Prepare For A “Double Ton” On The World’s Most Explosive Commodity: The Factors Creating A Supply-Demand Crunch That Has Uranium Prices Heading For $200 A Smart Profits Research Report
From the Mt. Vernon Research Team For decades, uranium has earned itself an unwanted reputation for being nothing more than a dangerous, volatile commodity with the potential to wreak massive environmental damage and sought by terrorists with nuclear ambitions. But in recent years, it’s begun to shake off that ugly stigma and make a hugely positive impact. As the world’s energy demands have cranked up, traditional energy resources are dwindling and under intense strain. That’s led to soaring costs and a heavier focus on alternative energy sources, as well as increased environmental awareness. For example, people are now paying more attention to fossil fuels, which do more damage to the environment every single day than uranium ever has – and are turning to uranium as a highly useful and profitable fuel. In fact, uranium prices hit an all-time high of $138 per pound in June 2007 – four years after the start of one of the most remarkable bull markets in history when the price sat around $10.90. That’s a staggering 1,166% surge. Until the first week of July 2007, prices hadn’t actually registered a decline in four years. But Australia’s Macquarie Bank believes the stunning run in uranium prices isn’t over yet – and is projecting $200 per pound by 2009. The catalyst for this price explosion is simple. Demand is far outpacing current supply levels, which have dropped significantly in recent years. The key questions: How long could it last? And how can investors profit from uranium? Falling Supply + Rising Demand = Surging Prices In the uranium industry, the fact is… the worldwide supply is currently unable to keep up with soaring demand. The world’s leading uranium-mining countries have both seen a decline in production in recent years. Between 2005 and 2006, uranium mine production dropped from 11,628 tons to 9,862 tons in Canada, and 9,516 tons to 7,593 tons in Australia. In 2006, the Cigar Lake mine in Canada, the world’s largest undeveloped uranium deposit, suffered a serious flood that halted the extraction of 7 million pounds of uranium that were expected to hit the market in 2007. Even worse, another 12 million pounds of uranium will come off the market through 2009. What used to be a uranium surplus has also evaporated… In 1993, the United States and Russia agreed that an alternative energy source would be to dismantle nuclear warheads left over from the cold war and use the uranium to power nuclear reactors. This resulted in an excess supply of uranium for more than a decade, but now more than 80% of that excess has been used up. According to the market's leading journal, The Uranium Market Outlook, above ground uranium is at an all-time low. As reasons for the sudden dearth of above ground uranium, the journal cites 30 years of underinvestment, stringent regulations, and an overall lack of exploration of uranium deposits. International Nuclear, Inc. reports that commercial reserves of uranium fell by 50% from 1985 to 2003. It also reported that in 2004, only 54% of the uranium consumed in the world came from mining. The rest came from the depletion of existing reserves. Ultimately, there isn't enough uranium to satisfy the world's current needs. And it’s a big problem, considering the World Nuclear Association estimates that it takes eight years for a new mine to get “online” and start producing usable uranium. And aside from supply and demand pressure, there’s another reason why nuclear power is making a big push to the front of the line of alternative energy sources… The Temperature Is Rising… And So Is Uranium Most of the scientific community now agrees that global climate change is a reality. And you don’t have to look very far these days to see some new study on global climate change, or government measures to save energy and reduce pollution. As a result, fossil fuels have become unpopular and increasingly impractical. In fact, the International Energy Agency has stated that the world only has enough fossil fuels to meet energy demand until 2030. It won’t be long until fossil fuels are a thing of the past. But right now, fossil fuels account for a massive 85% of the world’s energy production. In 2003, the most recent year for which data is available, the world consumed 29 billion barrels of petroleum, 5 billion metric tons of coal, and 2.7 trillion cubic meters (96 trillion cubic feet) of natural gas. So what’s going to replace fossil fuels? But according to Greenpeace founder, Patrick Moore, “Nuclear energy is the only non-greenhouse gas emitting power source that can effectively replace fossil fuels.” And there’s a growing consensus that agrees with him. That’s good news for the fuel that drives it: Uranium. Nuclear energy supplies 16% of the world’s power. 441 power plants in 36 countries depend on uranium, and those numbers are destined to increase. But there’s one country where momentum to find less alternative energy sources is building rapidly… China’s $50 Billion Nuclear Bill China is the world’s second-largest contributor of greenhouse gas emissions. And pressure is mounting for the country to clean up its act with a move towards alternative energy sources. Already, the health of the Chinese population is suffering from filthy, smog-ridden air. China burns more coal than the U.S., European Union and Japan combined, and pollutants from coal-fired power plants account for approximately 400,000 premature deaths a year. In response, China is making a massive effort to embrace alternative energy sources like nuclear power. In addition to the nine nuclear reactors already operating in China, the government in Beijing is looking to build 30 more nuclear power plants. This is the largest nuclear power initiative ever undertaken, and it’s likely that the price tag will exceed $50 billion. For its money, China will end up with 11% of the world’s nuclear energy capability. Add this up, and you’ve got the recipe for a continued strong run on uranium – the fuel that powers nuclear reactors. The Chinese are already negotiating with uranium-rich Australia (which holds 40% of the world’s reserves) to increase its uranium imports from 2.5 million pounds per year, to an unprecedented level of 44 million pounds per year – a 1,160% increase – and close to one quarter of the world’s total uranium supply. A couple of the world’s other big boys are trying to beef up the power, too… The Alternative Energy Alliance The U.S. leads the world in energy consumption, devouring approximately 25% of the world’s total energy production. But it’s trying to generate some more alternative energy sources of its own to compensate. Right now, there are 104 nuclear power plants licensed by the U.S. Nuclear Regulatory Commission. Fifteen of them have had their licenses extended from 40 years to 60 years, and there are more than 20 proposed nuclear facilities currently undergoing regulatory review. Federal and state governments have also passed energy legislation that includes special tax and loan incentives to encourage nuclear reactor development in the U.S. Across the Atlantic, the U.K. is also taking steps to beef up its nuclear resources in an effort to meet the country’s growing energy needs. Just before leaving office, former British Prime Minister Tony Blair said the country needs to take more steps to ensure its energy demands are met, as well as reducing greenhouse emissions – and mentioned that, “we have got to put the issue of nuclear power on the agenda.” Right now, nuclear power accounts for 20% of Britain’s electricity. But every power station except one is set to close in 2023… with no more planned. So the government is pushing for more construction. The key, as always, will concern the level of investment and the sustained drive to push plans forward. The 21st Century Fuel There’s no doubt that the search for viable, alternative energy sources to replace coal, oil, and natural gas is reaching a new level of urgency. With reserves running low and existing facilities unable to mine uranium fast enough to keep up with demand, it may take years for uranium production to catch up. That means the value of uranium is only going to keep soaring to record heights. Good investing, The Mt. Vernon Research Team P.S. In October 2006, the Xcelerated Profits Report team issued a powerful “uranium doubleheader” recommendation, advising readers to enter a covered call position on one of the industry’s biggest players, then use the profits to buy a flourishing small-cap stock. The play worked perfectly and investors have profited ever since. But it’s still not too late to get in on one of these picks at very attractive prices. For more details, check out this link. Related Articles: - Renewable Energy Resources: How To Profit From Rising Oil Prices & A New Boom In Renewable Fuels
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