Rick Rule: Uranium Series Part 8: Upside in Uranium Price is Absolutely Inevitable
Rick feels that it’s too early to draw any conclusions from the recent market action. Technically these price fluctuations are not that aggressive. He is encouraged by golds recent performance but two weeks of data is not worth anything but amusement.
He cautions that if there is a liquidity crisis, all of the stocks including gold stocks will get hit. If gold holds up some of the mining stocks will bounce back. He says, “In a liquidity crisis the markets take no prisoners.”
He is optimistic about uranium but not until the pace of Japanese reactor restarts picks up which could take 18 months. He discusses the incredible gains in the last market cycle.
When investing in uranium companies, you want to make sure they are well funded, that they actually have uranium and that it’s not merely in the title of the company. He argues that placing your money in the best of the best companies will likely do better than wildly speculating.
Rick cautions that investors should be less interested in vanadium now that the price has doubled and that commodities that shoot up are just as likely to drop quickly.
For a nuclear plant, the cost of uranium compared to the cost of building the reactor is insignificant. A large plant may spend 30 million dollars a year on fuel for a plant that cost 6 billion to construct. The price of uranium to an energy producer is barely a blip on their bottom line.
Nuclear still represents 15% of U.S. baseload energy needs and therefore in the coming years either the lights will go out, or the price of uranium will go up.
Time Stamp Reference:
00:40 – Too early to draw any conclusions from the recent market action.
02:00 – A liquidity crisis will lower gold stock prices along with everything else.
03:40 – Optimistic about uranium stocks but investors should buy well-funded ones.
05:10 – Previous uranium bull market performance.
06:45 – Utility companies are very tight-lipped.
08:05 – Value proposition of uranium juniors.
09:20 – Uranium stock picking strategies.
11:30 – Vanadium outlook and risks.
15:00 – Comparison of the cost of uranium vs. the cost of reactors.
Talking Points From This Week’s Episode:
• Rick still wants to see Japanese Reactor restarts pick up.
• Too early to determine what effect if any recent Dow fluctuations will bring.
• Current all-in cost of production of uranium is $60 dollars.
• Nuclear energy is still needed in the United States.
Rick Rule began his career in the securities business in 1974. He is a leading investor specializing in mining, energy, water, forest products, and agriculture. Rick founded California-based Global Resource Investments, Ltd., which grew into a much larger organization with significant affiliated companies. As Director, President, and Chief Executive Officer of Sprott US Holdings, Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.