In the past few weeks, I’ve been digging deep into uranium — talking to CEOs, geologists, government officials, and scientists. And everything supports my view that we have entered the golden age of uranium.
But before I tell you what I see in the future, let’s take a quick look at how we got here.
Uranium’s Past:
Colored Glass and
Atomic Bombs
Uranium is found pretty much everywhere — in rocks, dirt, even the ocean. It’s about as common as zinc or tin.
Indeed, uranium is about 40 times more common than silver. That means there are an estimated 40 trillion metric tonnes of uranium in the Earth’s crust. But normally it’s not concentrated in one place, making it harder to find in very large quantities.
Mankind’s romance with uranium began in 79 AD, when the metal was used to add a gorgeous yellow color to ceramic glazes that decorated a villa near Naples, Italy. This know-how disappeared with the fall of the Roman Empire, until the Germans rediscovered it in the early part of the 19th century.
You can still find this kind of “vaseline glass†in antique stores today. It has a yellow-green hue in daylight and glows bright green under ultra-violet light. It’s not dangerous … I’m told … though the more yellow it is, the more likely a Geiger counter will freak out!
Later in the 19th century, French physicist Henri Becquerel unlocked uranium’s true potential by discovering that the metal was radioactive.
From there, mankind learned that splitting uranium released energy. Fast forward a half century, and this path through time culminates with the Manhattan Project and the first atomic bomb.
Until the fall of the Berlin Wall, the prospect of nuclear weapons far overshadowed uranium’s potential as a power source. But now, we’re finally entering …
The Golden Age of
Uranium: Nuclear Power
Now’s the best time: We’re no longer going to squander this natural resource just to color glass and it’s unlikely we’re going to abuse its power to blow each other up. Instead, uranium is emerging as the fuel of the future.
Yes, the concept has been around for a while. But nuclear power hit a major barrier with the accident at Three-Mile Island in 1979. The Chernobyl disaster was the nail in the coffin. Today, we’re finally getting over those setbacks.
A sign of the times: Many who were once stridently anti-nuke are now on my side of the fence, and there are three good reasons why. I call them the “Three E’sâ€:
#1 — Economics: Nuclear power is getting cheaper and safer.
The current generation of nuclear plants is much safer than the old models. These new plants involve more safety mechanisms that automatically shut the reactor down in the event of a problem.
Plus, costs have dropped. Westinghouse, for example, reports that its AP1000 advanced nuclear plant will cost $1,500 to $1,800 per kilowatt (kw) for the first reactor, and may fall to $1,200 or even $1,000/kw for subsequent reactors. That’s less than one-third of what it costs to run the older, second-generation plants currently in use — up to $5,000/kw.
Of course, the real trick is to make nuclear power as cheap as coal or natural gas, and major companies like Westinghouse think they can do it. But even if nuclear is a little more expensive, there are hidden costs to coal-fired plants — especially the greenhouse gases and other pollutants they emit, which leads me to …
#2 — Environment: Global warming IS a major problem.
Right now, coal plants can spew hundreds of tons of heavy-metal laden ash into the air without paying fines or penalties. However, this could change very soon. Indeed, word is leaking out of the White House that President Bush is preparing a jaw-dropping U-turn on global warming.
After years of saying the facts were inconclusive on climate change, the President is said to be drawing up plans to control emissions of carbon dioxide.
Heck, his administration’s own “Climate Action Report,†published in 2002, concluded that unless global warming emissions are reduced, average temperatures will rise another 3 to 9 degrees Fahrenheit by the end of the century, bringing with it even more severe heat waves, drought, and crop damage — not to mention permanent flooding caused by rising sea levels.
Coal power is one of the worst culprits when it comes to greenhouse gases, and oil power is also an issue. But you know how much greenhouse gases come out of an operating nuclear plant? ZERO!
#3 — Energy security: Taking control of our own destiny.
Enjoy this short-term pullback we’ve seen in crude oil prices, but don’t expect it to last. The big trends are still in place, and they are pointing to higher prices.
There’s been no change in our dependence on the rest of the world for energy, especially Persian Gulf oil, and particularly Saudi Arabia. And there’s no change in the fact that the U.S. keeps importing a larger percentage of its energy supply from foreign suppliers with big chips on their shoulders.
Are there many other alternative sources of energy? Yes. But they don’t have a chance of replacing oil anytime soon. Nuclear power is the only one that’s got a solid shot at doing so.
That’s why the investment money flowing into nuclear is just beginning to gain momentum. If it continues, as I expect it will, I bet that in 10 years or so, we could tell the Saudis to kiss our collective assets.
The Time Is Right …
Let’s Make Lots of Money
Even if the U.S. does not ramp up its nuclear energy production, and even without a push from Washington, I expect we’ll see a lot more uranium mining going forward.
Reason: The world is already running an estimated uranium supply/demand gap of 42 million pounds in 2006.
All the experts I’ve talked to agree that this disparity will continue for years. The only question is how bad it’s going to be. I’m betting it will be bad enough to drive the stocks of near-term uranium suppliers through the roof.
Ditto for the uranium prices: I fully expect to see uranium hit $70 per pound next year — a 35% rise from current prices.
To put that in perspective, a 35% rise would send the price of gold to $782 per ounce … or oil to $84 per barrel.
Where could uranium go after that? $80 … $90 … even higher! Heck, in 1978, uranium topped out at $43.40 per pound —about $145 per pound in today’s dollars!
So, how can you participate in uranium’s big bull market? One way is through the Uranium Participation Corp., a Canadian fund that tracks uranium.
The symbol up in Canada on the Toronto Exchange is U. In the U.S., the symbol is URPTF on the Pink Sheets. (On Yahoo, that would be URPTF.PK).
If I’m right, and uranium rises 35% in the next year, that would be a nice return on your money.
Yours for trading profits,
Sean
P.S. For the really big potential returns in uranium, I’m targeting stocks that are leveraged to the metal. They could rack up gains of 100% or even 200% down the road. I’ll be naming some of these companies in the special uranium report I’m sending to my subscribers on Wednesday, October 4.
I’ll be selling this report — including three follow-ups — for $199. I think it would be cheap at triple the price, but if you contact us at 1-800-400-6916, and mention my name, you can reserve a copy for the low pre-publication price of $99. On October 4, we’ll email you a PDF copy so you can jump on those red-hot recommendations as soon as they come off the press.
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MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Monica Lewman-Garcia, Wendy Montes de Oca, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.
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