By Chris Mayer
03/11/10 Gaithersburg, Maryland – Uranium – One of the best investments you can make right now is to pick up relatively secure, low-cost uranium – the feedstock for nuclear reactors.
The demand for uranium is building in intensity like a heap of hot coals. There are already 436 reactors up and running today. And there is a surge in demand coming in the next decade from the hundred or so new reactors expected to come online. Yet the industry is about 400 million pounds short of meeting that demand, as shown in the chart below.
The market has been in deficit for years, as it burns off Cold War stockpiles, which are finite and dwindling. Another way to look at it: Uranium demand is on its way to hitting 226 million pounds per year. Yet last year, the top dogs – which make up 90% of the market – produced only about 110 million pounds of uranium.
So essentially, the industry needs to produce almost four times that to meet the estimated new demand through 2018. On an annual basis, the industry will need to about double in size.
A sidelight to this is the fact that 63% of all uranium comes from just 10 mines. This means that the global supply of uranium is susceptible to supply shocks. If one big mine floods or goes down for whatever reason, it’ll make a big wave in the uranium market.
It gets even more interesting…
Most of the best mines are already in production. As with everything else in the resource world these days, the low-hanging fruit is all gone. Future grades will be lower, meaning we’ll have to mine a lot more…Read more…
By Eric Fry
03/11/10 Laguna Beach, California – Stocks up, gold down.
Once again yesterday, investors demonstrated their preference for paper over the shiny yellow metal. The Dow Jones Industrial Average notched a slight 3-point gain, while gold tumbled about $17 an ounce.
This divergence between stocks and gold is not enormous, but it is telling. Most investors believe the credit crisis is a mere memory, and that an economic recovery is underway.
Your editor is not persuaded by this conventional wisdom. As a homegrown Californian, your editor is as eager to embrace a feel-god vibe as anyone. But this particular vibe doesn’t feel that good…or logical.
The worst of the credit crisis may have passed, but serious credit problems continue to beset the US banking system. Everywhere you turn you see an impaired loan dressed up like an Academy Award nominee.
And the economic recovery that so many folks pretend to see is nothing more than a mirage wrapped in a chimera. This so-called recovery is not a recovery at all; it is a Fed-induced bounce from “superbad” to merely bad.
Your editor is not buying this storyline, dear reader.
If he were buying anything at all he would be buying gold and/or the shares of companies that haul monetary metals out of the earth. No matter whether the US economic recovery is real or not, the tsunami of cash and credit that the Fed has unleashed on the US economy is very real…and the consequences are likely to be very inflationary.
But even if this logic eludes the Ivy League educated minds on Wall Street, it does not elude the minds that control the national…Read more…
By Bill Bonner
03/11/10 Mumbai, India – China says it is continuing to buy US bonds “every day.” It doesn’t have much choice. It earns money by selling things abroad. In fact, exports in February were up more than 40% over February ’09. This leaves it with a lot of foreign money – most of it in dollars. What can it do with so much money?
China has quietly bought stakes in America’s leading companies…and in various businesses all over the world. But the only way large amounts of US dollar cash can be readily and safely deployed is in US bonds.
That said, China could also cause one helluva problem for the US if it ever chose to do anything else.
No worries on that score, said the Chinese official in charge of its $2.4 trillion worth of foreign reserves. He says China’s holdings of US debt are normal and that there is no intention of reducing them or playing politics with them.
He surely means it. And when the dollar goes down…and when the market turns, and China feels compelled to get rid of its US bonds, he’ll be totally sincere when he explains that to the international financial press too.
Markets make opinions, as they say on Wall Street. The market in bonds and the dollar has been very good for a very long time – since 1983, to be exact. As a result nearly everyone – including the Chinese – are of the opinion that US bonds are a safe place to be. When the market changes, so will opinions.
So far, no problem. But there’s no telling how long the foreigners will continue to support the dollar. Then what? Well…it leaves quantitative easing…in which the US central…Read more…
