BillyTG (90.48)

Uranium on the up and up

March 07, 2011 – Comments (2) | RELATED TICKERS: CCJ , STHJF.PK , URRE

While I've been watching my enormous precious metals position explode recently, a smaller part of my portfolio has moved along very, very, very well over the past year: Uranium stocks.

I jumped on the uranium bandwagon about 5 years ago, seeing positions double, triple, or go even higher, only to fall to 20-50% of my purchase price.  I held a lot of my shares.  I figured why should I sell something that's near a total loss---might as well hold on and hope that one day glory will return.  That day is here.  My holdings are back in positive territory, and while tempted to sell with the recent run, I can't yet pull the trigger. 

It's really this simple:

1. Hundreds of new reactors are being planned and built.

2. Current uranium production is less than demand.

3. With demand growing rapidly and production not so much, there is a serious divergence.

4. Uranium prices have to go higher.

Read this Fortune article for more. Highlights:

Next year will bring the end of the "Megatons to Megawatts" program, launched by the U.S. after the fall of the Iron Curtain to secure and safely reprocess dismantled nuclear warheads in the former Soviet Union. Since the mid-1990s M2M has dumped hundreds of tons of uranium onto the world market. Along with existing above-ground supplies, the repurposed Soviet material accounts for nearly half of the annual requirements of the world's nuclear fleet. That means that the yearly supply of newly mined uranium falls short of demand by 40-50%.

China, meanwhile, may well be stockpiling uranium: the country imported about 5,500 tons of yellowcake last year, according to physicist Thomas Neff, a uranium-industry analyst at MIT, while it consumes only half that much.

If you aren't invested in---and on the right side of---the massive energy revolution, or the massive currency revolution, you are wrong.  Going long Uranium is one way to have a good decade.