It’s all about energy and interest rates
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Cory thanks for discussing Uranium with Chris as part of the energy sector. Nuclear is much more green that oil/gas/coal and much more prevalent and important to the energy mix than solar or wind. It is a very misunderstood commodity, with a bad stigma (even though there are many important positives around how it will reduce carbon, reduce the load Japan is paying for oil while their reactors have been down, and really there is nothing else to handle the energy burden in US, Europe, Asia other than a good mix of different energy sources. Whether people like that or not, the electricity has to come from somewhere, and oil/gas/ and coal can’t do it all.
There are already a number of companies like Paladin & Cameco that have cut back production or closed certain mines due to the low prices, while small scale producers like Uranez and Ur-Energy are only producing enough uranium to meet their long term sales contracts. There is going to be a supply deficit once those Japanese reactors are back on and world begins to reorder supplies.
Russia is a player, and all the sanctions against them from the west could ignite this market to the upside just like oil. The middle east is also building reactors, and so is the US & Europe. China is the prime mover, but I wouldn’t rule out India either.
Energy Fuels (UUUU) is my favorite company in the Uranium sector because they have acquired a number of key assets from 2-3 companies over the last few years, including one of the only active Uranium mills from Dennison a year or so back. This is a company that has scaled back production, sold non-core assets this year, reduced expenses, and has a great management team. If any company will do well (besides Cameco or Areva) in the long term, then it will be Energy Fuels.
Well jj, as I mentioned, I’m indeed glad I haven’t gotten any more aggressive on energy than a few picks I still like longer-term, even though they look pretty ugly now.
The possibility of the dollar moving higher still is certainly distinct; however, I think today provides some clue as to what might happen if reality sinks in a bit more to the dollar bulls that the US is not as strong as is supposed…nor is the Fed likely to be aggressive. The bullish side of the dollar trade is quite crowded of late, too — so as we see this morning, weak economic #’s have led to a strong dollar, and, in turn, some more stabilization f a very weak oil market.
The dollar will indeed be interesting to watch. My gut tells me that we’ve seen most or all of the gains; but my head tells me it’s unwise to bet too much on that!
Funny how the bullish side of the gold trade was rarely ever suggested by the gold bugs heading into $1900 yet a bullish US$ stance is always the case as overbought. Its the trend in play that the ECB and the BOJ have created Chris driving a higher $ into 2015…toss in the fact the US is even looking at higher rates keeps the $ bid…oh it will fluctuate as it does get overbought and oversold but the trend is clear as Rick points out and that’s not bullish any commodity sector.
I don’t quibble with that…in fact, have said on the show more than once that both the yen and euro should be far lower still against the US dollar. What I have asked aloud is whether that would be allowed to happen, given 1. the devastation to emerging markets 2. and to commodities, not the least including a blow-up in the junk bond market from all the energy cos. that won’t be able to service debt if prices keep falling.
That’s why I said earlier — my gut tells me the dollar’s rise won’t be as open-ended as some think (and especially because the US economy will be revealed as less strong than is imagined.) But my head tells me to not bet too much on that. Resource-oriented holdings as a whole are a very small part of my recommended portfolios for now.
Lastly, don’t forget that Yellen and her crew (and all the central banks) are stark-raving terrified of “deflation.” What would be unleashed by much more $ strength and commodity, emerging market and related plunges is a breakdown of the financial system…the Fed knows this, and knows that in the end they can talk tough, but won’t DO merde.
Well Chris I’d say the action of the Central banks clearly highlight their fear of Deflation…but…you and I know too well once the mindset kicks in why buy today that will be cheaper next week it takes a very big turn around to reverse that thought process, babyboomers alone have had their peek debt years….Japan has not been fixed in decades I wouldn’t bet this global deflationary trend will be reversed easily….real inflation is based on true economic growth, real jobs, real wages, real demand…I don’t see that on the horizon of the globe anywhere, you?
Interesting that Mr. Temple’s views on interest rates are the exact opposite of Alan Greenspan.
Hi : I just sold a phama company in the topical ointment area. In just 3 sessions i made 10% using limit orders.. Also i bought another closed end preferred stock fund and will be happy to get 7.2% annual yield. I am looking at oil stocks again but will delay buying for some time. love to all S
Chris if Rick Ackerman is correct with his Euro$ and US$ outlook going into 2015 oil and related energy stocks will trade much lower.
All eyes on OPEC to see if any guidance creates a low trade off this $74 level as its held the last 4 years, a bearish outcome suggest off the Weekly oil chart that instead of trading between $75-$110 oil flips and creates a new zone between $50-$75