“I am also watching the uranium story unfold. The news over the last week and a half is very bullish both for the uranium companies and uranium itself. BHP announced they are shelving their expansion of Olympic Dam. Now, Olympic Dam is primarily a copper gold mine, but they also produce a tremendous amount of uranium.
They (BHP) were going to do this expansion and take it up from 8.8 million pounds per year, to 20 million pounds per year of uranium. Now that’s cancelled. There are numerous other uranium projects that have been shelved, almost indefinitely, due to price or other issues.
So this is very bullish going forward for the uranium price. I’ve also mentioned that the US/Russian down-blend program is coming to an end in 2013. Putin has already said he is not going to extend it. That’s going to take another 15% of the secondary supply of uranium, for the whole world, offline.
This event will significantly impact the supply of uranium. Right after this happened there were a flurry of statements. The United Arab Emirates, who are building four nuclear reactors right now, came out and said that they had negotiated an agreement with a number of uranium producers in order to guarantee supply for years.
It’s written into the contract that the United Arab Emirates is going to pay more than the current spot price. That’s bullish for the price as well. I would also like to note that Paladin received $200 million from an undisclosed source, probably the Chinese, to take the uranium from their mines seven years into the future.
The third thing that has happened is that the government of India came out a few days ago and said, ‘We will go worldwide, and we will buy uranium mines.’ The reason for this is they do not have the internal resources in the country of India to fuel their nuclear program.
So unless the price of uranium goes up, and I mean goes up drastically, we are going to see an incredible squeeze next year in the supply of uranium. I really believe uranium is going to punch right through that $130 all-time high it had achieved, and uranium is going to go parabolic.
This is going to be an incredible situation. I’ve never seen a setup like this for a commodity in all of my years of watching these markets. What is shaping up here is unimaginably bullish.”
