The Most Bullish Development For This Commodity In Years
Back in September, we told you about one of the most “hated” commodities on earth and how recent bullish developments could send prices soaring.
In short, we explained how the aftermath of the Fukushima nuclear meltdown in March 2011 led the Japanese government to immediately shut down its remaining nuclear power plants, with countries like Germany also threatening to follow suit.
#-ad_banner-#Uranium prices plunged 50% as a result.
At the time, it might have looked like the beginning of the end for atomic energy, but this wasn’t the case.
In fact, it has actually had no impact whatsoever on uranium demand. That’s because as Dave Forest, Chief Investment Strategist for Scarcity & Real Wealth, pointed out, Japanese uranium buyers have continued to accept delivery, opting to stockpile the material rather than end their supply agreements.
That’s because Japan simply has no other alternative but to use nuclear. It has historically supplied 30% of Japan’s energy, and the country would have to import an unfathomable amount of oil or gas to make up for the shortfall.
Japanese policymakers are slowly beginning to realize this, and now, things are beginning to trend up for uranium…
In our original writeup, my colleague Jimmy Butts mentioned that three of Japan’s 48 nuclear power plants cleared new safety hurdles set in place after the Fukushima disaster.
Dave has been following the news in this space closely. That’s because, as he regularly points out to readers of Scarcity & Real Wealth, the perfect time to buy a commodity is when it’s cheap, hated and about to trend upward.
And just a couple of weeks ago, I received a memo from Dave regarding news of approval for restarts for two more nuclear reactors in Sendai, Japan.
From Dave:
| “On November 7, the assembly for the prefecture of Kagoshima voted to support the local municipality in endorsing a restart of the nuclear units. Clearing one of the last hurdles for Japan’s first atomic energy capacity to come back online since the Tohoku earthquake. The decision means that — pending final safety checks — the two Sendai nuclear reactors could be operational again by early 2015. No exact timeline has currently been put forward by officials.” |
As Dave pointed out to me, the restart of the Sendai reactors would be a rallying point for sentiment in the uranium space.
And that’s exactly what happened.
Here’s more from Dave:
| “Just look at trading in the world’s most visible uranium player, Cameco. Following the announcement of the prefectural approval, Cameco’s stock jumped 11% on Friday –closing at its highest level since mid-September. Stocks directly exposed to the uranium price faired even better. With “ETF” firm Uranium Participation closing Friday at a 7-month high share price. Despite the lack of fundamental action in the market, it thus appears the coming Japanese nuclear restart may help to bounce uranium stocks out of the undervaluations they’ve been seeing lately [a]nd return these companies to more-normal trading multiples. The pickup in sentiment in this market is evident in the uranium price, [w]hich this week moved up significantly for the second week in a row — hitting $44 per pound, according to industry analysts UxC. That gives the metal a gain of $8 over the past few weeks alone. Importantly, this now puts the uranium price at its highest level since January 2013. With the metal now up nearly 60% since the low of $28 per pound it saw in June.” |
As Dave mentioned in his memo, his favorite way to play the uranium sector is with Uranium Participation Corp (OTC: URPTF). URPTF is a small over-the-counter stock. Such stocks usually come with a bit more volatility, so keep that in mind if you decide to take a stake.
Commodities can be a love/hate experience for investors. When things are good, they’re good, but when they’re bad, they tend to turn horrible. Most investors usually just forget about commodities when they’re hated, but when you can get in at the bottom of a downturn, it can pay off big-time.
It’s these kinds of little-known opportunities that Dave travels the world searching for. In fact, he’s recently stumbled upon what could be the world’s first $1 trillion boomtown. Several oil and resource-mining companies are poised to make billions from this under-the-radar hotspot. Simply put, Dave says “this could be the biggest opportunity I’ve seen in my lifetime.” To get access to some of the names and ticker symbols of these companies, follow this link.