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Guest Post: Massacre In Uranium: When The Blood Is Running In The Streets, You Buy!

Tyler Durden's picture




 

Submitted by  Smart Money Europe

Massacre in Uranium: when the blood is running in the streets, you buy!

Japan is living through some apocalyptic days. An historic earthquake and following tsunami put large parts of the country in ruins, and a nuclear disaster still looms.

Several reactors on the nuclear plant of Fukushima are damaged. Official spokesmen already talked about partial meltdowns. Radiation levels on the site are reaching life-threatening heights and tens of thousands of citizens have been evacuated from the area.

A new Chernobyl is in the making!

All of a sudden nuclear energy is put into question worldwide. Chancellor of Germany, Angela Merkel, pledged a three-month pause in her government's plan to extend the running times of Germany's nuclear power plants. 

Switzerland has suspended the approvals process for three new nuclear power stations so safety standards can be revisited. Belgium is thinking about a import tax on uranium.

On a European level, Energy Commissioner Oettinger called for the introduction of safety "stress tests" at nuclear power plants in Europe, which one could compare to the stress tests for European banks – which also failed.

But not only in Europe, also elsewhere in the world, specifically in the US, nuclear energy is again being questioned. It looks like several leaders want to – in the heat of the moment – erase nuclear from the national energy agenda’s.

With all these sort of ‘gloom & doom’ news items on nuclear energy, it shouldn’t come as a surprise that uranium, the fuel of a nuclear power plant, is in the spotlights. Many pundits all of a sudden start questioning the bright outlook for uranium and fearing a collapse in demand for the commodity.

Well, we think that, despite the catastrophe in Japan, the reality is far different.

The most recent figures of the World Nuclear Association point to a least 150 new nuclear power plants till 2030, with Asia being the big driver for the future of nuclear energy expansion.

China has 13 nuclear plants, with 10.2 GW power capacity, and is currently building 25 new reactors. In 2020, China wants 75 GW installed! India has similar ambitions: the current 22 nuclear power plants are producing 4 GW, which they want to raise to 60 GW by 2030.

The reaction from China on Japan’s nuclear horror-scene are unequivocal.  China has temporarily suspended approval of nuclear power projects, including those in the preliminary stages of development. But Zhang Lijun, China’s vice minister for environmental protection, already told reporters that there would be no change in China’s nuclear plans. “Some lessons we learn from Japan will be considered in the making of China’s nuclear power plans,” he said. “But China will not change its determination and plan for developing nuclear power.”

In India, there is little bit more cautious, but given the economic policy objectives, the country has no other options on the table.
The emerging markets simply cannot afford to store away their nuclear future.

A little smash in the demand from the West with a gigantic demand from the Asian emerging markets… all in all one would expect little impact on the price of uranium.

The spot uranium price fell nearly 10% to US$60 a pound, according to Ux Consulting, which is in line with our expectations : a correction but no capitulation.

But while the damage in the uranium market remains rather limited, there was tremendous havoc in the uranium sector. The shares of different producers and exploration companies lost a quarter to half of their market caps, an unprecedented massacre!

You don’t have to be a rocket scientist to know that these kind of extreme results are far from any realistic scenario. It’s rather investors in a panic mode, dumping everything that has something to do with nuclear energy. You can almost smell the fear in the air.

When the blood is running in the streets, we as contrarians buy, especially our convictions!

Sure, we certainly take into account a period of high volatility in the sector, but a halving of some values in a few days? We are all too happy with these positive set of fundamentals for uranium: those cheap shopping days are back in town.

 

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Thu, 03/17/2011 - 09:09 | 1066121 The Profit Prophet
The Profit Prophet's picture

I`m hoping for the development of home nuclear reactor kits....this is definitely the time to go long uranium.

T.E.I.N. everyone.

Thu, 03/17/2011 - 09:11 | 1066143 Sudden Debt
Sudden Debt's picture

I don't think that's a good idea...

 

I CAN'T EVEN REMEMBER TO WATER THE PLANTS IN TIME LET ALONE URANIUM RODS!

 

Thu, 03/17/2011 - 09:42 | 1066209 The Profit Prophet
The Profit Prophet's picture

No worries....it comes with a set of long glass tubes full of water that automatically detect when your home reactor fuel rods require cooling....and if you call within the next 30 minutes....they`ll send you an additional set of tubes at no extra cost (just pay separate shipping and handling).

Thu, 03/17/2011 - 09:13 | 1066152 oh_bama
oh_bama's picture

Hehe.. those stocks are cheap, but what kind of risk you are taking on?

Whenever I see institutionals want to dump things into retails using media I just feel sick. This is worse than the radiation in FUK-U-SHIMA.

Thu, 03/17/2011 - 09:29 | 1066223 max2205
max2205's picture

hold for 20 years, then when the aliens show up to help us use it your rich

Thu, 03/17/2011 - 09:47 | 1066295 oh_bama
oh_bama's picture

that is true, but some of those companies will go poopoo. hehe before aliens come..

And why wait 20 years? why not just follow the FED and just BTFD? Simple, right?

 

 

Thu, 03/17/2011 - 09:08 | 1066122 Hammer Time
Hammer Time's picture

remember peak oil end the wedge of hope...

Thu, 03/17/2011 - 09:12 | 1066134 Mercury
Mercury's picture

When the blood is running in the streets, we as contrarians buy, especially our convictions!

- or buy when the streets are glowing...

Not only will China not change their determination but sadly, I don't think Europe can.

What's a country like France going to do?...swap their 80% nuclear electricity generation for what?...coal? windmills? blue energy?

Between their welfare states, minimal defense spending and enviro-religion Western Europe has painted themselves into a corner energy-wise.  The can't abandon or even reduce nuclear.  No way.

Thu, 03/17/2011 - 09:14 | 1066151 Sudden Debt
Sudden Debt's picture

I seems if you put 50.000 hamsters in a tread wheel, they generate enough electricty to power a television.

WE NEED MORE HAMSTERS!!!

HAMSTERS ARE OUR FUTURE!!!

 

Thu, 03/17/2011 - 09:20 | 1066187 Arttrader
Arttrader's picture

I'm with you.  Disclosure: Long hamsters.

Thu, 03/17/2011 - 09:35 | 1066245 Thomas
Thomas's picture

Gerbils.

BTW-There are those who say that you buy when the blood in the streets has dried up, blown away, and been forgotten.

Thu, 03/17/2011 - 11:45 | 1066799 Stares straight...
Stares straight ahead's picture

Personally, I prefer the I.U.D. over the rhythm method.

Thu, 03/17/2011 - 10:23 | 1066444 MachoMan
MachoMan's picture

You and Richard Gere.

Thu, 03/17/2011 - 10:29 | 1066458 css1971
css1971's picture

The can't abandon or even reduce nuclear

No, but we put it all in France. 2 problems solved for the price of one.

 

Thu, 03/17/2011 - 09:11 | 1066135 I am a Man I am...
I am a Man I am Forty's picture

CCJ isn't even particularly cheap yet and it's been hammered the past week

Thu, 03/17/2011 - 09:10 | 1066138 MrVincent
MrVincent's picture

If we are to have electric cars and electric trains in this world, there are no alternatives. China knows this.

China may make statements that they are suspending new plants, but they will say this for political purposes. They will build more nuclear power plants than anyone. and when they are done, they will rule the world.

Electricty is the gasoline of the future, and uranium is the oil.

 

 

Thu, 03/17/2011 - 09:13 | 1066142 MiningJunkie
MiningJunkie's picture

Last time the "U-stocks" got smoked due to a shift in the political landscape, they stayed in the bin for six years. Good luck catching the machete...

Thu, 03/17/2011 - 09:13 | 1066144 franzpick
franzpick's picture

Where do I store the physical ?

Thu, 03/17/2011 - 09:31 | 1066225 dark pools of soros
dark pools of soros's picture

in a foreclosed swimming pool

Thu, 03/17/2011 - 10:34 | 1066482 TheDriver
TheDriver's picture

You may be interested in renting a storage unit at a place called Yucca Mountain. No one else is using it at the moment, so rent should be cheap.

Thu, 03/17/2011 - 09:12 | 1066146 Snidley Whipsnae
Snidley Whipsnae's picture

Give me infinite warp, Scottie!!!

Aye, buts shes not gonna take it, captain!

Use the duct tape!...the good stuff, not that crap from the flea market!

Aye captain!

 

 

Thu, 03/17/2011 - 09:15 | 1066164 Sudden Debt
Sudden Debt's picture

SHE'S GONNA BLOW CAPTAIN!!!

 

CLOSE THE CURTAINS!! THEY'LL PROTECT US FROM THE RADIATION!!!

Thu, 03/17/2011 - 09:43 | 1066282 The Profit Prophet
The Profit Prophet's picture

And for God's sake man....don't forget to Duck & Cover!!!!!

Thu, 03/17/2011 - 14:27 | 1067535 Jack Sheet
Jack Sheet's picture

Pardon my asking, but is your interesting nom de plume an anagram?

Thu, 03/17/2011 - 14:30 | 1067542 Jack Sheet
Jack Sheet's picture

I mean S.W. of course

Thu, 03/17/2011 - 09:14 | 1066149 oh_bama
oh_bama's picture

Hehe.. they are cheap, but what kind of risk you are taking on?

Whenever I see institutional want to dump things into retails using media I just feel sick. This is worse than the radiation in FUK-U-SHIMA.

Thu, 03/17/2011 - 09:12 | 1066150 BrianOFlanagan
BrianOFlanagan's picture

there is no doubt that this decline is due to JPM in cahoots with the Fed manipulating the price.

I'm loading up on some Uranium Eagles to crush them.  

Uranium Bitchez?

Thu, 03/17/2011 - 09:15 | 1066157 Doode
Doode's picture

But do you still buy if the blood is radioactive? Lol

Thu, 03/17/2011 - 09:15 | 1066163 Azannoth
Azannoth's picture

I don't think we'hv hit the peak of this crisis yet

Thu, 03/17/2011 - 09:31 | 1066232 dark pools of soros
dark pools of soros's picture

have we hit peak peaks?

Thu, 03/17/2011 - 09:18 | 1066167 Sudden Debt
Sudden Debt's picture

Can you ask for delivery if you buy?

 

Do they mint them in 1 ounce coins?

 

 

Thu, 03/17/2011 - 09:21 | 1066188 Gene Parmesan
Gene Parmesan's picture

You can't eat uranium. But yellow cake...

Thu, 03/17/2011 - 09:38 | 1066257 Dangertime
Dangertime's picture

Let them eat yellow-cake.

Thu, 03/17/2011 - 09:18 | 1066173 justbuygold
justbuygold's picture

Some of the deep values from this selloff trade on the TSX ( Toronto) or TSX Venture.

 

Uranium Particiaption Fund ( U on TSX ) has a NAV with $60 spot Uranium of $9.45 and if spot uranium drops to $48 then is NAV is $9.05.  Trading at $6.35

 

LAramide  ( LAM on TSX)  Has royalties from 3 sources takes its NAV to $.8.50 yet it trading at $1.31

http://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=29316742&l...

 Paladin  ( PDN on TSX)  has mostly long term contracts locked in and none with Japanese. Stock has sold way off . Conference call this morning indicated they will actually benefit from this.  Very cheap at $3.25

Hope that helps.

 

 

 

Thu, 03/17/2011 - 09:26 | 1066213 anvILL
anvILL's picture

Thanks for the help!

Thu, 03/17/2011 - 09:34 | 1066250 romanko
romanko's picture

let me add UNR (Uranium North Resources) on the venture exchange to that list.

in addition to their uranium, they're drilling to define a new high-grade gold/silver/copper district - at it's current price it's like getting that project for free

Thu, 03/17/2011 - 09:38 | 1066256 AGORACOM
AGORACOM's picture

JBG, thanks for sharing. We've got a pretty active Uranium Ideas HUB on AGORACOM that we set up just a few days ago, so I shared your post there as well http://bit.ly/ev5PX4

FIS.TSXV seems to be an idea that many in our HUB are liking at these levels.

George

Thu, 03/17/2011 - 10:23 | 1066433 oddjob
oddjob's picture

Agoracom is a rats nest.

http://www.theglobeandmail.com/globe-investor/agoracoms-online-chatter-case-goes-before-regulator/article1628319/

No more than a bunch of maggotts pushing worthless stocks.

Thu, 03/17/2011 - 10:01 | 1066287 herewego...
herewego...'s picture

looks interesting. wish I didn't have all my money in gold and silver.

Thu, 03/17/2011 - 10:02 | 1066354 Grimbert
Grimbert's picture

What about an ETF like Global X Uranium ETF (URA)? It's falling like a stone at the moment.

Thu, 03/17/2011 - 14:31 | 1067551 Jack Sheet
Jack Sheet's picture

Right on, I'm holding U

Thu, 03/17/2011 - 15:47 | 1067959 malek
malek's picture

Take a look at Australia, for example ASX:ERA

Thu, 03/17/2011 - 09:20 | 1066183 MrMorden
MrMorden's picture

Doh, liquidate some of my SLW and buy some DNN, or sit tight?  So hard to decide... 

Thu, 03/17/2011 - 09:22 | 1066192 monopoly
monopoly's picture

I do have CCJ on watch. Not going with the spec companies. 0

Thu, 03/17/2011 - 09:22 | 1066196 spanish inquisition
spanish inquisition's picture

I am guessing the Chinese will have underground storage rather than the water tower above reactor method. You kind of hope that would be a lesson learned...

Thu, 03/17/2011 - 09:23 | 1066201 Cult_of_Reason
Cult_of_Reason's picture

CNBC (Wall Street bankster's propaganda machine) just announced that Operation Extension Cord will fix all reactor problems "within hours". Unbelievable.

Thu, 03/17/2011 - 10:32 | 1066471 css1971
css1971's picture

I believe!

Thu, 03/17/2011 - 09:27 | 1066219 FranSix
FranSix's picture

Interview with Ross Clark, includes uranium based charts:

http://talkdigitalnetwork.com/2011/03/transition-period/

imo, the uranium mania has been over for quite some time.

Thu, 03/17/2011 - 09:27 | 1066221 Zon
Zon's picture

"An historic earthquake and following tsunami put large parts of the country in ruins, and a nuclear disaster still looms."

ok, it wasnt a large part of the country, it was really just 2 or 3 prefectures of out of many, and only in the touhouku region. Tokyo is still standing and so is most of Japan.

Thu, 03/17/2011 - 09:31 | 1066231 FranSix
FranSix's picture

As for nuclear power, my preference would be Thorium, but there's no market for it, because it doesn't have a weapons cycle:

http://pubs.acs.org/cen/email/html/8746sci2.html

LTBR - Lightbridge is a company based on promoting the use of thorium in fuel rods.

Thu, 03/17/2011 - 09:39 | 1066264 MisterKurtosis
MisterKurtosis's picture

Just because some of the stocks are down 40%-50% does not mean they're cheap...there are some good companies like Cameco, but there are some real POS out there.

Thu, 03/17/2011 - 09:41 | 1066266 mikjall
mikjall's picture

China has suspended approval for new nuclear power stations following the accident at Japan's Fukushima Daiichi plant

http://www.bbc.co.uk/news/world-asia-pacific-12769392

 

Thu, 03/17/2011 - 09:42 | 1066274 AGORACOM
AGORACOM's picture

China just trying to "help" uranium lower? I think so.

Thu, 03/17/2011 - 09:41 | 1066267 Oso
Oso's picture

URZ.  best and most unknown way to play uranium.

Thu, 03/17/2011 - 09:40 | 1066268 AGORACOM
AGORACOM's picture

My take on China Nuc suspensions ... they know such an announcement could drive down the price - or hold down the price - of Uranium, producers and advanced exploration projects.  They pick up some great resources/companies on the cheap and announce that Nuclear is back on again.

No?

Thu, 03/17/2011 - 10:04 | 1066364 Flakmeister
Flakmeister's picture

Yes....

Snarfed some CCJ, DNN, EFR.TO, URPTF on this dip...

Thu, 03/17/2011 - 09:52 | 1066313 Byte Me
Byte Me's picture

I'm surprised w the Chinese response. A one party Guv can ram through anything that it likes, maybe they're looking for a discount on PWRs. But their 'modest' CANDU reactor programme ought to be fine.. apart from the inherent tritium production, of course..

Thu, 03/17/2011 - 09:52 | 1066321 TonyV
TonyV's picture

Wake me up when some of these companies pay 7% dividend or at least have a PE of 10. Most of them are priced for a 20% anual growth and that is not going to happen.

Thu, 03/17/2011 - 09:54 | 1066323 TheJudge2012
TheJudge2012's picture

No nukes is good nukes.

Thu, 03/17/2011 - 10:01 | 1066348 fundmanagernews
fundmanagernews's picture

Maybe the best way to hedge bets is to buy Nat Gas and Uranium. One of the two will surely power our future.

 

 

Thu, 03/17/2011 - 11:19 | 1066672 painequalschange
painequalschange's picture

I think our energy future is "all of the above" - meaning, we'll get energy any way we can get it.

Thu, 03/17/2011 - 10:19 | 1066421 zero intelligence
zero intelligence's picture

The market's immediate, one-day reaction isn't going to be based on a lot of analysis. However, after thinking about it for a while, I concluded that these markdowns are fairly reasonable. Nuclear power ambitions might get a serious reconsidering, not overnight, but over the next year or two by governments. Just look at what happened to the industry after Three Mile Island, which was not nearly as bad. It is very easy to cancel a project that has not yet broken ground.

With that in mind, a 25% or 30% markdown is not unreasonable. I would definitely say tha ta 10% markdown would be insufficient. So, what's the upside here? That we'll go from a 25% markdown to a 10% markdown?

"Blood in the streets" means a 90% markdown.

Thu, 03/17/2011 - 10:35 | 1066487 MisterKurtosis
MisterKurtosis's picture

Exactly. If Cameco goes to $15.00 - $20.00 per share, and some of the juniors become penny stocks, I think we'd be closer to a 'blood on the streets' scenario. People are conveniently forgetting that some of these stocks have increased 2x-4x within 1 year.

Thu, 03/17/2011 - 11:03 | 1066591 TonyV
TonyV's picture

I wouldn't touch the juniors even if they become penny stocks, unless they have some excellent prospects. Most of them depend on private financing and that will be hard to come by in the current environment.

Thu, 03/17/2011 - 10:21 | 1066429 Printfaster
Printfaster's picture

Sure.  Buy all the uranium that you want.

As Zero says, in the long term we are all dead.  Trouble is with u3O8, it will be long after we are dead that it will take hold.  In that amount of time thorium and breeder reactors will push u3o8 out of play.

In the short run, China will put a bid under u3o8 because it will win.  China wins today in the "rare earth" game because it will put up with awful pollution in processing them.  The same way China will win with energy because China will build the power plants that the rest of the world fears.

Industry is about energy and nothing else.  The US will return to its pre-european animist roots and worship trees, acorns, and roots, wearing animal furs.  Sorry PETA, there won't be enough cotton or synthetic to wear because of EPA regulations.

China will run the world, because the rest of the world is afraid.  Of living.

Thu, 03/17/2011 - 10:38 | 1066508 SilverRhino
SilverRhino's picture

Screw long uranium .... once all these governments take a look at how fucked up the Fukushima plants are they wont TOUCH a Uranium plant again.  

 

Now Thorium on the other hand has some serious promise.

 

Thu, 03/17/2011 - 13:46 | 1067319 linrom
linrom's picture

+1000

Thu, 03/17/2011 - 14:00 | 1067378 redarrow
redarrow's picture

India is the world leader on that. Its surprising that the govt there is signing up all these deals for uranium, plutonium mix fuel reactors when the have the technology and are the Saudi Arabia of Thorium.

Its possible some vested interests have infilitrated the decision making process there to make a few bucks.

Thu, 03/17/2011 - 10:50 | 1066545 Whizbang
Whizbang's picture

Thanks guys, I'm up a little over 7% today on that call.

Thu, 03/17/2011 - 11:16 | 1066653 Questionmark
Questionmark's picture

Make sure to demand physical.

Thu, 03/17/2011 - 11:17 | 1066654 Questionmark
Questionmark's picture

double post

Thu, 03/17/2011 - 11:27 | 1066711 medicalstudent
medicalstudent's picture

technical analysis works a helluva lot better when you predict and buy bottoms compared to timing and selling tops.

 

bottoms can linger for a bit, tops are fast and furious.

Thu, 03/17/2011 - 11:37 | 1066762 Bernank Sheeple
Bernank Sheeple's picture

Diesel generators will be in demand in Japan. Easy to operate, easy to run, easy to transport to remote locations, Can be up and run fast.  Nuclear wont return fro a while, I need money now.

Thu, 03/17/2011 - 11:38 | 1066767 themosmitsos
themosmitsos's picture

Distastefull

Thu, 03/17/2011 - 11:38 | 1066771 T-NUTZ
T-NUTZ's picture

falling knive BITCHEZ!!

Thu, 03/17/2011 - 11:38 | 1066773 T-NUTZ
T-NUTZ's picture

falling knives BITCHEZ!!

Thu, 03/17/2011 - 11:50 | 1066819 koot
koot's picture

Only this time it is just not blood running in the street, it is an invisible but deadly radiation.

Thu, 03/17/2011 - 13:24 | 1067235 FrankS
FrankS's picture

In the 1970s, the U. S. planned to build 200 reactors before the year 2000.  Virtually none of them were ever built – nuclear was uncompetitive compared to the alternatives.

 

That is even more so now, with cogeneration and renewables now producing more energy than nuclear worldwide.

 

Amory Lovins, who has been proven right about the nuclear costs, debated nuclear power at http://www.earthisland.org/journal/index.php/eij/article/fix_or_folly/.  He has pointed out that the only countries building nuclear plants are ones with strong central governments that override citizen and investor reluctance.

Thu, 03/17/2011 - 15:53 | 1068006 malek
malek's picture

Uncompetitive measured in what?

Thu, 03/17/2011 - 13:35 | 1067270 apeakunderthehood
apeakunderthehood's picture

http://apeakunderthehood.blogspot.com/2011/03/nuclear-real-estate-meltdown-will-begin.html

 


Nuclear Real Estate Meltdown Will Begin the Next Bear...

Thu, 03/17/2011 - 14:30 | 1067544 Al89
Al89's picture

Buying before this crisis is resolved is stupid. If we get the worst case scenario and the reactor blows up, so will a portfolio of uranium stocks.

Thu, 03/17/2011 - 15:55 | 1068017 malek
malek's picture

And if doesn't?
Good luck trying to time the absolute bottom.

Fri, 03/18/2011 - 15:20 | 1072785 NrYC
NrYC's picture

Yea my 20% gain today was totally idiotic and stupid. Got any more tips?

Thu, 03/17/2011 - 15:37 | 1067729 Flakmeister
Flakmeister's picture

Just bought 2000 DNN, sold 20 Oct 3 for 0.4

 

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