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

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

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

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

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

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

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

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

The price of Uranium as it stands today:

CONCLUSION AND PREDICTIONS

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

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

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

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

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

18 March 2007