by Alex Williams, Managing Editor, Investment U
Friday, December 29, 2006: Issue #623
In October, the world’s largest undeveloped high-grade uranium deposit was suddenly rendered useless.
A flood put a halt to 7 million pounds of uranium production next year in Canada’s Cigar Lake mine. And it will take another 12 million pounds off the market through 2009.
In fact, the impact on supply was so severe, it immediately sent uranium prices higher in the weeks that followed, by more than 25%. Even the company that owns the Cigar Lake mine moved higher. That would be Cameco (NYSE: CCJ), a Canada-based uranium producer and the controlling force behind all North American uranium mining. (Cigar Lake represents a fraction of the company’s 550 million pounds of proven and probable reserves.)
But here’s the thing…
The recent supply cut in Cigar Lake is only one of the reasons uranium’s double-digit pace is likely to continue.
Just this morning, Investment U released a special report on the widening gap between uranium’s supply and demand (see below for details). As you’ll read in this 2007 uranium forecast, our research suggests we’re only at the beginning of a long bull run in this fuel. And that uranium may very well be the best-performing commodity investment in 2007.
Uranium Is Up 554% And Counting…
We began following uranium 18 months ago, when it was around $25 a pound. At the time, demand for the alternative fuel source was quietly beginning to ramp up, based heavily on increasing imports to China.
It’s now $72 a pound – up 188% since it first hit our radar. And one of its biggest moves was last week, jumping 10%. Take a look at this chart from UxC Consulting Company LLC (note that this latest graph doesn’t include last week’s move).
Source: The UxC Consulting Company LLC
What’s more, since July 2003, it’s up 554%. And the outlook for uranium should only get better from here on out, for several reasons…
- Right now, 441 nuclear power plants produce 16% of the world’s energy. And 37 more reactors are either in the planning phase or under construction. By 2030, it’s been predicted that there will be more than 2,600 reactors worldwide.
- The global gap between supply and demand is already 15 million pounds – or 20% below worldwide demand. Prices reflect this all-time high demand, and have just hit yet another 52-week high.
- India is planning to build 20 to 30 new reactors in the next 15 years; Russia has 31 reactors in operation and is finishing construction of three right now; South Korea is bringing eight new reactors online within the next 10 years; and France already receives 75% of its power from nuclear reactors.
- China has 10 nuclear power plants in full operation right now, but the government has recently announced plans to build 30 more. And that might not even be enough Former CIA Director John Deutch’s report, The Future of Nuclear Power, says China will need the equivalent of 200 full-scale nuclear plants to meet its energy demands.
And that’s great news for uranium suppliers, as well as…
A Great Uranium Forecast for Investors
Imports to China are set to jump from 2.5 million pounds a year to 44 million pounds – an increase of 1,760%. The Chinese government is increasing spending on uranium from $72 million to $119 billion. And uranium is getting more expensive by the day. That’s because supplies are dwindling…
In the first six months of 2006, production from Canada – where several of the world’s largest uranium mines are located – fell 33%. And in Australia, another uranium-rich country, production dropped 27%.
In short, the world needs more uranium than suppliers can produce.
In our report, Profit from Uranium: How the “Largest Buildout” in the History of Energy Could Hand Investors 435% or More, we recommend four uranium producers that stand to benefit from this situation. We believe many Investment U readers will find it to be a valuable resource in the coming months as we continue to monitor and forecast uranium as an investment play in 2007.
P.S. You can get the report from Amazon at a special discount. Also, we’ve created a special page on the Investment U website that tracks the price of uranium and any new information that might impact the companies we’ve recommended in the report. (Instructions for logging onto this page are found inside the report itself.)
Also, you can find our # 1 uranium research report right here on www.investmentu.com read below:
To meet its soaring energy demands, the Chinese government is turning to nuclear power in a big way. To fuel its 30 new power plants, China is boosting its uranium spending from $79 million in 2005 to $119 billion in the coming months. Get the details in our free report, Investing in Uranium: Three Ways to Profit In Uranium, Before Prices Rocket Another 400%.
Today’s Investment U Crib Sheet
- When commodities across the board corrected hard from May to June, uranium never skipped a beat. While gold, silver, platinum, palladium, copper and the like backed off their highs, uranium spot prices kept going up. The metal has not dropped in price since July of 2003, when it was $10.90 a pound. It’s now $72 per pound.
- On December 17, Westinghouse struck an $8 billion deal with China to build four of the country’s new nuclear reactors. The contract will generate nearly 5,000 jobs, both in the U.S. and overseas. “It will also reaffirm China,” Reuters reported, “at the forefront of a global trend towards increased use of atomic power.”
- Stay tuned Our next investor’s report is on China, and will be available in a couple of days. We’ll be sure to pass along the details.