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« US Sub-Prime Problems Surface Down Under! | Main | Europe’s Reliance on Natural Gas Challenged! »
Tuesday
Jan082008

A Readers Notes From Tehran On The Uranium Bull Market

The following is a summary of the fundamentals driving this bull market in uranium and uranium stocks, as written by one of our subscribers Daniel Ray.

A Readers Notes From Tehran

This is a fictional story and should be read with a good sense of humour...

******

I recently got a night job working for the CIA. Things were going pretty well, too, until I was caught sneaking out of a secret government facility near Tehran with classified documents and some photos. I had forgotten to silence my cell phone, which started blaring my “Mission Impossible” ring tone while I was passing underneath a guard tower on my way to the outer wall. (Got your message, Jared!) As you can imagine, I was immediately blinded by spotlights and swarmed by the Iranian National Guard. Before long I was sitting face-to-face with President Mahmoud Ahmadinejad. I don't know if the treatment I received was typical for detainees, but I had the distinct impression that he wanted something.

“More crumpets with your tea?” he asked with a grin, nudging the tray of goodies towards me.

“No thanks,” I replied as I finished off my third pastry, wondering if it would be my last. “I was wondering, though, if you could tell me how long I will be detained.”

“Ah yes,” he replied. He sat up straight and shook crumbs off the manila envelope which was resting in front of him. He opened it and inspected the contents. “I understand that you were caught in a government facility with stolen documents.” He paused, then leaned back in his chair. “But, we may be willing to overlook this unfortunate misunderstanding if you'd be willing to provide me with some useful intelligence.” Fortunately for me, I had an early version of this article tucked away in my ninja suit. Nervously I withdrew it, skipped the unnecessarily long introduction, and began to read.

“There are 4 reasons why I feel uranium will be an extremely profitable investment over the next decade.” My captor gasped at the word uranium. Evidently I struck a cord with him. At this point I was happy I didn't go with my original article topic, “Opportunities In Radish Farming.” I continued reading.

“First, uranium is cheap and abundant. In case you didn't know, the world is running out of oil. In spite of an increased effort to find new reserves, nothing significant has been discovered since the 1970s. So what does this mean? Either we find a cheap alternative to oil, or industrialized civilization grinds to a halt over the next few decades. Wind, solar, and even ethanol may play a part, but they're still too expensive and unreliable to make much of a dent.”

“Wind and solar are for sissies. Are there beefier alternatives?” asked the dictator.

“Yes, there are,” I replied. “Two natural resources are sufficiently cheap and abundant to dominate energy production over the next 50 years. These are coal and uranium. I prefer nuclear power (fueled by uranium) as an investment since the energy produced is both cheaper and cleaner than coal.”

He interjected, “Plus you can't make coal into warheads. Believe me, big waste of time.” He took a sip from his tea. “Tell me more about uranium.”

“Well, to give you an idea of uranium's potential, consider the fact that China can run for 2 days on oil, or it can run for an entire year on uranium, all with the same fuel costs! No wonder that China is currently locking up Australia's uranium reserves and has aggressive plans to build new nuclear plants. This brings me to the next reason why uranium may be an excellent investment.”

“Second, nuclear power is relatively clean and safe. Although concerns about nuclear accidents and waste are common, most of these are largely unfounded. Thanks to modern safeguards, chances of a catastrophic accident at a nuclear plant are next to nothing. Even on-site deaths from accidents are many many times fewer than from hydropower, coal, or natural gas. But what about harmful emissions? Nuclear power plants emit clean water vapor, and the National Cancer Institute found no increase in cancer incidents among people living near US nuclear power facilities. On the other hand, it is estimated that fossil fuel waste kills around 20,000 people each year in the US alone. Also, a coal power plant releases around 100 times the radiation of a nuclear plant of the same wattage.”

“I found coal in my stocking this year,” Ahmadinejad said suspiciously. “Perhaps the fat man is trying to kill me,” he muttered to himself as he wrote something down. “I'll deal with him later. So you think that nuclear power is supremo?”

“Well, I'm not saying that nuclear power doesn't have its concerns, but they may not be as serious as most people think. Also, the current prejudice against all things nuclear may, in fact, be a benefit to investors with the foresight to get in early.” He sat thoughtfully. I continued.

“Third, demand for uranium is increasing rapidly. Let's look at China, for example. According to the Australian Foreign Ministry, with whom China has been negotiating, uranium imports to China are expected to increase from 2.5 million pounds to 44 million pounds per year. Also, the People's Republic committed $50 billion to build 30 new reactors over the next 15 years. According to some analysts, these plants will only begin to generate the needed energy for China's booming economy. And that's just China! In addition to the 442 operating nuclear plants around the world, there are 28 being built, 38 on order, and another 115 have been proposed.

The dictator sat forward, and asked, “So if nuclear power is so cheap and abundant, cannot miners just increase production to compensate for this surge in demand?” I was pleasantly surprised by the intelligence of his question, until he grabbed a crumpet and missed his mouth completely. I shook my head and moved on to my next point, which conveniently answered his question.

“Fourth, supply probably won't meet demand for another decade. Currently, new mining production provides enough uranium to fuel only about half of the world's current nuclear power consumption. Much of the other half comes from decommissioned nukes. But these supplies are declining fast, and most of the Soviet weapons-grade uranium is gone due to the “Megatons to Megawatts” program. So what do you suppose will happen when these uranium reserves run out?”

“The American Imperialist Regime will crumble?”, he blurted.

“Um, no,” I replied. “But it will cause uranium prices to rise. Even if Uranium surged from its current price ($90) to $600 a pound, it would still be a cheaper alternative to coal or oil. Here's why: only a small portion of a power plant's expenses goes to uranium. This being the case, uranium's price could rise to $1,000 a pound before costs became prohibitively expensive. One might expect higher prices to lead to additional supply, since higher profits would lead companies to open new mines. However, it takes at least 10 years to take a uranium mine from discovery to production, assuming everything goes as planned. This means that prices will likely move much higher over the next decade before supply catches up with demand.

Ahmadinejad: “I've made my decision. I will immediately go out and blindly purchase uranium stocks in companies that I haven't researched.”

“I appreciate your enthusiasm,” I replied. “You're correct in that one invests in uranium through the stocks of exploration and mining companies. But I do have a couple of cautions. First, many uranium stocks aren't worth the paper their certificates are printed on. Second, because uranium investing is largely undiscovered by Wall Street, shares are thinly traded and prices can be volatile. This summer, some excellent stocks dropped to 30% of their highs of just a few months earlier! So don't use money that you're not willing to lose, and do expect wild swings occasionally.”

Ahmadinejad: “You make it sound risky. How should I proceed?”

“All investments have risk,” I noted. “But if you're investing for the long term, and you buy the right stocks at the right time (when they're cheap like they are now), holding uranium stocks may be quite profitable. Also, it would be wise for you to pursue expert advice on the subject. I can't make specific recommendations, but I can provide examples. I subscribe to the following three investment newsletters: (1) The Casey Energy Speculator, (2) The Dines Letter, and (3) The Uranium Stocks Newsletter. They give me specific advice on what to buy and when.”

My host stood abruptly, and shouted: “Guards! Get this man more tea! And bring him cushions!”

******

Aside from giving us a chuckle, this story does raise some important factors that are driving the uranium bull market and will continue to push uranium higher in 2008, propelling our uranium stocks to new highs.

To stay informed on the uranium market and investment ideas regarding uranium stocks, subscribe to The Uranium Stocks Newsletter totally free of charge. All you have to do is click here and enter your email address.

We would like thank to Daniel Ray of Utah for this article, remember if you want your voice heard then you can write an article for publication on www.Uranium-Stocks.net Simply email your article in Microsoft Word format, (complete with pictures and charts if you wish!) to bob@uranium-stocks.net

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Reader Comments (3)

This report on the JV betwwen Delta and Rockgate is unbelieveably riddled with false information. First the stock prices of both companies are way below $1.00. Secondly, at their top prices last year, they were both over $2.50. Thirdly, they have had two drill results published since the late fall, the latest drill result being earlier this week. There is no recognition of this fact at all. These reports are spurious and I strongly suggest that you do a more professional job at your DD and in your statment of these facts in your latest news.
Sincerely
Visco

January 30, 2008 | Unregistered CommenterVisco

I think your comment was intended for a different article. Are you referring to the one posted on Feb 17th of last year? If so, that article is a year old and would not contain current stock information or recent news releases.

January 30, 2008 | Unregistered CommenterDBR

Thanks DBR.
We did an article on the Delta JV last year, .
Please check the dates on all articles as this website has been in operation for some time now and all our articles are still avalible online as a record to what we have done.

January 30, 2008 | Unregistered CommenterUranium Stocks

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