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Monday
Nov152010

Hyperion Power Key Member of New Nuclear Maritime Consortium

Hyperion Logo 20 Nov 09.JPG

Just in is this missive from Hyperion Power regarding the possibility of future commercial shipping being powered by small modular reactors:

Shipping and power experts join forces to explore the potential for nuclear power to propel future generations of commercial tankers

Members of new research consortium, which includes Lloyd's Register, Enterprises Shipping and Trading, Hyperion Power Generation and BMT, to examine the marine applications for small modular reactors (SMRs).

LONDON - November 15, 2010 - A consortium of British, American and Greek interests have agreed to investigate the practical maritime applications for small modular reactors as commercial tanker-owners search for new designs that could deliver safer, cleaner and commercially viable forms of propulsion for the global fleet.
 
The Strategic Research Group at Lloyd's Register, Hyperion Power Generation Inc, British designer BMT Nigel Gee and Greek ship operator Enterprises Shipping and Trading SA are to lead the research into nuclear propulsion, which they believe is technically feasible and has the potential to drastically reduce the CO2 emissions caused by commercial shipping.
 
"This a very exciting project," said Lloyd's Register CEO, Richard Sadler. "We believe that as society recognises the limited choices available in the low carbon, oil scarce economy and land based nuclear plants become common place we will see nuclear ships on specific trade routes sooner than many currently anticipate."
 
The agreement for the joint industry project was signed today at the offices of Enterprises Shipping and Trading in Athens, Greece. Enterprises' Victor Restis, commenting at the signing said, "Despite the fact that shipping is the industry that contributes much less in the World's atmospheric pollution compared to other shore based industries, we believe that no effort is enough towards safeguarding a better world for the future generations. We are extremely honored and proud to be part of this consortium at this historic event as we strongly believe that alternative power generation is the answer for the shipping transportation."
 
The consortium believes that SMRs, with a thermal power output of more than 68 megawatts, have the potential to be used as a plug-in nuclear 'battery'.
 
The research is intended to produce a concept tanker-ship design based on conventional and 'modular' concepts. Special attention will be paid to analysis of a vessel's lifecycle cost as well as to hull-form designs and structural layout, including grounding and collision protection.
 
"We are enthusiastic about participating in the historic opportunity presented by this truly groundbreaking consortium," said John R. 'Grizz' Deal, the CEO of Hyperion Power. "In addition to fitting the basic requirements as the model for studying the application of SMRs in commercial naval propulsion, the Hyperion Power Module [HPM] can also help to set new nuclear maritime standards. The HPM's design includes a non-pressurised vessel, and non-reactive coolant. These features, among others in the HPM, should encourage the industry to strive for even higher levels of inherent safety in their models."
 
International shipping has been identified as a significant global contributor to greenhouse gas emissions, and it is under mounting pressure to contribute to overall emission reductions. There is an ongoing debate about how much the sector will be able to reduce those emissions, while continuing to support the forecast expansion in world trade that it enables.
 
"Nuclear propulsion offers the opportunity for an emissions-free alternative to fossil fuel, whist delivering ancillary benefits and security to the maritime industry," said Dr Phil Thompson, Sector Director -- Transport, for the BMT Group. "We look forward to using our wide range of maritime skills and expertise to identify the through-life implications, risks and potential for developing and using SMRs in the civilian maritime environment and to provide a framework for its safe and reliable introduction and utilisation."

So there we have it, they do appear to be making excellent progress.

Over in the options trading pit the team have just updated the progress chart to include last weeks closed trades as follows:

sk Chart 14 November 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
Monday
Nov152010

SK OptionTrader Closes 13 Trades, Banking 43% to 100%

Our premium options trading service, SK OptionTrader, has opened and closed 13 trades since our last update, banking an average profit of 63.67% on these trades.

The highest profit was a 100% gain in 6 days and the lowest was a 43% gain in 14 days.

This brings our total of closed trades to 51, with 49 winners.

Our average return per trade is 46.89% in 44.8 days.

A subscriber who had invested $1000 in each of our 51 trades would have accumulated profits of $23,913.60.

SK OptionTrader Closes 13 Trades, Banking 44% to 100% In Profits

Please note that these are closed trades, profits that we have taken and are in the bank, not paper gains in a portfolio that can vanish as quickly as they arrive.

We understand that what matters to investors and traders more than anything is the bottom line. Therefore our focus is on producing profitable results, and we feel we have achieved that. Our full trading record can be viewed here, which contains a complete record of all 51 of our closed trades.

Not just our best 51 trades, not a handpicked selection of 51 trades, but all 51 trades that SK OptionTrader has recommended and closed.

With a 6 month subscription costing just $199, and the average return on a trade being 46.89%, one would only need to have invested $1000 in just one average trade to have paid for the cost of subscription more than twice over!

You can subscribe to SK OptionTrader by clicking one of the buttons below and following the instructions. You do not need to be a member of Paypal, all you need is a valid credit card or bank account.


Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 




SK OptionTrader is not merely another gold investment letter that aims to perform well solely when gold prices increase, but to perform, period. This is an active trading service which aims to make money in all circumstances, whether gold be going up, down or even sideways.

With our model portfolio being 80% cash at time of writing, we have been formulating a strategy to deploy this cash and expect to initiate a number of trades imminently. To find out what they are sign up to SK OptionTrader now by clicking one of the buttons above and get on board for what should be some very profitable trading ahead.
Thursday
Nov112010

Cameco Corporation Up 3.14% Today

CCJ Chart 12 Nov 2010.JPG



Cameco Corporation (CCJ) has put in another good day with a gain of 3.14%. However, there is a gap opening up between the 200dma and the stock price which needs to be watched. The RSI is standing at 83.14 which suggests that a breather is on the cards, along with the MACD and the STO which are also in the overbought zone.



On the 9th October, 2010 we wrote the following about Cameco's progress:

Also worthy of note is the 50dma which looks set to cross over the 200dma, in an upward motion. This cross over when it occurs is usually a positive indicator for the stocks progress.

As we can see on the chart at the top of the page this crossover has now taken place with the resultant positive effect.

Recent results for Cameco have also come through with some good news for investors such as production is up 17% year to date and the average unit cost of production has decreased by 13% The 2010 uranium production forecast has increased to 22 million pounds, Cigar Lake is on track and McArthur River and Key Lake have signed a four-year collective agreement.

Cameco CEO Jerry Grandey commented as follows on the results as follows:

"This year's operational success has continued into the third quarter, Production volumes are 17% higher than in 2009, while production costs are lower. Our $US realized prices have also risen, illustrating the strength of our contract portfolio.

As we advised earlier this year, revenues were lower in the third quarter due to the timing of uranium deliveries. We expect about one third of our uranium sales will be delivered in the fourth quarter.

We are on track to double our annual uranium production from existing assets by 2018. Our growth strategy is in place to ensure we remain among the world's leading uranium suppliers to those who choose to use safe, clean and reliable nuclear power."


Uranium production is expected to be 22 million pounds this year, compared to our previous estimate of 21.5 million pounds, with increased production at Rabbit Lake and Inkai.

To read this news release in full please click here.



Cameco Corporation trades on the NYSE under CCJ and on Toronto under the symbol CCO with a market cap of $14.70 billion. It has a P/E ratio of 26.41 and 52 week price range of $20.70 - $38.56.

On the skoptionstrading front some of our 'stops' were triggered this week sending us back into cash with some good profits, we will update the chart on the skoptionstrading site this weekend.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Wednesday
Nov102010

Strathmore Minerals Corporation: Up 20% Today

STM Chart 11 Nov 2010.JPG


Strathmore Minerals Corporation (STM), like others in this sector has doubled in price since September 2010. Note the heavy volume over the last three days. The indicators suggest that STM is now overbought so a pull back may be on the cards.

Strathmore has been a uranium company since 1996. Its goal is to become a leading uranium producer in the United States. The Company's uranium property acquisition strategy was initiated when the uranium price was between US $7-15 per lb. Strathmore was successful in acquiring advanced uranium projects in the two largest historical uranium producing regions in the United States: the Gas Hills Uranium District in Wyoming and the Grants Mineral District in New Mexico. Many of these projects were extensively explored and advanced to the mine planning stage, but were later abandoned due to prolonged weak uranium prices. In 2005, Strathmore opened operations offices in Riverton Wyoming and Santa Fe, New Mexico. Projects were reviewed and prioritized, and permitting efforts were initiated. Strathmore's Management and Technical team led by CEO David Miller, has over 200 years of uranium exploration & development, and mining experience in the United States

Strathmore Minerals Corporation trades on On the Toronto Venture Stock Exchange under the symbol TSX-STM.V, has a market capitalization of $100.20 million, with a 52 week trading range of $0.41 to $1.19.

For disclosure purposes we do own this one.

On the skoptionstrading front some of our 'stops' were triggered yesterday sending us back into cash with some good profits, we will update the chart on the skoptionstrading site this weekend.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Monday
Nov082010

DNN Up 11.55%, CCJ Up 7.46%, KRI Up 35.80%, URE Up 10.83%, URRE Up 31.43%, URZ Up 15.26%

URRE Chart 09 Nov 2010.JPG


What a cracking day for uranium stocks as we can see most of them have put in a brilliant performance today bringing some respite to long term suffers and putting a smile on the faces of those who have recently taken an interest in this beaten down sector and bagged a few shares.

Using Uranium Resources Incorporated (URRE) as an example, we can see that it has doubled in a matter of weeks from $1.17 to $2.30, also note the recent increase in the volume of shares traded, which is another positive sign for the stock. The technical indicators are in the overbought zone, which suggest that a pull back is on the cards, however, they could stay there for some time as renewed interest in this sector buoys the stocks.

As you know our focus has been on the silver sector where we have made excellent profits particularly with our options trades with Silver Wheaton Corporation. The best performer being closed out for 212% profit and our most recent purchase gaining 35% in one day. However, the uranium sector looks as though it is coming back life and the possibility for generating profits via a few well placed options trades is upon us. For us, its time to dust off the drawing board in an attempt to unearth a few gems.

Uranium Spot Price Chart 09 Nov 2010.JPG

To answer some of the emails that you have sent us we are pleased to tell you that over in www.skoptionstrading.com we currently have 13 gold and silver related open positions, up between 66% - 131% with an average gain of 86% on each of these trades, which were all opened in the last 18 days. Those who joined us three weeks ago are doing very well indeed.


Please dont forget to take a look at our options trading service, www.skoptionstrading.com where our total of closed trades is 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Thursday
Nov042010

Marin Katusa Values Viable Technologies and Leadership

Marin has a few interesting points to make about uranium so dont miss them!

Source: Karen Roche of The Energy Report  11/04/2010
The Energy Report http://www.theenergyreport.com/pub/na/7782

Marin Katusa.JPG

Casey Energy Opportunities Senior Editor Marin Katusa shares his perspectives and predictions on the direction in which the energy sector is headed—from popular green alternatives like geothermal, run-of-river hydro and natural gas to the oil sector all the way to the less-popular, but very viable, uranium sector. The Energy Report caught up with Marin at the New Orleans Investment Conference for this exclusive interview.

Casey Energy Opportunities Senior Editor Marin Katusa shares his perspectives and predictions on the direction in which the energy sector is headed—from popular green alternatives like geothermal, run-of-river hydro and natural gas to the oil sector all the way to the less-popular, but very viable, uranium sector. The Energy Report caught up with Marin at the New Orleans Investment Conference for this exclusive interview.

The Energy Report: Marin, one of the things you mentioned here at the New Orleans Investment Conference and at the Casey Conference is that the current focus on gold means a lot less attention for the energy sector. Can you talk about the overlooked energy stocks you have found?

Marin Katusa: Let's start with the geothermal sector. Two years ago, geothermal was the buzz and hot sector in the junior resource sector. Today, nobody's talking about it. That's beautiful and fine by us because now these companies have developed projects and explored at a much lower cost of capital for present investors. But the investors got bored and sold the stocks. Now these companies are 50% cheaper than they were 16–18 months ago, but they have so much more value today than they did 18 months ago.

TER: What's unique about the geothermal?

MK: Of all the green energies, geothermal is by far the most economic. It makes sense. It works without government subsidies. But, when you include the government subsidies, it's like taking candy from a baby (or from Obama, not sure which is easier). The government's providing the construction loan guarantees and refinancing the projects at around 4% debt versus a year ago when companies were doing it at +14%. That's a big difference on the bottom line for cash flow. You can cheaply buy geothermal companies that actually have positive cash flow. I think it's the cheapest sector today—period.

TER: One of the downsides of geothermal is it's a relatively small sector. There aren't a lot of players in it. What will really take it to the next level?

MK: That's actually the upside. Because there are so few players and it is so front-CAPEX extensive, consolidation will have to happen to create the size. The key number to get the attention of a big firm, such as MidAmerican Energy Holdings Co. (NASDAQ:MDPWM; OTCBB:MDPWM), which is Warren Buffet's energy company, is 500 megawatts (MW) of production. Whether it's Ram Power Corp. (TSX:RPG) taking over Nevada Geothermal Power (TSX.V:NGP), Nevada Geothermal taking over Ram, Nevada taking over Magma Energy Corp. (TSX:MXY), Magma taking over Nevada or a merger between Ram and Magma—there's going to be consolidation. But the question of who will be the consolidator is still up in the air.

You want to be in the company that's going to have the largest upside. We put Nevada Geothermal, Ram and Magma as buys because they're run by excellent people. They're undervalued compared to a year ago. In January, Nevada Geothermal was over $1. We recently wrote about it trading in the $0.50 range. Now the company's refinanced its debt and had a recent equity financing in which very smart money like Rick Rule participated in (as did we). It's producing close to 50 MW now and will be growing production in the very near future; and, better yet, Ormat Technologies Inc. (NYSE:ORA) just bucked up some big money to farm into one of its other projects. A year and a half ago, it wasn't producing; so it's so much cheaper today and is a much better company.

TER: We've seen some consolidation. Over a year ago, you had Ram and Magma. . .

MK: Ram was created when Polaris Geothermal and Sierra Geothermal Power Corp. merged with Hezy Ram's private company. Magma is purchasing a lot of the Iceland production and it purchased Soda Lake in Nevada. Consolidation is going to continue.

TER: Why haven't these consolidator plays seen any market appreciation since the IPOs?

MK: Well, frankly, a lot of upside was already priced into the IPO of those two. We stated very clearly to be patient and wait until the "mojo" and "excitement" of the IPO weakened and both companies hit our buy targets, which they are currently at; both are great buys today. There's a lot of sex appeal to these companies.

Geothermal is a very difficult business—you have to produce results. It's not like gold where you can do some geophysics, some trenching, pop a couple of holes and say, "I think I've got 5 million ounces of gold here," then wave your hands and have a +$100 million market-cap company. In geothermal, when you pop in that hole it's going to cost you US$4–$6 million per well and you know what you have.

Ross Beaty and Ram raised hundreds of millions of dollars and they had all these huge projects with a lot of potential. There was a lot of hype built into the price and a lot of expectations. I told people just to be patient and not buy the stocks. That was a very frustrating period for me because we had subscribers asking, "Why can't we buy it now?" It's a funny thing, we got a lot of grief for telling subscribers to "BUY under $X" but it was EXACTLY the right thing to do. So, the price and timing of your purchase are just as important as selecting the right company in which to invest.

I was on a panel with Ross Beaty at a Casey Conference in September 2009 when the stock was about $2.25. Somebody on the panel asked what I thought. My answer was: "Be patient. Buy under $1.50." Within six months, it got to $1.35. That's because the big institutions had unrealistic expectations, got bored and, more importantly, didn't understand the geothermal sector. A lot of mining investors invested in the geothermal sector, but their timeframe was much shorter than that needed for the geothermal sector. Geothermal today is the uranium sector in 2004. Today, gold is hot and the investors took their money and placed it elsewhere. Geothermal is getting no love. Like I said before, we look for undervalued "unloved companies and sectors." And a patient investor will make a lot of money in a few years by investing today in the geothermal sector.

TER: What are the good buys in geothermal?

MK: Right now, we have three buy recommendations: Nevada Geothermal, Ram Power and Magma.

TER: The big 800-pound gorilla in the geothermal sector is Ormat. Does it fall into the buy category?

MK: No. It has some issues with the regulators right now. It's a big company that has undergone a management change. I believe you have much more upside owning Magma than you do owning Ormat. But I do believe you will see Ormat involved in the consolidation of, or investment in, other companies' projects like the one it just announced with Nevada Geothermal, which by the way, is a fantastic deal for Nevada Geothermal shareholders.

TER: Magma and Ram are already consolidation plays, but Nevada Geothermal is not. Does that make Nevada a better opportunity?

MK: If you compare Ram and Nevada, the big difference is that no one expects Ram to be bought out today. Ram doesn't have enough production. The beauty of Nevada Geothermal is that not only is it going to be growing these projects, but also President and CEO Brian Fairbank and his team are very good and very well respected on the technical front. They built the plant and will increase production on Faulkner. The Blue Mountain Faulkner 1 is the largest plant built in Nevada in more than 20 years and it's one of the largest plants built in the U.S. over the last 10 years. He will not only increase the production of project, but he has three phases coming.

A lot of people are wondering if Magma, Ormat or Ram will buy the company out. So not only is there near-term growth within the company, but you also have the speculation: "Will it get bought out?" That gives you a double-impact speculation. The "hot" money hasn't even figured out this play yet, but it will. With Ram, it is just growth. That's the difference between the two.

TER: You also said that oil is ripe for a correction. Can you explain why you think that?

MK: There's a lot of speculation in the oil markets. In the summer, we published a research report in the Casey Energy Report, which showed that when the BP spill happened, it took 15% of America's supply offline. You would have assumed the spot price of oil would've corrected upward. What actually happened when all offshore drilling was shut down in the Gulf was the spot price of oil dropped 20%. What does that tell you? The speculators didn't know what to do, so they just got out. They took the money off the table. There's a speculation premium in the oil markets right now. However, on the other side, you need to look at how low oil can go. It's a reflection of the economy and speculation. China will buy up all the oil it can get at US$40/barrel.

TER: Isn't it more a reflection of supply because you're hearing all about peak oil?

MK: Yes, there's the peak oil concept. Look at natural gas. America's been so successful in unconventional shale gas technology, but that's just starting to hit Europe. The Middle East hasn't even started doing unconventional exploration. You've got these great, cheap world-class producers that have been producing the same way they did before I was born over 30 years ago that haven't seen modern American technology. When the American innovation hits the Middle East, you will see a lot more of this supply come online.

TER: To what technology are you referring?

MK: The unconventional shale primarily uses fracking techniques. The hottest thing in Europe right now is the unconventional shale sector. Big funds like the one run by George Soros are investing millions of dollars in the sector—these wells cost more than US$8–$15 million per well. But people are worried because each frack uses 2–5 million gallons of water.

In the old days, when you drilled a well for gas, once you spud—you produce. There's no way to contain it; you have to sell it. So, you dump it into your pipelines and get the price going at the wellhead. Today with the shale technology, you can frack it and it takes you about two days to complete the well. That way, you know how much gas you have and it's a new natural storage facility. You don't have to pump it out. The reservoirs can triple—quadruple if they're successful.

TER: What's the timeframe for getting this unconventional technology into Europe and the Middle East?

MK: It's already starting in Europe. In fact, Casey Research wrote the first research report in the business on the potential of shale gas in Europe. In the Middle East, I think the best potential right now is a company called East West Petroleum Corp. (TSX.V:EW). It has the people, network, connections, experience and knowledge. I haven't been as excited about a company as I am about East West since Cuadrilla Resources Ltd. (which was the leader in European shale and got bought out) and Copper Mountain Mining Corp. (TSX:CUM) before that.

TER: East West's property is mostly in the Middle East?

MK: Nope, it has a project in Alberta that is producing. It also has four blocks in Romania in the Pannonian Basin—a very hot area right now. I'm hoping the company gets in early and uses other people's money (OPM) with the Romanian projects. I've met with the management and it intends to joint venture (JV) that out and get someone else to spend more than US$60 million on the project. After that, East West will take a free ride over the next four years.

When we do our due diligence, we always focus on people. If you look at the management team, President and CEO Dr. Greg Renwick spent more than 10 years in the Middle East. That's where he was an integral part of Centurion, which Dana Gas (ADX:DANA) bought out. I believe that you go where you know what to do and are effective at what you do best. Our big speculation here is that Greg is going to do something big in the Middle East. With people like Herb Dhaliwal and Dr. Marc Bustin on the board, he's built an amazing team. Dr. Bustin is one of the best minds in the business and probably one of the world's top experts in the unconventional oil and gas sector. Dr. Bustin was the one who educated me on the potential of the European shale gas sector, and investors can make a lot of money following him. Remember, the best companies are always built by great people.

TER: When we spoke at the Casey Conference in San Diego, you recommended Africa Oil Corp. (TSX.V:AOI) as one of your top picks at under CAD$1. The company was trading in the low $0.80s when you recommended it. You put out a Casey Energy Confidential alert on Africa Oil at CAD$1.05 and told the audience the company was a perfect example of taking the Casey Free Ride. It's gone up so much in such a short period, but you're still recommending it. Also, could you explain the Casey Free Ride concept again for our readers who might not be familiar with it.

MK: Sure. Casey's Free Ride is when returns make you feel you want to take a profit, always take your initial investment out or more if you want. What remains invested is like playing with the house's money in a casino. At that point, you can't lose.

And as far as Africa Oil, I went on national TV, in the newspaper and our newsletter saying, "Buy under $1." It was trading in the $0.80 range and today it hit over $2. In four months, our subscribers had a gain of more than 100%. The people at Africa Oil are amazing and have a pattern of success; perhaps they have different DNA, but it's in their blood (success, that is). Both Lukas Lundin and Keith Hill are part of our Explorers League. They've had success after success; they know what they're doing.

Then you've got Tullow Oil plc (LSE:TLW), which is the largest African oil explorer to come in and farm into its projects. That's what East West is going to do. You come in early and see what no one else sees. You develop these projects to the point where a major can come in and spend hundreds of millions of dollars on them, and you've just conserved your share worth. You haven't diluted your shareholder. It increases shareholder net worth by doing OPM or the JV model. That is what Africa Oil is doing so successfully, and it's going higher.

Another example is Stream Oil and Gas (TSX.V:SKO). In one of our publications, we recently told subscribers to take profits on that and we're at a 500% gain. We did the same thing with Amir Adnani, the CEO of Uranium Energy Corp (NYSE.A:UEC). Our subscribers' gains were over 1,000% on that specific investment. You have to take some profits off the table. But the story got so good that we just put it as a buy again. Amir Adnani is a name people should definitely watch; it's in our "Top 10 Under 40 list," which can be read for free at www.caseyresearch.com.

TER: Is Africa Oil to the point where institutions are coming in yet?

MK: It's starting to get the institutions in. The company is now attracting the attention of the biggest and smartest institutions in the world of oil exploration.

TER: You also wrote about uranium making a comeback. There are several uranium companies in the booths at this conference. Please tell us about what you're seeing.

MK: The most recent recommendation in our newsletter was Denison Mines Corp. (TSX:DML; NYSE.A:DNN). We said buy under $1.30. The company popped over $2.30. Most recently, we said to take a Casey Free Ride. We've had big success with Hathor Exploration Ltd. (TSX.V:HAT). And Uranium Energy has been a free ride.

Some of the best management teams in uranium are Ted Trueman with Pitchstone Exploration Ltd. (TSX.V:PXP) and Rick Kusmirski with JNR Resources Inc. (TSX.V:JNN). These guys have spent their lives in uranium. But they are not good promoters—they're good explorers. They will make a discovery; it's just taking time, but that's the exploration game.

Uranium is still not loved. It's unpopular but we've had big success with Hathor, which is a free ride. But if I were to buy a uranium company today, it would be the small micro caps like JNR and Pitchstone.

TER: What do you see for JNR, which is still looking for uranium, compared to Hathor and Denison, which are producing?

MK: Hathor's not producing. Denison has facilities in the Athabasca and in Utah. I see the next near-term producer being Amir Adnani's Uranium Energy Corp. It's going to start out producing about 1 million pounds (Mlb.) uranium a year. Within three or four years, it'll get to 3 Mlb.

Unfortunately, JNR and Pitchstone have uranium but not in large economic numbers. Until they get to the magnitude of Hathor, which found a great discovery, JNR and Pitchstone won't get that type of promotion or value in their stock. Right now, Pitchstone is trading 2x–3x cash in the $0.36 range.

TER: Another company is Ur-Energy Inc. (NYSE:URG; TSX:URE). When I spoke with the company, I learned that, in the U.S., we've burned something like 55 million tons (Mt.) of uranium. We produce only about 12.5 Mt., so a lot of that uranium is being imported.

MK: The year 2013 will be a very important year in the energy world. That is when the HEU Agreement for uranium will be renegotiated. It is also when the government will take another look at the American Recovery and Reinvestment Act for the green energy companies.

The HEU Agreement involves the Russians taking their nuclear warheads, blending them down and converting them into fuel. People forget that the U.S. has 3x the number of warheads as Russia. Will America down blend its own warheads? I don't know. America doesn't have the actual physical, logistical infrastructure to do it within the country. Russia has that infrastructure. America would have to send its warheads to Russia to get uranium back. What a funny result of the Cold War. But in all seriousness, I think you're going to see uranium going sideways. If you're a long-term investor, start picking up these companies on the cheap because they are cheap right now.

TER: If the U.S. decides to downgrade its nuclear weapons, wouldn't that drop the bottom out of the uranium price?

MK: It would; but, as I said, the infrastructure is not in place to do so. I'm pretty sure that every American is going to stand up and say, "No, we're not sending our weapons to Russia to get down blended."

TER: If we're importing most of our uranium, is there any distinct investment advantage to investing in U.S. uranium?

MK: Yes, there is. Look at Uranium Energy Corp. When we first recommended the company, it was $0.25. It's at $4.45 now. That's a nice win. Why? Because Uranium Energy Corp. is going to be America's next in-situ recovery (ISR), low-cost producer.

America's problem is that most of the prior production was conventional hard rock. That costs about US$40–$45 to produce. ISR is unconventional; it's an unconventional technique. You can do it for under US$30/lb. There's upside there. You will see a lot more of the word "unconventional," which means it's not the standard or "old" way of doing things. Rather, it uses new, more-proven modern techniques and, eventually, the newer unconventional techniques will replace the older ones.

You look at Denison's White Mesa Mill, and the company can't really make money at $40/lb. uranium. That's its cost. What's saving Denison is the vanadium byproduct—it's getting quite the upside there. So you're completely right. You want to invest because companies like Denison and UEC are going to be the cornerstone of American production. But, at US$50/lb., Denison starts making some real money—especially with its vanadium as a sweet kicker.

TER: A theme throughout our discussion is unconventional technology. You mentioned Reservoir Capital Corp. (TSX.V:REO), which has run-of-river hydro, the last time we chatted.

MK: That's not really unconventional; run-of-river hydro has been around for a long time. It's an old technology—a proven technology. Run-of-river is my second favorite green energy. It's also economic without government subsidies. The difference between run-of-river and geothermal is that geothermal has a larger baseload. However, run-of-river is a lower upfront cost.

We had a very successful run with three run-of-river companies in our newsletter. Plutonic Power Corp. (TSX:PCC) was a more than 100% gain; Swift Power Corp. got bought out at a nice gain and Reservoir also has been a huge success. We've more than doubled our money in Reservoir and recently recommended the company again through our alert service and our newsletter. Reservoir is a run-of-river developer in Serbia with geothermal projects in Bosnia and mining projects in Serbia. The company will likely spin out its mining projects, as well as its geothermal. The big upside for Reservoir Capital will be when it signs its power purchase agreement (PPA). If it can do that within the next six months, you will see a lot of institutional interest in the company.

So what do you invest in? You want to invest in juniors that don't really have the attention of the big institutions because, when institutions come in, it'll be like Africa Oil, Copper Mountain or Cuadrilla. These companies will be 4x, 5x, 6x or 7x the value because the institutions come in and want to do a big financing. If that happens, Reservoir will be well north of $1. I could see it doing the next institutional financing north of $1.50 if it can get a good PPA.

TER: How close is Reservoir to a PPA?

MK: I think you'll see that within the next six months; but, really, I have no idea as these things can take a long time.

TER: What's the probability that it won't happen?

MK: These juniors are all high-risk ventures. What is the risk? Well, I think there's a better chance that it will happen than it won't.

TER: One of the pieces of advice you give investors is to sell and take a Casey Free Ride. But you also say to play only with money you're willing to lose. So, what do you put your money in if it's not in the risk part of your portfolio?

MK: It's difficult for me to compare myself to someone who doesn't live, eat and breathe this business the way I do. Outside of my real estate holdings, I have cash. All the rest is in junior resource stocks. I believe that if you invest in companies that don't yet have the institutional interest but do have great management and people, you will do well. That's the key. You have to invest with people who've done it before and who invest heavily in these companies personally. When you look at the winners like Ross Beaty, Lukas Lundin or Robert Friedland, they are always the largest shareholders in their deals. That's what winners do. It's important to follow that formula.

TER: Very good Marin. Thank you for your time.

Investment Analyst Marin Katusa is the senior editor of Casey's Energy Report, Casey's Energy Opportunities and Casey's Energy Confidential. He left a successful teaching career to pursue what has proven an equally successful—and far more lucrative—career analyzing and investing in junior resource companies. With a stock pick record of 19 winners in a row—a 100% success rate last year—Marin's insightful research has made his subscribers a great deal of money. Using his advanced mathematical skills, he created a diagnostic resource market tool that analyzes and compares hundreds of investment variables. Through his own investments and his work with the Casey team, Marin has established a network of relationships with many of the key players in the junior resource sector in Vancouver. In addition, he is a member of the Vancouver Angel Forum, where he and his colleagues evaluate early seed investment opportunities. Marin also manages a portfolio of international real estate projects.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

DISCLOSURE:
1.) Karen Roche of The Energy Report conducted this interview. She personally and/or her family own shares of the following companies mentioned in this interview: None.
2.) The following companies mentioned in the interview are sponsors of The Energy Report or The Gold Report: Ram Power, Nevada Geothermal, Copper Mountain, Uranium Energy Corp and Reservoir Capital.
3.) Marin Katusa: I personally and/or my family own shares of the following companies mentioned in this interview: Copper Mountain, East West Resources, Nevada Geothermal, Reservoir Capital. I personally and/or my family are paid by the following companies: None.
The Energy Report - http://www.theenergyreport.com - a unique, free site, featuring summaries of articles from major publications, specific recommendations from newsletter writers, analysts and portfolio managers covering the fossil, nuclear, renewable, and alternative energy sectors. We welcome your comments mailto:newsletters@theenergyreport.com
The Energy Report is Copyright © 2010 by Streetwise Inc. All rights are reserved. Streetwise Inc. hereby grants an unrestricted license to use or disseminate this copyrighted material only in whole (and always including this disclaimer), but never in part. The Energy Report does not render investment advice and does not endorse or recommend the business, products, services or securities of any company mentioned in this report. From time to time, Streetwise Inc. directors, officers, employees or members of their families may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise. Streetwise Inc. does not guarantee the accuracy or thoroughness of the information reported.
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Now, both gold and silver traded a lot lower just prior to this spike and looked a tad gloomy as investors were nervous about the possible outcome of the elections and QE2. However, our options team remained focused and issued a buy signal stating which options contract to buy, the series, the strike price and how much to pay for them. These contracts, which are barely a day old are now trading 91% higher than when we fired out that buy signal putting a huge smile on our subscribers faces.

If you have got something better then please tell us about it, if not, then please give some consideration to joining our winning team.


Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Monday
Nov012010

Denison Mines Corporation up 3.33% Today

DNN Chart 02 November2010.JPG

As we can see from the above chart Denison Mines Corporation (DNN) has now doubled in price since July, also note that the volume of trade is increasing which bodes well for Denison's future progress. The technical indicators are a tad overbought but nothing that some sideways consolidation cant resolve. The RSI is currently standing at 64.77, so there is still room for some upward movement in the stock price.

Taking a quick look at just what others are saying regarding Denison Mines Corporation (DNN) we have the following four differing opinions as below:

Thomson Reuters: Under Perform
Smart Consensus Report: Hold
Market Edge Second Opinion: Long
Raymond James has raised Denisons target price to $2.60 from $2.40.

No real change since the last time we checked on these forecasts and nothing conclusive here so we all need to do the work. Our opinion, for what its worth, is that Denison will continue to make progress and should uranium prices gain any sort of traction then we would expect Denison to do very well indeed.

The spot price of uranium is improving as we can see on the chart below, so, hopefully, things are looking up for Denison Mines and this sector in general, so you just may start to consider acquiring a few more of your favourite uranium stocks on a gentle but steady basis. Layering in over the next few months could prove to be a successful strategy as this tiny sector comes out of the doldrums.

Uranium Spot price Chart 02 November 2010.JPG

We covered Denison in a bit more detail recently in an article entitled: Denison Mines Corporation: Up 7.32% Today on heavy volume



We purchased Denison Mines back in January 2009 for $1.66 so we now have a paper profit of 29.94%, so at least its a step in the right direction. We may pick up a few more on dips in the future, but we have yet to make that decision. We will of course keep you posted if we do decide to commence buying in earnest.

Denison Mines Corporation trades on the AMEX under the symbol of DNN and on the Toronto Stock Exchange as DML.

Market capitalization is $737.19 million, average volume is sub 1.0 million shares traded, however, spikes can see 3.0 million shares change hands, 52 week high $2.24, 52 week low $1.08, closed yesterday at $2.17.


Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
Tuesday
Oct262010

Rick Rule: Courage of Conviction

Source: Karen Roche of The Energy Report 10/26/10
http://www.theenergyreport.com/pub/na/7698

Rick has a few interesting points to make about uranium so dont miss them!

Rick Rule and Sam Kirtley in Auckland recently.JPG

Rick Rule has mastered his fear. A renowned resources investment manager, Rick likes underdog sectors that have fallen out of favor with the wider investment world and has the fortitude to hold those stocks through volatility. In this exclusive interview with The Energy Report, Rick explains why he likes the pummeled natural gas sector and why he hopes he loses money on his sizable bullion holding.

The Energy Report: I attended your speech at the recent Casey Conference, wherein you professed a love of bear markets because everything is cheap. Can you explain further?

Rick Rule: People draw psychological comfort from increasing share prices; but, if trying to increase wealth, they also have to augment their assets. Assets are cheap during bear markets and expensive during bull markets. The virtues of bear markets are fairly obvious—assets are cheap and customers (the consumers of assets and providers of capital, if you will) are afraid. Companies are more willing to offer inducements for you to buy financings, such as long warrants. Another bear-market advantage is that asset markets become more and more constrained, which go to stronger players with established management teams.

TER: Do you think we're in a bear market? Investors have had some pretty nice returns this year.

RR: No. I think we're in a raging bull market in the resource sector. It's arguable that some sectors of the general securities market are in a bear market; but even that market has been very generous relative to what I think the economy would sustain.

TER: If we're in a raging bull market in resources, should investors be buying resources?

RR: There's always a bear market somewhere. The resources sector is a broad one, running the gamut from conventional to alternative energy, agriculture to agricultural minerals and forestry. Under the broad heading of "resources," some sectors are extremely strong, read expensive and are weaker, read cheap. We go to the out-of-favor sectors rather than the in-favor sectors; and we're finding adequate opportunities in certain aspects of the natural resource business.

TER: Can you briefly summarize the in- and out-of-favor resource sectors?

RR: The most in-favor portion of the precious metals sector seems to be large, very low-grade gold deposits that didn't stand a chance when gold was $500—or even $1,000—an ounce. But perhaps they stand a chance now that gold is over $1,300/oz. Those deposits have become extraordinarily popular of late, so we're avoiding them like a plague. That isn't to say that gold won't go to $1,600 or $1,700 an ounce and money won't be made on these; but I think the market capitalization of those opportunities exceeds a risk-adjusted price that I'd be willing to pay.

On the other hand, sectors like alternative energy—hydro and geothermal—continue to be cheap and are selling below risk-adjusted net asset values (NAVs). We're attracted to that. Although early, we're beginning to walk back into the extremely unpopular natural gas sector.

The entire conventional energy sector in Canada in the sub-$300 million market-cap range is very cheap. We're looking at companies in the range of about 2,000 barrels per day (bpd). If we buy some that aren't too highly leveraged in the next two or three years, they will be taken over by their bigger brethren, which is a trend we've played before to good effect.

We're also very interested in the uranium sector. We had extraordinary luck with that sector 15 years ago, before anybody cared about it. When that sector returned to favor, we were very aggressive sellers. The uranium sector went from 5 junior companies to 500 companies, which was problematic because there were roughly 20 competent management teams at the time.

TER: Didn't the commodity price grow dramatically, as well?

RR: That was part of it, but there are some less-rational explanations. I think most of the mania that occurred in the stocks really stemmed from the fact that the first stock to run, Paladin Energy Ltd. (TSX:PDN; ASX:PDN), went from $0.05–$10. Yes, the commodity price ran but it ran from an unsustainably low price to one that was unsustainably high. During the unsustainably high price period, people wanted to believe they had uncovered a perpetual money machine.

The thesis regarding uranium pricing and world energy security is extremely attractive. At the same time, the capital raised by the industry so cheaply from 2003–2007 has been deployed. Paradoxically, the same speculators who put up all the money are now disgusted and selling before they get to recognize the benefit. We're very attracted to that.

TER: To what extent does the uranium market comeback depend on continued electrical demand?

RR: I think that's critical. One thing that protects nuclear power demand is that it's likely the cheapest power to generate in the world.

TER: A lot of uranium companies disappeared when the price went down. Now that the industry has been flushed out, is it safe to say most remaining players will make discoveries?

RR: Most companies won't have a discovery, so the discovery cycle won't pertain to the industry as a whole. I think around 90–100 listed companies worldwide are at least still pretending to be active in the uranium space. I wouldn't expect more than 10 of them to make a discovery. That means 10% or less of the active participants will generate economic value, but some of the value they generate will be spectacular. This is a game that should be played only by people who have the knowledge to play it.

TER: Compared to other energy sources like geothermal and natural gas, where does uranium fit into your out-of-favor sectors?

RR: Currently, I think uranium, natural gas and geothermal are the most out of favor. There's an awful lot of room in the next 18 months to position in uranium stocks that will do extremely well over a three- to five-year timeframe. You have to buy the stock with the view that you're going to get some validation in two years and big validation in three–five years. A lot of speculators don't have sufficient courage of conviction to be in a stock for that long.

TER: You are perpetually early to the market. You're saying three–five years, but are you really looking at a longer timeframe?

RR: No, I don't think so. My clients are frequently bored, and then elated. Most speculators experience trauma holding stock over a long weekend. My way to manage risk is ensuring that I buy assets cheaply. I get into investments before the crowd is interested in them—sometimes a long time before. That technique has worked very well for me. I'd rather be as early as I was in uranium and have to wait two–three years for a 2,000% run-up than be late and endure an 80% decline.

TER: Is the geothermal market large enough to take off or too small to garner much attention?

RR: I don't think it will ever garner widespread investor interest, but it is extremely lucrative. Geothermal is the first resource I've ever been involved with that has widespread social and political acceptance. Political acceptance surrounding the world of "green" energy has led to both political and social acceptance of paying a premium for it.

In Imperial County, California, we modeled the power purchase agreement (PPA) rates that are being offered for "green" energy on geothermal projects. We model 20% unleveraged internal rates of return (ROR)—very high due to high power purchase agreements. At the same time, the industry's cost of capital is being subsidized by the federal government with equity grants of up to 30% of a project's allowable expenditures and a Department of Energy loan of up to 80% of project revenues. The numbers in geothermal are very compelling: 18%–20% internal ROR on a project basis and 5% capital costs. Given the relatively low risks associated with geothermal developments, the guaranteed ROR between the unleveraged project returns on the cost of capital are probably the most attractive risk-adjusted returns I've ever seen in the resource industry.

TER: With such high returns, why isn't there more geothermal development?

RR: The industry is so new that people are just starting to learn about it. I'm on the phone every week with major U.S. utilities or major international power groups. Big power producers are circling the industry. Three weeks ago, a benchmark agreement was reached wherein Enbridge Inc. (NYSE:ENB), a large Canadian power producer and pipeline owner, joint-ventured into a project controlled by a geothermal junior. The pros in the industry are seeing that these assets are worth two–three times as much on a standalone basis as they are in these public vehicles.

TER: There aren't many geothermal producers in the U.S. Is the sector a relatively short-term opportunity if major power producers are circling the industry to make acquisitions?

RR: I think it may be, at least in the U.S. There are five public small-cap geothermal companies, which I expect will attempt to merge with one another or be acquired by major power producers. Perhaps that will open up a second round of more-speculative geothermal activity in which companies actually explore for geothermal rather than resurrecting projects already explored by major oil companies in the 1970s. It will also open up capital markets for geothermal activities outside of the U.S. in Guatemala, Nicaragua, Costa Rica, Panama, Chile, Peru, the Philippines and Indonesia. I think the second round for geothermal, after the U.S. companies get gobbled up, will be the internationalization of the industry as capital markets become familiar with geothermal.

TER: Round one for geothermal is U.S.-based, but round two will be international?

RR: That's correct. A unique set of circumstances exist in the U.S. with a lot of geothermal prospectivity in the western states: U.S. acceptance of geothermal energy,
the desirability of "green" energy manifesting high PPAs and federal incentives leading to low capital costs. Those factors aren't present anywhere else in the world. Other parts of the world are less developed for geothermal energy. They probably represent better exploration terrain than the U.S., particularly places like Indonesia, the Philippines and Chile.

TER: I doubt there's a sector more out of favor than natural gas. Could this sector take off?

RR: I think we're about two years early, which is just about right for me. Technological advances have allowed companies to produce gas out of shales that hadn't been accessible before and unleashed a tremendous supply of natural gas, driving down the price. The big component will be increasing demand. Paradoxically, that can be a function of increasing reliance on alternative energy. Many of the alternative energies that we're using are intermittent producers. Solar, for example, has to deal with a very simple problem called night. The sun doesn't shine at night, but people want power at night. We have to make up the power we don't get from solar with some other energy source. The easiest and cheapest interruptible, intermittent power supply we have is natural gas, which, fortunately, is in abundance.

TER: I'm surprised that's where the demand will come from given T. Boone Pickens is trying to convince the transportation industry, specifically trucking, to convert to natural gas.

RR: Your point is very prescient. Pickens is trying to convince the U.S. government to finance the conversion. I don't think it needs to do that. Gas is enough cheaper than diesel that the market will work the transfers. Using natural gas as a motor fuel is a chicken-and-egg conundrum. It costs money to convert gas stations to sell nat gas. However, until it's available at gas stations, you won't be able to put it in a vehicle.

The savings to the nation's long-haul trucking fleet from converting from diesel to natural gas could be as much as half. I think that you'll start to see real conversion in the U.S. within five years. That'll be the magic moment for natural gas.

TER: Gasoline prices aren't high enough to convince individual drivers to start incurring the conversion costs now?

RR: I suspect the cost of running an automobile on natural gas would generate a 50% fuel savings because it is astonishingly less expensive than gasoline. I suspect natural gas will be a less heavily taxed motor fuel than gasoline. The discount to gasoline and the tax savings could easily generate a market in which natural gas was available at 40% of the price of gasoline. I think that 60% savings on a fuel bill would be sufficient inducement to convince many to change.

TER: So many positives, and yet the media focuses on nat gas' collateral issues—fracking and gas in groundwater. Is that a red herring or just something the industry needs to overcome to achieve widespread use of natural gas?

RR: I think it's both. A lot of the objection to water formation damage from fracking comes from people who don't understand anything about the fracking process. Having said that, fracking uses enormous amounts of water. The oil and gas (O&G) industry has been woefully deficient in recycling treatment water. What they do is take a bunch of this good, clean, cheap water and make it into dirty water and dispose of it. Then they get a bunch of good, cheap, clean water and they wreck it again. The industry will have to do a better job of recycling process water it uses in fracturing.

Ironically, that's less of an issue now than the concern that fracking O&G reservoirs will pollute freshwater aquifers. O&G reservoirs and the freshwater aquifers are typically separated by thousands of feet of rock, so the risk of underground fracture channeling from the O&G reservoir into a freshwater aquifer is extremely slim.

TER: We've discussed how investors must be patient to allow these industries to reward them with returns. What do you suggest investors do in the interim?

RR: In periods when volatility is high, prices across many markets are high and interest rates are very low; so investors have to hold a greater amount of cash than most consider reasonable. Investors tell me they think holding cash is extremely painful due to the low interest rate and the inflation rate. Investors rightly point out that holding cash exposes them to a -3% to -5%/year real ROR. My response to that is that it's likely a crash could happen in the next two–three years. If it doesn't happen, market swings of broad indexes of up to 20%–40% could occur.

Holding large amounts of cash is good for two reasons: 1.) Losing 3% a year is better than losing 40% in a precipitous decline; and 2.) In response either to a crash or volatility, having cash available to pick up bargains when the market becomes attractively priced is something people need to consider. Think of cash the way a hunter thinks of ammunition during hunting season. It does you no good to find a deer if you don't have any cartridges. Cash is your cartridge.

Although gold and silver prices are very high, I believe bullion is an important part of a cash component. This is the most honest advice you can get from a broker because I don't sell gold or silver bullion. Bullion comprises about 25% of my cash holdings and it's going up. I would be delighted if I ended up losing money on my bullion, which is something you own because you're afraid. I'm afraid the U.S. dollar and the other fiat currencies are on the way to some zero-like price. I hope I'm wrong, but the circumstances that would cause gold to go to $2,000—or even $4,000—an ounce, are extremely unpleasant. So, ironically, I suggest people hold relatively large amounts of bullion while praying they don't make money on it.

TER: Is it possible that investors getting into these sectors now could still lose 20%, 30%, even 50% of the value on those investments before it comes back to them?

RR: Absolutely. My experience in uranium stocks was just that. From 1998–2000, I was a big buyer of the uranium stocks. Between 1998 (when I got in) and the bottom in 2001, I suspect I sustained 20%–30% losses. Mercifully, I had the courage of my convictions and bought lots more. I was rewarded with 2,000% and 3,000% gains. If you're not in position once the market starts to move, you can get left behind very easily.

TER: What would you tell investors holding lots of bullion or cash as they reposition their portfolios for what could be a mild upswing, a bigger recession or the complete collapse of fiat currencies?

RR: Be very careful about long-term bonds. Investors are getting pushed further out of the maturity cycle in bonds to try and grab more yield. I think that's suicidal. When interest rates turn around and go up, investors holding long bonds will absolutely get massacred. Sophisticated investors should be participating in private placements rather than secondary market transactions simply to get the warrant, which is the right, but not the obligation, to buy more equity at a fixed price over a fixed period of time.

The next five years will be both wonderfully rewarding and terribly treacherous. I think companies' stocks will go up or down 20%–30% over relatively short periods of time for almost no reason. Investors have to be both financially and temperamentally ready to deal with that volatility; if they're ready to deal with such volatility, it becomes a bonus and benefit for them. Goods go on sale more frequently than occasionally.

In my talk at the Casey Conference in early October, I reminded the attendees that the greatest bull market I've ever experienced was the gold bull market from 1971–1981 when gold ran from $35/oz. to $800/oz. Right in the middle of that spectacular bull market, we had a cyclical decline of 50%. The gold price halved from $200/oz. to $100/oz. Some investors got the cycle right and were long gold; but, because they didn't have the courage of their convictions, they still went broke—a true tragedy. Volatility has been a wonderful tool for me over the last 20 years.

TER: So, investors with speculative money to invest should look at private placements. How do you advise investors find brokers in good private-placement deal flow?

RR: I, of course, would recommend my own firm first, but there are four or five brokers in the U.S. with reasonably consistent access to Canadian, Australian and British private placements. Reasonably sophisticated clients can find the best, unbiased source of access to those brokers by placing a call to the investor relations department of the companies they own and get recommendations from them and see if there's any crossover.

TER: Excellent tip. Thanks so much for your time today, Rick.

Rick Rule is the founder of Global Resource Investments, Ltd., which he recently agreed to sell to Sprott Inc. Rick began his career in the securities business in 1974, and has been principally involved in natural resource security investments ever since. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture. His research and brokerage capabilities are frequently recommended by distinguished financial newsletter writers such as Bob Bishop, Jim Blanchard, Doug Casey, Adrian Day, Richard Maybury, Paul Van Eeden, Mark Skousen, Jack Pugsley and others.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page

DISCLOSURE:
1.) Karen Roche of The Energy Report conducted this interview. She personally and/or her family own shares of the following companies mentioned in this interview: None.
2.) The following companies mentioned
in the interview are sponsors of The Energy Report: None.
3.) Rick Rule: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None.

Streetwise - The Energy Report is Copyright © 2010 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
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Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.

SK Chart 23 Oct 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Monday
Oct252010

Uranerz Energy Corporation: Up 9.37% Today

URZ Chart 26 October 2010.JPG

Uranerz Energy Corporation (URZ) continued to make good progress today putting on $0.18 to close at $2.10 for a gain of 9.37%. When we consider that this stock was trading at around $0.90 in July, although for a short time only, it has doubled in price since then.

Taking a quick look at the chart above we can see that a golden crossover is about to take place, whereby the 50dma moves up and crosses through the 200dma, which should be positive for the stock. The technical indicators are high, however, the RSI is standing at 67.66 which is still below the '70' level, which we would consider to be in the overbought zone. However these indicators can remain high if the fundamentals are positive. For instance the spot price for uranium has been improving for the last three months as the chart below indicates.

Uranium Spot Price Chart 26 October 2010.JPG

On the news front URZ recently announced the completion of an independent National Instrument 43-101 technical report for its wholly-owned Reno Creek property in the Powder River Basin of Wyoming, U.S.A. The Technical Report estimates "measured and indicated" mineral resources of around 4,292,948 pounds of uranium (eU3O8) at an average grade of 0.056% and an "inferred" mineral resource of approximately 142,167 pounds at an average grade of 0.039%.



On the companies web site they list their Highlights as follows:

Strong management and technical team with expertise in the in-situ recovery uranium mining method. Team members have years of experience in all phases of uranium exploration and development.

License and Permit applications were submitted to State and Federal regulatory agencies for ISR uranium mine development in 2007 on two projects; the Company expects to receive these licenses during the second half of 2010, with an anticipated production start in late 2011 or 2012.

Long-term contracts have been signed for the sale of uranium with two of the United States' largest nuclear operators, including Exelon (operates the largest nuclear fleet in U.S. and third largest in the world).

The Company controls a large and strategic land position in the Powder River Basin of Wyoming, U.S.A., an area well known for ISR uranium mining.
Small capitalization with only 64,194,887 shares issued and outstanding, with over US$22 million in the Company's treasury.

The Company continues to advance the Permit to Mine (WDEQ) and Source Material License (NRC) applications for the Nichols Ranch ISR Uranium Project, now believed to be in the final stages.

Uranerz has a Market Capitalization of $134.81M, a 52 week price range of $0.87 - $2.24 with average Volume of around 800.000 shares traded, with 64.19 million shares outstanding.


Uranerz Energy Corporation trades on the NYSE Amex: URZ; TSX: URZ and in Frankfurt: U9E.


Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

SK Chart 23 Oct 2010.JPG
Friday
Oct222010

Depression Within a Depression

three casey 23 Oct 2010.JPG

By James Quinn, Contributor, The Casey Report

Regular Casey Report contributor James Quinn is the head of strategic planning for one of the world's most prestigious business schools and the host of TheBurningPlatform.com blog. In this article, he is presenting historical indicators that may tell us what’s in store for the U.S. economy.

In recent months, worshippers at the altar of Keynes have been hyperventilating over the possibility Congress will run a deficit of “only” $1.5 trillion in 2010. They have issued dire proclamations about a replay of the 1937-1938 Depression within the Great Depression. White House favorite and #1 Keynesian on the planet, Paul Krugman, declared that not borrowing an additional $100 billion to hand out to the unemployed for another 99 weeks would surely plunge the country into recession again:
 
“Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s. Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession.” – Paul Krugman in NYT


So did Roosevelt’s attempt to balance the budget in 1937 cause the second major downturn in 1938? I’m a trusting soul, but I prefer to verify what is being peddled to me by any economist, especially Paul Krugman. 
 
Ghost of Keynes Past

Today’s Keynesian economists have convinced boobus Americanus that the Great Depression was caused by the Federal Reserve being too tight with monetary policy and the Hoover administration not providing enough fiscal stimulus. Ben Bernanke and Barack Obama used this line of reasoning to ram through an $850 billion pork-laden stimulus package, as well as the purchase of $1.2 trillion of toxic mortgages by the Federal Reserve.
 
The only trouble is that this storyline is a complete sham.
 
The fact that colossal stimulus spending, zero interest rates, the purchase of over a trillion in toxic assets by the Fed, and the loosest monetary policy in history have done absolutely nothing to revitalize the economy, has proven that Keynesian policies have been a wretched failure. This is not a surprise to Austrian school economists.
 
Keynesian policies failed during the Great Depression, and they are failing today. An economic catastrophe caused by loose monetary policies, crushing levels of debt, and appalling lending practices cannot be solved by looser monetary policies, issuance of twice as much debt, and government commanding banks (or, in the case of Fannie and Freddie, “commandeering”)  to make more bad loans.
 
Ludwig von Mises described what happened in the 1920s and 1930s. His explanation accurately illustrates the situation in America today.
 
"There is no means of avoiding the final collapse of a boom brought on by credit and fiat monetary expansion. The only question is whether the crisis should come sooner in the form of a recession or later as a final and total catastrophe of depression as the currency systems crumble.”

The Roaring Twenties

They don’t call the 1920s roaring because money wasn’t flowing freely and consumers were practicing frugality. The newly created Federal Reserve expanded credit by setting below-market interest rates and low reserve requirements that favored the big Wall Street banks. The Federal Reserve increased the money supply by 60% during the period following the recession of 1921. By the latter part of the decade, "buying on margin" entered the American vocabulary as more and more Americans overextended themselves to speculate on the soaring stock market.
 
The 1920s marked the beginning of mass production and the emergence of consumerism in America, with automobiles a prominent symbol of the latter. In 1919, there were just 6.7 million cars on American roads. By 1929, the number had grown to more than 27 million cars, or nearly one car for every household. During this period banks offered the country's first home mortgages and manufacturers of everything – from cars to irons – allowed consumers to pay "on time." Installment credit soared during the 1920s. About 60% of all furniture and 75% of all radios were purchased on installment plans. Thrift and saving were replaced in the new consumer society by spending and borrowing.
 
Encouraging the spending, the three Republican administrations of the 1920s practiced laissez-faire economics, starting by cutting top tax rates from 77% to 25% by 1925. Non-intervention into business and banking became government policy. These policies led to overconfidence on the part of investors and a classic credit-induced speculative boom. Gambling in the markets by the wealthy increased. While the rich got richer, millions of Americans lived below the household poverty line of $2,000 per year. The days of wine and roses came to an abrupt end in October 1929, with the Great Stock Market Crash.
 
Between 1929 and 1932, the market fell 89% from its high. The Keynesian storyline is that Herbert Hoover’s administration did nothing to try and revive the economy. It took Franklin Delano Roosevelt and his New Deal Keynesian policies to save the country. It’s a nice story, but completely false. Between 1929 and 1933, when Roosevelt came to power, the Hoover administration increased real per-capita federal expenditures by 88%, not exactly austere.
 
Excessive Consumer Spending

When examining the BEA chart of GDP from 1929 to 1939, some fascinating similarities with today’s economy leap out. In 1929, consumer expenditures accounted for 72.3% of GDP, confirming that the much-commented-upon American consumerism is not a modern development. In fact, consumer spending peaked at 81% of GDP in 1932 and remained above 70% during the entire depression.
 
By 1950 consumer expenditures had subsided to 64% of GDP. In 1960, they had fallen to 63% and edged up to 64% by 1970, where they remained until 1980. By 1990 they had ticked up to 66% and by 2000 had reached 68%. The modern-day climax appeared to many to have been reached in 2007 at 70% of GDP. But in a replay of the New Deal playbook, where much of the consumerism was funded by make-work projects and federal transfer payments, the federal government has thrown billions of dollars at consumers to buy houses, cars, and appliances. Consumer expenditures as a percentage of GDP actually rose to 71% in 2009. It should be readily apparent that until consumer expenditures are narrowed to a level that leads to a sustainable balanced economy, the current depression will continue indefinitely.


Bureau of Economic Analysis National Income and Product Accounts Table 23 Oct2010.JPG

Bureau of Economic Analysis National Income and Product Accounts Table
Table 1.1.6A. Real Gross Domestic Product, Chained (1937) Dollars [Billions of chained (1937) dollars]


The Depression Within the Depression

The Great Depression lasted from 1929 until 1940. What is not well known is that GDP was at the same level in 1936 as it had been in 1929. In no small part because GDP soared by 37% between 1933 and 1936. The unemployment rate in 1929 was 5%. In 1936, even after GDP had recovered to pre-depression levels, the unemployment rate was still 15%. It spiked back to 18% in 1938 and stayed above 15% until World War II. Tellingly, in 1936, private domestic investment was 21% below the level of 1929.
 
By contrast, government expenditures surged by 46% between 1929 and 1936. With the government creating agencies and hiring people into make-work projects, private industry was crowded out. The extensive governmental economic planning and intervention that began during the Hoover administration was expanded significantly under Roosevelt. The bolstering of wage rates and prices, expansion of credit, propping up of weak firms, and increased government spending on public works prolonged the Great Depression.


two casey 23 Oct 2010.JPG


The evidence strongly contradicts the notion promoted by Krugman and other Keynesian worshippers that the supposed 1937-38 Depression within the Great Depression was caused by Roosevelt becoming a believer in austerity. In fact, GDP only dropped by 3.5% in 1938 and rebounded by 8.1% in 1939. What actually collapsed in 1938 was private investment, which fell 34%. By contrast, government spending declined by only 4.5% in 1938, confirming that Roosevelt did not slash spending. To the extent that he eased up on the accelerator, it was by cutting back on jobs programs like those provided by the Works Progress Administration and the Public Works Administration.
 
The reason private investment collapsed in 1938 was Roosevelt’s anti-business crusade. He denounced big business as the cause of the depression. In March 1938, FDR appointed Yale University law professor Thurman Arnold to head the antitrust division of the Justice Department. Arnold soon hired some 300 lawyers to file antitrust lawsuits against businesses. Arnold launched cases against entire industries, with lawsuits against the milk, oil, tobacco, shoe machinery, tires, fertilizer, railroad, pharmaceuticals, school supplies, billboards, fire insurance, liquor, typewriter, and movie industries.
 
The Greater Depression and Excessive Debt
see the above chart



Some Conclusions

The mainstream media’s popular narrative about the causes and cure for the Great Depression invariably start with the storyline that the stock market crash caused the Great Depression. Herbert Hoover purportedly refused to spend government money in an effort to reinvigorate the economy. Franklin Delano Roosevelt’s New Deal government spending programs allegedly saved America.
 
This storyline is a big lie.
 
The Great Depression was caused by Federal Reserve expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. When the Federal Reserve belatedly tightened in 1928, it was too late to avoid financial collapse. According to Murray Rothbard, in his book America’s Great Depression, the artificial interference in the economy was a disaster prior to the depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. Government intervention delayed the market’s adjustment and made the road to complete recovery more difficult.
 
The parallels with today are uncanny. Alan Greenspan expanded the money supply after the dot-com bust, dropped interest rates to 1%, encouraged a credit-driven boom, and created a gigantic housing bubble. By the time the Fed realized they had created a bubble, it was too late. The government response to the 2008 financial collapse has been to expand the money supply, reduce interest rates to 0%, borrow and spend $850 billion on useless make-work pork projects, encourage spending by consumers on cars and appliances, and artificially prop up housing through tax credits and anti-foreclosure programs. The National Debt has been driven higher by $2.7 trillion in the last 18 months.
 
The government has sustained insolvent Wall Street banks with $700 billion of taxpayer funds and continues to waste taxpayer money on dreadfully run companies like Fannie Mae, Freddie Mac, General Motors, and Chrysler. The government is prolonging the agony by not allowing the real economy to bottom and begin a sound recovery based on savings, investment, and sustainable fiscal policies. President Obama continues to scorn business by creating more burdensome healthcare, financial, and energy regulations.
 
Today’s politicians and monetary authorities have learned the wrong lessons from the Great Depression. The result will be a second, Greater Depression and more pain for the middle class. The investment implications of government stimulus programs are further debasement of the currency and ultimately inflation and surging interest rates. Owning precious metals and mining stocks, and shorting U.S. Treasuries will pay off over the next few years. 
 
Regular Casey Report contributor James Quinn is the head of strategic planning for one of the world's most prestigious business schools and the host of TheBurningPlatform.com blog.
----
Gleaning emerging big-picture trends by putting all the puzzle pieces together is the specialty of The Casey Report. Following the theory that only a prepared and well-educated investor is a successful investor, the team of editors analyze current and historical data – and then recommend the profit opportunities that make the trend your friend. Read more here.







Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 35 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15636.

With a 6 month subscription costing just $199, and the average return on a trade being 41.15%, one would only need to have invested $1000 in just one average trade to have paid for the cost of subscription more than twice times over!


SK Chart 23 Oct 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.