Opportunities in Nuclear Power
by Daniel R., Homemade Investors
Friday, May 10th, 2008
A profitable Investment Opportunity
“More crumpets with your tea?” asked Ahmadinejad with a grin,
nudging the tray of goodies towards me.
“No thanks,” I replied as I finished off my third pastry, wondering if
it would be my last. “I was wondering, though, if you could tell me
how long I will be detained.”
“Ah yes,” he replied. He sat up straight and shook crumbs off the
manila envelope which was resting in front of him. He opened it
and inspected the contents. “I understand that you were caught in
a government facility with stolen documents.” He paused, then
leaned back in his chair. “But, we may be willing to overlook this
unfortunate misunderstanding if you'd be willing to provide me
with some useful intelligence.” Fortunately for me, I had an early
version of this article tucked in my suit pocket. Nervously I
withdrew it, skipped the unnecessarily long introduction, and
began to read.
“There are 4 reasons why I feel uranium will be an extremely
profitable investment over the next decade.” My captor gasped at
the word uranium. Evidently I struck a cord with him. At this point
I was happy I didn't go with my original article topic, “Opportunities
In Radish Farming.” I continued reading.
“First, uranium is cheap and abundant. In case you didn't
know, the world is running out of oil. In spite of an increased effort
to find new reserves, nothing significant has been discovered since
the 1970s. So what does this mean? Either we find a cheap
alternative to oil, or industrialized civilization grinds to a halt over
the next few decades. Wind, solar, and even ethanol may play a
part, but they're still too expensive and unreliable to make much of
a dent.”
“Wind and solar are for sissies. Are there beefier alternatives?”
asked the dictator.
“Yes, there are,” I replied. “Two natural resources are sufficiently
cheap and abundant to dominate energy production over the next
50 years. These are coal and uranium. I prefer nuclear power
(fueled by uranium) as an investment since the energy produced is
both cheaper and cleaner than coal.”
He interjected, “Plus you can't make coal into warheads. Believe
me, big waste of time.” He took a sip from his tea. “Tell me more
about uranium.”
“Well, to give you an idea of uranium's potential, consider the fact
that China can run for 2 days on oil or for an entire year on
uranium, all with the same fuel costs! No wonder that China is
currently locking up Australia's uranium reserves and has
aggressive plans to build new nuclear plants. This brings me to the
next reason why uranium may be an excellent investment.”
“Second, nuclear power is relatively clean and safe. Although
concerns about nuclear accidents and waste are common, most of
these are largely unfounded. Thanks to modern safeguards,
chances of a catastrophic accident at a nuclear plant are next to
nothing. Even on-site deaths from accidents are many many times
fewer than from hydropower, coal, or natural gas. But what about
harmful emissions? Nuclear power plants emit clean water vapor,
and the National Cancer Institute found no increase in cancer
incidents among people living near US nuclear power facilities. On
the other hand, it is estimated that fossil fuel waste kills around
20,000 people each year in the US alone. Also, a coal power plant
releases around 100 times the radiation of a nuclear plant of the
same wattage.”
"So you think that nuclear power is supremo?” he asked.
“Well, I'm not saying that nuclear power doesn't have its concerns,
but they may not be as serious as most people think. Also, the
current prejudice against all things nuclear may, in fact, be a
benefit to investors with the foresight to get in early.” He sat
thoughtfully. I continued.
“Third, demand for uranium is increasing rapidly. Let's look at
China, for example. According to the Australian Foreign Ministry,
with whom China has been negotiating, uranium imports to China
are expected to increase from 2.5 million pounds to 44 million
pounds per year. Also, the People's Republic committed $50 billion
to build 30 new reactors over the next 15 years.6 According to
some analysts, these plants will only begin to generate the needed
energy for China's booming economy. And that's just China! In
addition to the approximately 442 operating nuclear plants around
the world, there are 28 being built, 38 on order, and another 115
have been proposed."
The dictator sat forward, and asked, “So if nuclear power is so
cheap and abundant, cannot miners just increase production to
compensate for this surge in demand?” I was pleasantly surprised
by the intelligence of his question, until he grabbed a crumpet and
missed his mouth completely. I shook my head and moved on to
my next point, which conveniently answered his question.
“Fourth, supply probably won't meet demand for about
another decade. Currently, new mining production provides
enough uranium to fuel only about half of the world's current
nuclear power consumption. Much of the other half comes from
decommissioned nukes. But these supplies are declining fast, and
most of the Soviet weapons-grade uranium is gone due to the
“Megatons to Megawatts” program.8 So what do you suppose will
happen when these uranium reserves run out?”
“The American Imperialist Regime will crumble?”, he blurted.
“Um, no,” I replied. “But it will cause uranium prices to rise. Even if
Uranium surged from its current price ($90) to $600 a pound, it
would still be a cheaper alternative to coal or oil. Here's why: only
a small portion of a power plant's expenses goes to uranium. This
being the case, uranium's price could rise to $1,000 a pound
before costs became prohibitively expensive. One might expect
higher prices to lead to additional supply, since higher profits
would lead companies to open new mines. However, it takes at
least 10 years to take a uranium mine from discovery to
production, assuming everything goes as planned. This means
that prices will likely move much higher over the next decade
before supply catches up with demand.
Ahmadinejad: “I've made my decision. I will immediately go out and
blindly purchase uranium stocks in companies that I haven't
researched.”
“I appreciate your enthusiasm,” I replied. “You're correct in that
one invests in uranium through the stocks of exploration and
mining companies. But I do have a couple of cautions. First, many
uranium stocks aren't worth the paper their certificates are printed
on. Second, because uranium investing is largely undiscovered by
Wall Street, shares are thinly traded and prices can be volatile.
This summer, some excellent stocks lost 60-80% of their share
values compared to a year earlier! So don't use money that you're
not willing to lose, and do expect wild swings occasionally.”
Ahmadinejad: “You make it sound risky. How should I proceed?”
“All investments have risk,” I noted. “But if you're investing for the
long term, and you buy the right stocks at the right time (when
they're cheap like they are now), holding uranium stocks may be
quite profitable. Also, it would be wise for you to pursue expert
advice on the subject. Although I don't consider myself an expert,
I'll let you subscribe to my free email newsletter available through
www.HomemadeInvestors.com, which provides uranium market
updates from time to time."
My host stood abruptly, and shouted: “Guards! Get this man more
tea! And bring him cushions!”
********************************
To receive our FREE EMAIL NEWSLETTER, visit http://www.HomemadeInvestors.com.
Disclaimer: Homemade Investors is published by Homemade Investors LLC. The
information contained in this article does not constitute personal investment advice
and is not designed to meet the personal financial needs of any individual.
Investors should seek advice from a qualified investment advisor before entering
into any transaction. The information contained in this article is deemed reliable but
is not guaranteed. The information and opinions contained in this article are subject
to change without notice, and there is no obligation to update such. To republish this
article, visit http://www.HomemadeInvestors.com/reprint for guidelines.
© 2008 Homemade Investors LLC. All rights reserved.
Friday, May 10th, 2008
A profitable Investment Opportunity
“More crumpets with your tea?” asked Ahmadinejad with a grin,
nudging the tray of goodies towards me.
“No thanks,” I replied as I finished off my third pastry, wondering if
it would be my last. “I was wondering, though, if you could tell me
how long I will be detained.”
“Ah yes,” he replied. He sat up straight and shook crumbs off the
manila envelope which was resting in front of him. He opened it
and inspected the contents. “I understand that you were caught in
a government facility with stolen documents.” He paused, then
leaned back in his chair. “But, we may be willing to overlook this
unfortunate misunderstanding if you'd be willing to provide me
with some useful intelligence.” Fortunately for me, I had an early
version of this article tucked in my suit pocket. Nervously I
withdrew it, skipped the unnecessarily long introduction, and
began to read.
“There are 4 reasons why I feel uranium will be an extremely
profitable investment over the next decade.” My captor gasped at
the word uranium. Evidently I struck a cord with him. At this point
I was happy I didn't go with my original article topic, “Opportunities
In Radish Farming.” I continued reading.
“First, uranium is cheap and abundant. In case you didn't
know, the world is running out of oil. In spite of an increased effort
to find new reserves, nothing significant has been discovered since
the 1970s. So what does this mean? Either we find a cheap
alternative to oil, or industrialized civilization grinds to a halt over
the next few decades. Wind, solar, and even ethanol may play a
part, but they're still too expensive and unreliable to make much of
a dent.”
“Wind and solar are for sissies. Are there beefier alternatives?”
asked the dictator.
“Yes, there are,” I replied. “Two natural resources are sufficiently
cheap and abundant to dominate energy production over the next
50 years. These are coal and uranium. I prefer nuclear power
(fueled by uranium) as an investment since the energy produced is
both cheaper and cleaner than coal.”
He interjected, “Plus you can't make coal into warheads. Believe
me, big waste of time.” He took a sip from his tea. “Tell me more
about uranium.”
“Well, to give you an idea of uranium's potential, consider the fact
that China can run for 2 days on oil or for an entire year on
uranium, all with the same fuel costs! No wonder that China is
currently locking up Australia's uranium reserves and has
aggressive plans to build new nuclear plants. This brings me to the
next reason why uranium may be an excellent investment.”
“Second, nuclear power is relatively clean and safe. Although
concerns about nuclear accidents and waste are common, most of
these are largely unfounded. Thanks to modern safeguards,
chances of a catastrophic accident at a nuclear plant are next to
nothing. Even on-site deaths from accidents are many many times
fewer than from hydropower, coal, or natural gas. But what about
harmful emissions? Nuclear power plants emit clean water vapor,
and the National Cancer Institute found no increase in cancer
incidents among people living near US nuclear power facilities. On
the other hand, it is estimated that fossil fuel waste kills around
20,000 people each year in the US alone. Also, a coal power plant
releases around 100 times the radiation of a nuclear plant of the
same wattage.”
"So you think that nuclear power is supremo?” he asked.
“Well, I'm not saying that nuclear power doesn't have its concerns,
but they may not be as serious as most people think. Also, the
current prejudice against all things nuclear may, in fact, be a
benefit to investors with the foresight to get in early.” He sat
thoughtfully. I continued.
“Third, demand for uranium is increasing rapidly. Let's look at
China, for example. According to the Australian Foreign Ministry,
with whom China has been negotiating, uranium imports to China
are expected to increase from 2.5 million pounds to 44 million
pounds per year. Also, the People's Republic committed $50 billion
to build 30 new reactors over the next 15 years.6 According to
some analysts, these plants will only begin to generate the needed
energy for China's booming economy. And that's just China! In
addition to the approximately 442 operating nuclear plants around
the world, there are 28 being built, 38 on order, and another 115
have been proposed."
The dictator sat forward, and asked, “So if nuclear power is so
cheap and abundant, cannot miners just increase production to
compensate for this surge in demand?” I was pleasantly surprised
by the intelligence of his question, until he grabbed a crumpet and
missed his mouth completely. I shook my head and moved on to
my next point, which conveniently answered his question.
“Fourth, supply probably won't meet demand for about
another decade. Currently, new mining production provides
enough uranium to fuel only about half of the world's current
nuclear power consumption. Much of the other half comes from
decommissioned nukes. But these supplies are declining fast, and
most of the Soviet weapons-grade uranium is gone due to the
“Megatons to Megawatts” program.8 So what do you suppose will
happen when these uranium reserves run out?”
“The American Imperialist Regime will crumble?”, he blurted.
“Um, no,” I replied. “But it will cause uranium prices to rise. Even if
Uranium surged from its current price ($90) to $600 a pound, it
would still be a cheaper alternative to coal or oil. Here's why: only
a small portion of a power plant's expenses goes to uranium. This
being the case, uranium's price could rise to $1,000 a pound
before costs became prohibitively expensive. One might expect
higher prices to lead to additional supply, since higher profits
would lead companies to open new mines. However, it takes at
least 10 years to take a uranium mine from discovery to
production, assuming everything goes as planned. This means
that prices will likely move much higher over the next decade
before supply catches up with demand.
Ahmadinejad: “I've made my decision. I will immediately go out and
blindly purchase uranium stocks in companies that I haven't
researched.”
“I appreciate your enthusiasm,” I replied. “You're correct in that
one invests in uranium through the stocks of exploration and
mining companies. But I do have a couple of cautions. First, many
uranium stocks aren't worth the paper their certificates are printed
on. Second, because uranium investing is largely undiscovered by
Wall Street, shares are thinly traded and prices can be volatile.
This summer, some excellent stocks lost 60-80% of their share
values compared to a year earlier! So don't use money that you're
not willing to lose, and do expect wild swings occasionally.”
Ahmadinejad: “You make it sound risky. How should I proceed?”
“All investments have risk,” I noted. “But if you're investing for the
long term, and you buy the right stocks at the right time (when
they're cheap like they are now), holding uranium stocks may be
quite profitable. Also, it would be wise for you to pursue expert
advice on the subject. Although I don't consider myself an expert,
I'll let you subscribe to my free email newsletter available through
www.HomemadeInvestors.com, which provides uranium market
updates from time to time."
My host stood abruptly, and shouted: “Guards! Get this man more
tea! And bring him cushions!”
********************************
To receive our FREE EMAIL NEWSLETTER, visit http://www.HomemadeInvestors.com.
Disclaimer: Homemade Investors is published by Homemade Investors LLC. The
information contained in this article does not constitute personal investment advice
and is not designed to meet the personal financial needs of any individual.
Investors should seek advice from a qualified investment advisor before entering
into any transaction. The information contained in this article is deemed reliable but
is not guaranteed. The information and opinions contained in this article are subject
to change without notice, and there is no obligation to update such. To republish this
article, visit http://www.HomemadeInvestors.com/reprint for guidelines.
© 2008 Homemade Investors LLC. All rights reserved.
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Homemade Investors
| I recently had the unique experience of speaking with Iranian President Mahmoud Ahmadinejad at a hidden nuclear facility outside of Tehran. Since our conversation dealt with nuclear energy, a great opportunity for investors, I decided to provide readers with a short account of the encounter. [Ed: The following narration may have been fictionalized somewhat. I'll let you figure out which parts are real.] |