007 Toronto, February 28, 2007 — Middlefield Group, on behalf of Uranium Focused Energy Fund, is pleased to announce that it has filed a final prospectus in relation to the initial public offering of units of the Fund. The minimum size of the offering will be $100 million. The closing is scheduled for March 20, 2007."

March 20, 2007 | Unregistered CommenterUranium Stocks

Is this a good fund UF.UN or is it better for a small investor to invest in say Khan or Pdn to make more $'s?

March 20, 2007 | Unregistered CommenterR.Rogers

Uranium will always be used to some extent but i suggest you take a look at this company , thorium power(THPW) www.thoriumpowerinc.com . They have the technology to modify current Russian and Westinghouse reactors to run on thorium based fuel. Over the next 5-10 years i would not be surprised to see them succeed at decreasing the use of uranium. They are already working with India , Russian and Europe.

March 20, 2007 | Unregistered Commenterpsperos

I noticed that the Longview Partners (LV:TSX.V) you recently mentioned in an article was mentioned in the Bayswater/Kilgore merger news release, quoted as,
"The directors and senior management of Bayswater are as follows:
Damien Reynolds, Chairman and Director
"Damien Reynolds also currently serves as president of Longview Capital Partners Inc. (TSX VENTURE:LV). Longview owns an equity position in Bayswater. Mr. Reynolds has an impressive track record of over 20 years in identifying, acquiring and developing resource projects of merit around the world and also for his exceptional ability to raise capital for junior companies".
Thought you might like to comment on Longview again, as I hadn't time to research it. I thought your article mentioned it as an alternative (possibly) to Pinetree.
Also, I was wondering if the writer of Comment #1 could provide info on what he means by NAV (Net Asset Value) being a measure of Pinetree's value. If PNP is earning $3.20/share with a P/E of 6.54, how does the avg. $9 NAV compared to $21 share price impact his choice? From PNP's website, they clearly state that they do not reveal all their holdings, only the ones that have already been made public. Would the NAV increase? or have all those holdings been calculated into the NAV? Does the NAV also account for the merchant banking arm of PNP? That must be generating a large portion of that $3.20/share earnings, but maybe not. I don't know.
What I have seen lately of PNP's activity is: Mega bought 100% of Monster Copper. PNP owned a 12.2% position in Monster and still owns a 4.9% piece of Mega. BAY merged with Kilgore. PNP owns an 11.2% position in Kilgore. It looks like PNP is maximizing their profits. But I agree the $21 share price doesn't look like an entry point. It seems to be dropping, so I hope to buy back in at 19.70 or less. I had bought it at 17.80 in early Feb. and just sold it at $22. It is quite a volatile stock.

March 20, 2007 | Unregistered Commenterstoneygulch

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