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Uranium Bull Market

China's Historic Power Grab... and Your Wallet

Written by Brian Hicks
Posted August 2, 2010

Look, we all know uranium isn't the sexiest story out there...

But with China loading up on it, uranium just became the hottest story of the year — and quite possibly the “supply-demand” buying opportunity of a lifetime.

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Mickey Fulp, a respected Certified Professional Geologist, believes:

Demand is exceeding mine supply right now. Obviously, there has been enough uranium to keep power plants going. One thing that's become apparent in the last few months is that utilities and governments, consumers of uranium, are carrying something on the order of 18 months' average forward supply. Historically, that supply stockpile has been more like three years. That difference may represent supply tightness, he says.

So try not to be too shocked when post-maniacal depressed uranium prices start to take off and hit $50 — maybe even $60 in five years.

Our goal here is simple: Ride the coming wave of uranium bullishness, short at the top

Uranium's parabolic move toward $140 between 2000 and 2007 was a thing of beauty.

Everyone and their grandmother was out buying uranium stocks.

Nearly 600 uranium companies started trading out of thin air on the Venture Exchange in Vancouver.

Nothing it seemed could go wrong...

Until the credit crunch and the unwinding of the global economy, which sent uranium screaming back to $40.

uranium chart 072910

Yep, like all past maniacal fascinations, this too faded under a tidal wage of misery and bankruptcy... and despair for good old grandma.

And junk uranium companies went down faster than Oprah's ratings.

But demand for uranium never really fell off, according to Wealth Daily Publisher Brian Hicks:

We can now pick at the carcass... and pick up quality names at a fraction of what they were years ago. Given the push worldwide for cleaner energy, we think it's a given that nuclear energy will be a growing component of the mix for years to come.

There's plenty of reason to get excited these days

There are three reasons for this: China, supply-demand, and a very bullish CEO.

The cause for recent uranium bull excitement is the fact that some suppliers have experienced labor concern and equipment failures, which increase expectations that supply projections will fall short.

At the same time, China has significantly stepped up its uranium buying activity... and could buy about 5,000 tones (about $500 million worth) this year, according to reports.

That news alone could send uranium to $55 a pound on limited supply and demand anticipation.

RBC Capital Markets thinks uranium could run up 32% to $55 on the supply-demand angle, too.

And according to the World Nuclear Association (WNA), China only needs 2,875 tons of uranium this year to keep the 11 reactors in operation up and running. And it still has another 24 under construction... and could have 200 total by 2030.

Heck, by 2020 alone, China demand could be up to 20,000 tons — more than a third of the 50,572 tons mined globally in 2009.

And there's still another 59 reactors being built around the world.

Russia is building 10; South Korea is building six; others are planned for Slovakia, Argentina, Finland, France, Japan, and the United States.

And then there's India, where demand could rocket to 8,000 tons, according to India's Nuclear Power Corporation.

Even better, Uranium Energy (UEC) CEO Amir Adnani is extremely bullish: "Throughout the industry, demand far exceeds supply on both a global and local-U.S. basis for now and the foreseeable future."

What's not to like here?

And who stands to benefit?

The one company set to benefit significantly is Cameco (NYSE: CCJ), the co-owner of the world's biggest uranium mine — especially with China's hunger for more material.

Plus, the company just inked a deal with China Nuclear Industry Corporation to supply a lot of uranium through 2020. It's also looking to move into India after a June deal between New Delhi and Ottawa opened the door for Canada into India.

But this isn't the only company lined up for uranium's "gold mine"...

I'll be talking about these and other opportunities for profit in the pages of Wealth Daily in the next few weeks, so stay tuned.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

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