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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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.

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!

 

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).

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.

max2205's picture

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

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?

 

 

Hammer Time's picture

remember peak oil end the wedge of hope...

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.

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!!!

 

Arttrader's picture

I'm with you.  Disclosure: Long hamsters.

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.

Stares straight ahead's picture

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

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.

 

I am a Man I am Forty's picture

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

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.

 

 

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...

franzpick's picture

Where do I store the physical ?

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.

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!

 

 

Sudden Debt's picture

SHE'S GONNA BLOW CAPTAIN!!!

 

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

The Profit Prophet's picture

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

Jack Sheet's picture

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

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.

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?

Doode's picture

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

Azannoth's picture

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

Sudden Debt's picture

Can you ask for delivery if you buy?

 

Do they mint them in 1 ounce coins?

 

 

Gene Parmesan's picture

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

Dangertime's picture

Let them eat yellow-cake.

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.

 

 

 

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

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

herewego...'s picture

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

Grimbert's picture

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

malek's picture

Take a look at Australia, for example ASX:ERA

MrMorden's picture

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

monopoly's picture

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

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...

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.