Last week, while at the U2007 Global Uranium Symposium, I visited three uranium projects. Two were on the conference agenda, one I was lucky to attend on a smaller, private tour. These tours taught me a lot about a particular type of uranium mining — one that will likely become the future face of uranium mining in the U.S.
Russia set to sign uranium deal with Australia soon - official - KRASNOKAMENSK (Chita Region, Far East), May 31 (RIA Novosti) - Russia has agreed on uranium production with Canadian and Japanese companies and expects to sign a similar inter-governmental deal with Australia in September, the country's top civilian nuclear official said Thursday.
Two uranium auctions this week: How the process works If you think those uranium sales that are often cited as the basis for recently skyrocketing prices are secretive processes, you’re right. Everyone wants to know what price people are willing to pay for the nuclear fuel. While they are often referred to as auctions, these uranium sales are done via a single round of private sealed bids.
I found this on Bloomberg News Service (sorry, no web link) ...
May 30 (Bloomberg) -- Uranium demand will more than double by 2030, with use of the nuclear fuel spreading to Malaysia, Indonesia and Vietnam, said a group representing companies including BHP Billiton Plc, Cameco Corp. and Duke Energy Corp. Demand will climb to 160,000 metric tons by 2030, from 65,000 tons this year, Steve Kidd, director of strategy and research of the World Nuclear Association, said at a Mining Journal uranium conference in London today.
WASHINGTON, May 28 — Even as Congressional leaders draft legislation to reduce greenhouse gases linked to global warming, a powerful roster of Democrats and Republicans is pushing to subsidize coal as the king of alternative fuels.
Prodded by intense lobbying from the coal industry, lawmakers from coal states are proposing that taxpayers guarantee billions of dollars in construction loans for coal-to-liquid production plants, guarantee minimum prices for the new fuel, and guarantee big government purchases for the next 25 years.
With both House and Senate Democrats hoping to pass “energy independence” bills by mid-July, coal supporters argue that coal-based fuels are more American than gasoline and potentially greener than ethanol.
You know I’m no fan of coal. But if the Good-Time Charlies in Washington are going to start throwing money at coal, we might want to take positions to ride that rising tide.
We took some nice gains on a defense stock in Red-Hot Canadian Small Caps a while back, and obviously, I'm going to have to look at adding more. Get a load of this story ... Russia Says New ICBM Can Beat Any System MOSCOW — Russia tested new missiles Tuesday that a Kremlin official boasted could penetrate any defense system, and President Vladimir Putin warned that U.S. plans for an anti-missile shield in Europe would turn the region into a "powder keg."
First Deputy Prime Minister Sergei Ivanov said Russia tested an intercontinental ballistic missile capable of carrying multiple independent warheads, and it also successfully conducted a "preliminary" test of a tactical cruise missile that he said could fly farther than existing, similar weapons.
XX I guess the Russians didn't have anything better to do than start up the arms race again, eh? But the Russians say they're actually late to the party, and that they're just countering potential threats from the Middle East and Asia.
"We see perfectly how our eastern and southern neighbors here, there and everywhere are acquiring short and medium-range missiles," Ivanov said in televised comments at Kapustin Yar, the southern Russian site where the tactical missiles were tested.
Even "moderate additional" greenhouse emissions are likely to push Earth past "critical tipping points" with "dangerous consequences for the planet," according to research conducted by NASA and the Columbia University Earth Institute.
With just 10 more years of "business as usual" emissions from the burning of coal, oil and gas, says the NASA/Columbia paper, "it becomes impractical" to avoid "disastrous effects."
S.African Q1 gold output falls 7.6 pct yr/yr South African gold output fell 7.6 percent to 2.02 million ounces (62,807 kg) in the first three months of 2007 compared to the same period last year as ore grades declined, the Chamber of Mines said.
It used to be that silver outperformed gold. No longer ... Finally, uranium...
Denison sees $150 uranium, pricey takeovers The price of uranium could reach $150 this year or next, but should ease over the longer term, the chief executive of Denison Mines Corp. Speaking at the Reuters Global Mining and Steel summit, Peter Farmer also said his company has had talks with potential takeover targets, although high stock valuations are a deterrent to making moves, he said.
Russia and China Battle over African Uranium Does interest by China National Nuclear in UraMin signal an era of more acquisitions and consolidations in Africa? Russia has developed ties in Namibia. Which would be the logical next acquisitions in Africa if UraMin is bought out? [XX Sean’s note – guess who has UraMin in its portfolio?]
Remember those "Airport" movies from the 1970s, the ones starring George Kennedy? I remember they used to fly in all sorts of weather. Not so today – it is raining here in Corpus Christi, and my flight plans are snafu'd.
I've gotten on standby for another flight from Dallas later tonight. That depends on the weather clearing here in time for a plane to land here and take me to Dallas. Since my plane diverted to Laredo, I don't take that as a good sign.
I've been two weeks on the road now with a brief, one-day stopover in West Palm Beach to attend a Father's Day event at my son's school and celebrate my anniversary. If homesickness was a disease, I'd have a fatal dose right now.
On Thursday, I visited two operating In-Situ Recovery uranium operations.I hesitate to call them “mines” because even though they extract uranium from the earth, they aren’t using shovels.Instead, they build what are essentially giant water treatment plants (sort of like the world’s biggest Culligan Water Softener) to suck the uranium out of porous sand layers between layers of clay.It is this geological feature that makes ISR recovery work so well in Texas.
There’s still uranium involved.It’s just not your classic definition of a mine.
The ISR process takes place at a central plant. This is fed by satellite operations that are connected by LO-O-O-O-NG hoses or that produce slurry that is trucked to the central plant. The slurry is trucked in a vehicle like this ...
Man, I so want one of those "RADIOACTIVE" signs for the front of my car. I would so RULE the South Florida highways.
Of course, a visit to the field wouldn't be complete without a photo next to a drilling rig. I posed for one yesterday. Today, you can see my friend Jason D'Alessandro, a fund analyst from New York, doing the same ... And yes, ladies, he's single (LOL!)
I've previously written about ISR operations using baking soda to rub the uranium off the rocks. Maybe in some places, but not so in Texas. Instead, they just use oxygenated water. Here are the oxygen tanks at the field operation. I'm titling this next picture "Great Balls of Oxygen" ...
The Oxygen tanks (and everything else) are on skids resting on cement slabs. This makes it very easy to move the different pieces where they are needed and tinkertoy them together. It also makes rehabilitation of the area very easy once the ISR operation is done.
And this is your basic field ISR operation ...What we see here are two rows of pumps -- one to pump the oxygenated water in, one to pump the uranium-rich water out. That's basically it. Using this method, ISR operators have a 75% recovery rate (they recover 75% of the uranium resource in the ground). However, with uranium prices climbing, it's becoming worth their while to go back and get more of the uranium out.
And all that pumping produces this ... This is uranium slurry -- little plastic beads to which the uranium attaches itself. Now, you'll notice that the slurry is in someone's hand. I'd like to make it clear that it is not MY hand (or Jason's hand for that matter). Indeed, it is the hand of someone who should know if this is a good idea or not. 'Nuff said.
Well, we've recovered the slurry. On to the ISR plant ...
This looks amazingly like the Lego playground castle in West Palm Beach, but it's actually an ISR plant. Uranium is being recovered there as we speak, to the tune of a million pounds per year. It's a fairly simple operation -- as I said, basically a water treatment plant. I could show you a bunch of vats and tubes, but what does that prove. Instead, here's what you've been waiting for -- the money shot!Oh yeah, that's yellowcake uranium in that little plastic container being held by an engineer. I don't want to say that uranium engineers tend to be old, but some of them (not the young man pictured) wrote their doctorates on "dirt" and "rocks", which were fairly new concepts in those days. Just kidding!
All kidding aside, the manpower problem in the uranium industry is reaching critical mass. If you have a kid approaching college age who is looking for a career, you could do worse than to push him or her toward geology or mining engineering.
And now, what do we have for our contestants ... Each of these barrels contains 900 pounds of 83% pure yellowcake. In other words, each barrel is worth $93,735 at today's spot market price. I wonder what they'll be worth next week?
Time for me to hop on a plane. Have a good weekend.
GET YOUR WEEKEND ON
Oh, here's something to get your weekend on. It's "something danceable"...
Yesterday, I went to visit a uranium project – interestingly enough, owned by one of the companies in the Small Uranium Wonders report. And on Tuesday, I had dinner with two of the CEOs from the Small Uranium Wonders report. They have to be careful about what they say – they can't tell me anything that isn't public knowledge – but they can highlight things that are public knowledge but not widely recognized as important (the stuff that is buried in reports and SEC filings). It's been a very interesting time.
I need more time to digest the stuff from this Symposium before I write an update for Small Uranium Wonders. Meanwhile, I'm sending out an update for the Golden Age of Uranium report. In it, I recommend you bag two rounds of gains. If you bought those stocks on my original recommendation (when the report first came out), you should easily grab triple-digit gains on each one.
Why am I recommending grabbing gains when I'm so bullish on uranium? I'm afraid you'll have to read today's update to find out.
I'll share with you one thing I learned from Treva Klingbeil, the editor of the Nuclear Market Review. Ms. Klingbeil had a great description of the new uranium futures, which are supposed to add transparency to the market. "Everyone wants more transparency," Ms. Klingbeil explained, "as long as I can see what you're doing and you can't see what I'm doing."
That just cracks me up.
Above, you'll see a photo of me at the uranium project I went to visit yesterday. I'm looking at drill core samples. See how the samples change color from yellow sand to blue mud and so on? In Situ Recovery works best when there is clay above and below the sand-bearing ore body, the better to seal in the water you are pumping through the sand to suck out the uranium. And that's just what we've got here. More on that in my next update for Small Uranium Wonders.
Last night, we got word that UX Consulting fixed the price of uranium at $125 per pound. Pretty bullish! There are many reasons why, and I'll cover a bunch of them in my MoneyandMarkets column on Wednesday. But here is another one …
The U.S. Energy Information Administration reported Wednesday that owners and operators of U.S. civilian nuclear power reactors purchased a total of 67 million pounds U3O8E (uranium oxide equivalent) of deliveries from U.S. and foreign suppliers during 2006.
As of the end of 2006, total unfilled uranium requirements for civilian reactors for the period of 2007 through 2016 came to 276 million pounds.
Approximately 16% of the uranium purchased originated in the United States. The weighted average price of $18.61/lb increased 30% over the 2005 price, according to the EIA. The agency is the supplier of official energy statistics from the U.S. government.
Analysts cautioned that a continued outflow could be an indication that further liquidation in the gold market might be on its way.
Bullion held by StreetTRACKS fell 16.6 tonnes, or more than 3%, to Thursday's 469.15 tonnes, which marked the level last seen in mid-February, compared with 485.8 tonnes on Tuesday. The decline came after the bullion ETF saw its metal holding peaked at a record 500.7 tonnes just on April 19.
All in all, I think it's best to wait and see what happens when gold hits its next level of support before buying again.
Silver looks more bullish …
It's hard to imagine silver going up when gold goes down. So maybe this support silver is finding is bullish for gold as well.
Next, let's look at a metal we don't look at as often as we should – copper.
This is a classic decision point, and it should happen this week. Kind of exciting, unless you're long copper, in which case it could be brown trousers time.
Oil could break out. If it doesn't, we could see more indecision as it bounces along in a range. What does gasoline have to say about this? …
Gasoline is accelerating. This is mainly due to lack of refinery capacity. Personally, I think gasoline prices have gone up too far, too fast. When I hear endless bitching about gasoline prices in line at the grocery store, it tells me people are ready to cut back on driving (as I detailed on my blog last week, so far consumers haven't changed driving).
A downward change in driving habits should ease back the throttle on gasoline prices. Indeed, that's part of why I think ALL US corporations should go to mandatory telecommuting twice a week. It would kick al Qaeda right in the wallet.
But let me put that soapbox aside for a minute while we look at one more chart – natural gas …
It looks like a setup for a major breakout. If hurricane season comes early and hard, look out!
Hat-tip to my friend Phil from HoweStreet.com for sending me this story about the poisoned food we're getting from China. About the only good news I could find in this piece on China's contaminated food is that we don't import THAT much of it. The US imports about $2 billion worth of Chinese food versus $10 billion of foodstuffs from Canada.
WASHINGTON - Dried apples preserved with a cancer-causing chemical. Frozen catfish laden with banned antibiotics. Scallops and sardines coated with putrefying bacteria. Mushrooms laced with illegal pesticides.
These were among the 107 food imports from China the Food and Drug Administration detained at U.S. ports just last month, agency documents reveal, along with more than 1,000 shipments of tainted Chinese dietary supplements, toxic Chinese cosmetics and counterfeit Chinese medicines.
For years, U.S. inspection records show, China has flooded the United States with foods unfit for human consumption. And for years, FDA inspectors have simply returned to Chinese importers the small portion of those products they caught - many of which turned up at U.S. borders again, making a second or third attempt at entry.
Now the confluence of two events - the highly publicized contamination of U.S. chicken, pork and fish with tainted Chinese pet food ingredients and this week's resumption of high-level economic and trade talks with China - has activists and members of Congress demanding the United States tell China it is fed up.
Dead pets and melamine-tainted food notwithstanding, change will prove difficult, policy experts say, in large part because U.S. companies have become so dependent on the Chinese economy that tighter rules on imports stand to harm the U.S. economy, too.
I added emphasis to that last part. Apparently, our government would LIKE to protect us, but can't because that might hurt the profits of US agri-business.
Some more from the story (oh yeah, it gets worse) …
As a result, the United States finds itself "kowtowing to China," Cassidy said, even as that country keeps sending American consumers adulterated and mislabeled foods.
It's not just about cheap imports, added Carol Tucker Foreman, a former assistant secretary of agriculture now at the Consumer Federation of America.
"Our farmers and food processors have drooled for years to be able to sell their food to that massive market," Foreman said. "The Chinese counterfeit. They have a serious piracy problem. But we put up with it because we want to sell to them."
U.S. agricultural exports to China have grown to more than $5 billion a year - a fraction of last year's $232 billion U.S. trade deficit with China but a number that has enormous growth potential, given the Chinese economy's 10 percent growth rate and its billion-plus consumers.
Once again, profits over the health of our nation. Ask yourself: If al Qaeda was doing this to us, would we put up with it? Why are we risking the health of all of us and our children just to make a few corporate farms and agri-businesses rich?
Two more paragraphs, then I'll let you go read the whole thing …
China's less-than-stellar behavior as a food exporter is revealed in stomach-turning detail in FDA "refusal reports" filed by U.S. inspectors: Juices and fruits rejected as "filthy." Prunes tinted with chemical dyes not approved for human consumption. Frozen breaded shrimp preserved with nitrofuran, an antibacterial that can cause cancer. Swordfish rejected as "poisonous."
In the first four months of 2007, FDA inspectors - who are able to check out less than 1 percent of regulated imports - refused 298 food shipments from China. By contrast, 56 shipments from Canada were rejected, even though Canada exports about $10 billion in FDA-regulated food and agricultural products to the United States - compared with about $2 billion from China.
If you've been reading my blog or my posts at MoneyandMarkets.com, you know that I'm a little obsessed with Colony Collapse Disorder, which is wiping out honeybees. So I read with interest a post at DailyKos about organic versus commercial bee-keeping, and why raising honeybees commercially is the reason for the die-off. You can find more explanation of the organic versus commercial thesis here.
The thesis in a nutshell: By raising bees in square Langstroth Boxes, we are killing the honeybees. Feral honeybees build colony cells 4.9 millimeters wide. A Langstroth box, used for about 200 years, has a cell about 5.4 millimeters wide. This breeds larger bees and gives pests like mites more room to breed and kill the bees.
I have to say I'm not convinced. I'm not a bee expert, but this is a line from the story: "recent data had shown that the number of managed bees is Starting to recover slightly due to more diligent pest management, but that the feral bee population has been decimated."
Well, if "going organic" is the solution to everything, why are feral honeybees dying? They build the cells the "proper" size. They feed their colonies honey, not syrup. They don't artificially replace their queens to prevent swarming. In other words, feral honeybees do everything that organic beekeepers say they should be doing, and yet they're the ones whose populations are suffering the brunt of the die-off.
I am not a bee expert, however I still believe it is new breeds of pesticides that are the problem. For one thing, pesticides affect feral and commercial honeybees alike, don't they?
Honeybees are our best immigrant (from Europe) migrant workers. They don't ask for money or days off. Our agriculture depends on them. We have to save them and they are dying like flies (pardon the insect pun). Saving them should be a national priority. I hope this problem is solved soon, and I'll likely keep obsessing about it until we hear some good news.
Red-Hot Canadian Small Caps subs already own this one.
Energy Metals in Exclusive Negotiations Regarding Potential Sale of CompanyVANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--May 18, 2007 -- Energy Metals Corporation (Toronto:EMC.TO - News)(NYSE Arca:EMU) announces that it is in exclusive negotiations with respect to a potential sale of the company. No assurance can be given that the negotiations will be successful.
Of course, we don't what will happen on this deal. Maybe all the good news is priced in. What do you think?
I Just Flew In From Vegas, and Boy Are My Arms Tired
I caught the red-eye from Las Vegas last night. I landed in time to rush to my son's school, where they were having a Father's Day Breakfast. My son made me some amazing gifts I will treasure for a lifetime, including a hand-made tie (from a 4-year-old, so maybe it a was a bit irregular in the cut) and a barbecue apron. Cool beans. I wouldn't have missed it for the world. Another dad just drove in non-stop from Tenessee for the breakfast. What is it with dads being scattered around the country on business?
Anyway, I've never been able to sleep on airplanes, so the flight back gave me ample time to reflect on what I learned and saw at the Money Show. These shows keep getting bigger -- it was packed this year. That goes doubly so for my presentation on uranium. Since it was slated at 6 pm in a room that even I had trouble finding, I thought I would be speaking to a small handful of people. Boy was I wrong. A LOT of people showed up, and they had good questions, too. I love talking to smart people about the hottest metal around.
And speaking of that, have you seen uranium stocks today? ZOOM! Anyone who bought the stocks I profiled at the show is already reaping open gains (one of the stocks I talked about at the show just spiked higher and now trading is halted on that issue -- NICE! We'll see what that is about shortly). And the stocks in my Small Uranium Wonders report are blasting off.
And yet we have little news to drive it. Obviously, this is speculative money at work. Anyone who buys these stocks will have to develop a strong stomach for ups and downs. And even if your favorite stock craters for a few days or weeks, remember the longer-term underlying trends are HUGELY bullish.
And here's something of note: Uranium Participation Corporation reports its net asset value at April 30, 2007 was CDN$815,168,000 or CDN$14.66 per share. On a fully diluted basis, after assuming the full exercise of all outstanding warrants, net asset value per share was CDN$13.96.
It's now trading at C$16.23, a 16% premium to its assets. Now this is nothing new -- Uranium Participation Corp, a fund that holds physical uranium and is Canada's uranium ETF, has traded at a premium to its assets for quite some time. The premium shows that investors are bullish -- they believe that the price of uranium is going much higher.
I believe they're right. It will be interesting to see what the next uranium spot price will be.
Demand for gold increased 4% from the same quarter last year, even as the spot price of gold has increased 17% during the same time, according to the World Gold Council.
Identifiable gold demand jumped to 831.7 tonnes of gold worth $17.3 billion compared to the first quarter of 2006, in which buyers sought 797.8 tonnes of gold worth $14.2 billion.
The big mover: Chinese demand. Consumer demand for gold in China was up 31% on the same quarter last year, as the Chinese flocked to buy gold jewellery and commemorative "lucky balls", particularly around Chinese New Year in mid-February.
Demand in the world's largest gold market, India, also surged in the first quarter, rising by 50% on Q1 2006 figures. Strong economic growth and the onset of the wedding season played a role.
Still, the problem for us now is that gold is getting shellacked. Look at the following weekly chart of gold. While long-term uptrends are still in place, in the short-term, gold looks ready to test support around the $640 to $645 area. Stay tuned.
In my workshop yesterday, I asked how many people thought gasoline prices would get to $4 this summer. Only a few hands went up. Well, it turns out some motorists in the US are already paying $4 per gallon. $5 per gallon, anybody?
Some gasoline facts …
Pump prices have soared 43% since the end of January.
The average U.S. household is already spending $1,000 more per year on gasoline than it did five years ago. That's an increase of 85%, and rural households have been hardest hit because they spend about 20 percent more on gas than urban residents.
Most Americans are locked into their driving habits and can do little to alter their fuel-buying patterns when prices rise, experts say. For example, the number of workers with commutes lasting longer than 60 minutes grew by almost 50 percent between 1990 and 2000, according to Census Bureau data.
Weekly gasoline demand in April increased as much as 1.9 percent over the same weeks in 2006, even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month.
Last night, I decided to tour Las Vegas with two of the women from work, Angie and Kristen. Kristen is young and has never seen Vegas. Angie is a Vegas veteran; she's been here and done just about everything.
So we were going to take the tram that runs from the Mandalay Bay (where we're staying) through the Luxor and Excalibur. But we got lost and we walked the whole way through the Luxor and Excalibur instead. It was fun to see the hotels, which got older and a bit more shabby as we went along, but had that old Vegas feel. In the Excalibur the waitresses are dressed up as Jesters. I was thinking wenches or witches would be more appropriate (for that King Arthur feeling) but, what the heck. Oh, also, the smell of old cigarette smoke started to get stronger in the Excalibur Casino.
Then we walked across the street to the MGM. Here, we planned to pick up the monorail. We followed the signs a-a-a-a-all the way through the Casino. MGM is even older and its Casino is even more cigarette smoke-soaked than the others, but very cool. MGM has a live lion on display in a walk-through, walk-under display. It was asleep but we enjoyed walking under the big cat and checking it out.
And we kept walking and walking, and trudged some more. I was starting to think the monorail station was a myth, some legend that Las Vegas tale-tellers spin for foot-weary visitors. But finally -- there it was! The freaking monorail station.
The monorail is a great way to see Vegas. And along the way, we enjoyed White Trash Dinner Theater, as this family of women fresh from an episode of Jerry Springer bickered and blustered through most of the monorail ride, right in front of us. Mom had a hairy mole on her face large enough to be featured on a topographical map of Las Vegas. Daughter #1 kept getting nagging phone calls from her baby's daddy, and Daughter #2, wearing jeans she bought 25 pounds ago and a "Don't You Wish You Were As Hot as Me" T-Shirt -- rather optimistic, but let's move on -- kept threatening her mom about splitting up the three Musketeers and going back on her own. "Oh, you don't want to know how I'll get home! Oh, I'll get home. But you don't want to know how!"
How the heck was she going to get home? Steal a car? Hijack a camel? Join al Qaeda? Marry Kevin Federline? I guess we didn't want to know.
We finally made it to Bally's then walked-walked-walked to the Bellagio to watch their "dancing fountains," which is VERY cool. Fountains, lights and fog are synchronized to classical music. I recognized the music as something from the movie Rollerball, but beyond that I can't name that tune.
Too footsore to retrace our steps, we hobbled back to Ballys and grabbed a cab back to Mandalay Bay. Then I abandoned the women ("It's too late for me … save yourselves!") and I dragged myself to bed. All in all a thoroughly enjoyable evening, though my spasming feet ("Trudge on us all night, eh? We'll show you, fat man!") kept me from nodding off to sleep too early.
Today we start all over again, with the Weiss Breakfast at 7:30 Local Time.
A couple of your Small Uranium Wonders stocks are already doing well, most were dragged down by the recent sell-off in the uranium sector (indeed, it was a sell-off across the metals sector)
However, there is one stock I need to address. It's lost about 30% of its value in the past week or so! We're getting some calls at the office.
If you have this portfolio, you know what stock I'm talking about. Yes, I'm watching it closely. The CEO, who I interviewed before I recommended the stock, is speaking at a company meeting tomorrow.
The Investor Relations guy for the company said that that there has been absolutely no fundamental change in the past 2 weeks. He says the company is still well on track to produce uranium and to increase production next year. There is no change in the negotiations for a milling agreement. The resignation of one of the directors was a nonevent.
My IR contact said that the CEO would be commenting on this action Wednesday, at the annual meeting.
I would recommend being patient until then. From what I know now, I think the stock is a steal at current prices, but I want to see what the CEO says. I'll have an update for you after the company meeting tomorrow.
I am also planning an update after my trip to the uranium conference next week, with potentially more picks for Small Uranium Wonders subscribers.
Bolton of Fidelity Says Stock Markets May Be About to Fall, Shorts Shares Fidelity International's Anthony Bolton, who has called bear markets successfully on two previous occasions, said stocks may be about to fall because there's too much risk in financial markets. [XX This is interesting especially considering the Money and Markets I've written for tomorrow. More on that after it gets published]
Tokyo gold recovers, platinum hits recordTOKYO, May 14 (Reuters) - Tokyo gold futures rose on Monday, snapping a four-day losing streak, while platinum futures hit a record high ahead of a supply and demand report.Analysts said a rise in the dollar above 120 yen and a rebound in U.S. stocks late last week helped stop further selling in yen-based gold futures, and instead, encouraged those who had gone short in the past sessions to unwind their positions.[XX Sean’s note – it’s interesting how the US dollar and gold are moving up at the same time]
A week ago, I posted (belatedly) about how a Chinese supplier of wheat gluten was caught spiking it with poison. To recap, Chinese wheat gluten containing melamine was blamed in a wave of pet deaths in March due to kidney failure. The U.S. Food and Drug Administration investigated, and nearly 100 brands of pet food made with the ingredient were ordered recalled. I was following the story and just getting more and more upset by how little coverage there is in the media. When it was mentioned, it was brushed off as a poison in pet food only.
That is a lie. While our pets are A) more susceptible and B) hit with higher doses, the evidence indicates to me that Chinese companies are also spiking people food. With poison. As in: Poisoning you.
Anyway, the lies and obfuscation went on. CNN even ran a story saying that melamine (the poison) is actually praised and sought after by customers. How did they get such an obviously unfactual quote? By asking a manager of one of the factories that produces poisoned pet food!!!! Isn't that like asking Al Capone if there are complaints about organized crime? "No, no, the people love us. They want us out on the streets!"
Damn, if you ever needed an example of how corrupt and useless the mainstream media has become, bookmark this CNN story. But it's not just CNN. Fox News, ABC, take your pick – none of them did more than cursory investigations into the story.
However, the smoke and mirrors couldn't obscure that it wasn't just one rogue pet food company. Sure, that guy got greedy and put too much poison in the food. Dogs dropped dead, Americans woke from their TV-induced stupors, and took notice. But don't think it's just one guy. It's common practice in China!
China said Thursday that it had no record of exporting any agricultural products that could have tainted the pet food that has been linked to the deaths of at least 16 cats and dogs in the United States.
The Chinese government said that wheat gluten, which has been linked to a pet food recall in North America, had not been exported from China to the United States or Canada.
Well, this went on for a while. During the course of the investigation, we learned that the Food and Drug Administration's food safety and nutrition arm — responsible for 80 percent of the nation's food supply — has fallen from $48 million to $28 million over the past decade. The U.S. Department of Agriculture, which oversees about one-fourth as much food, gets four times the funding. You can read that story HERE.
Can't you just hear the wheels clicking in the twisted brains of al Qaeda terrorists? They don't have to go through the trouble of bombing some of us. They just have to open a food distribution company and they can poison all of us!
Anyway, so while the Chinese denied everything, the US companies that bought the massively poisoned pet food still had the receipts from the food factory of a guy named Mao Lijun. So, the FDA went over to China to find him. But someone tipped Mao off that the FDA was coming (gee, I wonder who?)
Farmers in this poor rural area 400 miles northwest of Shanghai had complained to local government officials since 2004 that Mao's factory was spewing noxious fumes that made their eyes tear up and the poplar trees nearby shed their leaves prematurely. Yet no one stopped Mao's company from churning out bags of food powders and belching smoke -- until one day last month when, in the middle of the night, bulldozers tore down the facility.
It wasn't authorities that finally acted: Mao himself razed the brick factory -- days before the investigators from the U.S. Food and Drug Administration arrived in China on a mission to track down the source of the tainted pet food ingredients.
Read the whole thing by CLICKING HERE. You can see that the government (or at least someone in the government) was protecting Mao's little death factory. And when it became too much of an embarrassment, they told him to knock the thing down and split.
But then the story takes another interesting turn. Showing perhaps that not everyone in the Chinese government is endlessly corrupt, China's authorities actually caught Mao! After a few weeks, he confessed. But I notice two things …
The Chinese government says Mao's was a rogue operation
The US government says while a whole range of livestock (including fish) have been poisoned), no human food was poisoned.
Point #1 is obviously false – CNN's story, linked above, has an interview with a factory owner that also puts melamine in animal feed. Point #2 rings false as well. Why would Chinese food suppliers draw the line at poisoning people? "Oh, I'm going to poison dogs, cats and farm animals, but poisoning people, that's just wrong!"
Brodrick is hedging his speculative bets on US-based uranium exploration companies over the short term because of US government talks to decrease of uranium stockpiles. "I think lowering stockpiles will stimulate uranium exploration and mining activities in the US, and bring more projects to the forefront."
Actually, what I said (or at least meant to say) was the recent talk from the Department of Energy that it may lower its SALES from its stockpiles. What a difference a missing word makes, eh? Maybe I was misquoted, maybe I mis-spoke. Well, it's still a good article and the folks running U308.biz are top-notch. You can read the whole thing HERE.
If you've been reading this blog for any length of time, you know that Global Warming has long been one of my areas of interest. The following story is of big interest for people like me who live in Florida; maybe for you as well.
WASHINGTON — Future eastern United States summers look much hotter than originally predicted with daily highs about 10 degrees warmer than in recent years by the mid-2080s, a new NASA study says. Previous and widely used global warming computer estimates predict too many rainy days, the study says. Because drier weather is hotter, they underestimate how warm it will be east of the Mississippi River, said atmospheric scientists Barry Lynn and Leonard Druyan of Columbia University and NASA's Goddard Institute for Space Studies. "Unless we take some strong action to curtail carbon dioxide emissions, it's going to get a lot hotter," said Lynn, now a scientist at Hebrew University of Jerusalem. "It's going to be a lot more dangerous for people who are not in the best of health."
So how hot is hot?
Instead of daily summer highs in the 1990s that averaged in the low to mid 80s Fahrenheit, he eastern United States is in for daily summer highs regularly in the low to mid 90s, the study found. The study only looked at the eastern United States because that was the focus of the funding by the U.S. Environmental Protection Agency, Lynn said.
It's even worse if you live in the city ...
In the 2080s, the average summer high will probably be 102 degrees in Jacksonville, 100 degrees in Memphis, 96 degrees in Atlanta, and 91 degrees in Chicago and Washington, according to the study published in the peer-reviewed journal Climate. But every now and then a summer will be drier than normal and that means even hotter days.
So basically, we're getting Saudi Arabian weather without the oil. But don't worry -- once the ice caps melt and the sea levels rise 20 feet, much of Florida will be underwater. That's dark humor, folks.
Tom Jeffries and I talked about a whole range of subjects. I also talked about the potential for a market sell-off, and what do we get later in the day? A sell-off! Maybe I should be more careful what I say, LOL!
The markets sold off across the board today, and natural resources stocks got hammered. Don't worry too much. The market is way overbought and some consolidation is not only expected, it's necessary for the next leg up. The commodity supercycle is still intact.
#1<>Kinross marks 670% increase on bottom lineKinross Gold Corp. is in the "sweet spot" of a surging gold industry, chief executive officer Tye Burt says of the miner's 670-per-cent jump in first-quarter profit on a 24-per-cent rise in revenue. Profit for the three months ended March 31 totalled $68.5-million (U.S.). "We think we had an excellent quarter, and we're looking forward to the rest of the year," Mr. Burt said yesterday in a conference call. #2 Endeavour Reports Record Silver Production in Q1, 2007, Up 63%. Endeavour Silver Corp. (TSX:EDR)(AMEX:EXK) today reported record quarterly production totalling 490,986 oz silver and 1020 oz gold (541,986 oz Ag equivalents) in the 1st Quarter, 2007 from its Guanacevi Mines project located in Durango, Mexico.
#3 Energy Metals surges ...
There wasn't news yesterday, and the stock took off like this. Is it a late response to the news last week that the company signed its first uranium sales agreement?
#4 Global Gold Production Is Falling: Peru's Energy and Mines Ministry reported this morning that gold production in the country was down 14% in March at 15.1 million grams compared to the same period last year. Peruvian production has fallen 20%, 16% and 14% in the last several months ... South Africa’s gold production fell 9.5% in March 2007, compared with the previous month, and 10.8% compared with March last year ... and around the world last year, global mine production cash costs rose by $45/ounce, or 17%, year-on-year to $317/ounce, while global mine output fell by over 3% to 2,471.1 metric tonnes.
Naturally, falling global production puts upward pressure on gold prices. Indeed, if you can find mining companies that are increasing production, they make the short list of likely winners.
Looking at a short-term (daily) chart of gold, I see mixed signals. Take a look for yourself ... How will this work out? I think resolution may come from another source, the FOMC meeting today. The US dollar has rallied going into the meeting, because traders are pricing in the chance that the Fed might hint at raising rates. I think the Fed is more inclined to a "steady as she goes" course. If my hunch is right, the US dollar could sell off after the meeting. And that could provide a boost to gold, perhaps enough to get above overhead resistance.
What if I'm wrong? Then we could see gold go back and test the 670 level. However, the longer-term fundamentals for gold are very bullish, so this would be a great buying opportunity. It seems win-win to me.
StockInterview.com has a good rundown on the latest uranium auction, where the spot price of uranium hit $120 per pound. Now remember, this is different from the new uranium futures, which settled at $143 per pound yesterday. The front-month uranium future is the June contract. So, whoever is trading it thinks uranium will be worth $143 per pound in June (less the risk premium).
Anyway, StockInterview has a report from Nuclear Market Review, revealing: "Bids were made through a variety of channels ... Sellers were unresponsive and buyers were unable to conclude purchases by week’s end." No sales were actually made, and they raised the price to $120 per pound anyway. I'm not sure exactly how that works, maybe that's the "best-guess" price (what you would have to pay if you wanted it right now). However, if sellers aren't willing to sell, that tells me that prices are going to go higher. And $143 per pound in June may not be far-fetched at all.
We saw uranium stocks sell off hard yesterday, then most of them recovered to close slightly down for the day or even higher. I don't know what's going on in the stocks besides hot money rotation. I do know that in the longer term, the price of the mining shares should follow the price of the underlying metal.
From the Bloomberg Wire (sorry, not on the web yet) ...
May 8 (Bloomberg) -- Gold fell as a rebound in the dollar against the euro may erode investor demand for precious metals as an alternative investment. Silver declined. Gold has moved opposite the dollar against the euro 79 percent of the time this year. The dollar gained today for the first day in three before the Federal Reserve meets tomorrow to discuss interest rates. There is a ``threat of a stronger dollar in the near term'' before the Fed meeting, John Meyer, an analyst at Numis Securities Ltd. in London, wrote in a note today. ``The Fed may raise interest rates to combat inflation.''
XX My take -- I find it highly unlikely that the Fed is going to raise rates, not with the 2008 election cycle already getting underway. So this rise in the dollar/dip in gold is probably a good chance to get long gold. I expect the Fed to disappoint dollar bulls at its meeting tomorrow, and the dollar should slide lower. I've made a chart showing the existing trend ...
In Monday's NYMEX action, the front-month (June) uranium future settled at 135 after making a high of 140. But only six contracts traded. Interestingly, 20 contracts for January traded at a price of 150.50.
So speculators or whoever is trading this expect the price of uranium to be $150 per pound in January.
Remember, just because the futures settled at that price yesterday doesn't mean prices can't go up or down a lot today. Especially when the future is so illiquid, we could see big jumps either way.
ST. LOUIS (ResourceInvestor.com) -- TradeTech increased uranium spot prices to an all-time record of $120 per pound in anticipation of today's startup of futures trading on the New York Mercantile Exchange. The June contract hit $140/lb in its first day, with January 2008 U308 trading at $150.50/lb, raising the question of whether futures will trace the price of uranium or lead a life of their own.
A Ux Consulting Company (UxC) spokesperson told RI that as the current date gets closer to the futures settlement date, “you’re going to see the gap narrow” between the spot price and the contracts.
I talked to one of my sources at the NYMEX. The June uranium future (the front month, or what we'll use going forward to track the price of the metal) opened at $132.05 per pound.
There wasn't a lot of activity -- it's very illiquid, as I expected. However, the contract got as high as $135. When I spoke to my friend, it was currently being offered at $137.45 and bid was at $120.
One day does not a trend make. However, if you wanted to look at this from a bullish perspective, $132.05 is way up from the recent spot price set at auction of $113. And I believe this is why we're seeing many uranium stocks head higher today.
Remember, the debut of a new future often marks an intermediate term top. Prices could go down tomorrow ... or even this afternoon. Still, if you're a bull, this is good news.
May 7 (Bloomberg) -- Copper, nickel and lead, the best performing commodities in the past four months, may be the worst by year-end.
On Wall Street, the chorus is getting louder that rising metal supplies are outpacing demand. From Goldman Sachs Group Inc. to JPMorgan Chase & Co. to Societe Generale, there are warnings of a mania that is showing all the signs of a climax.
XX Ah, but see how the bubble is presented as fact as first, then we find out it's "warnings" from different Wall Street firms? And how correct have these firms been in the past ...
To be sure, many of the bears were wrong so far this year. An investor who acted on the advice of JPMorgan, the third- largest U.S. bank, missed gains of 67 percent for nickel, 30 percent for copper and 41 percent for lead, the best-performing commodities in the 26-member UBS Bloomberg CMCI Index.
It IS true that, as Stockholm-based copper producer Boliden AB is quoted as saying in the story, that world supplies of copper outpaced demand by about 50,000 tons in the first quarter. Global output rose 8 percent in the period, twice as much as demand, the company said.
However, it's also true that the Chinese withheld buying copper in the first quarter to try and manipulate prices. How is that working out for them now ...
Maybe not so good.
I'm not saying the bears are wrong. I'm saying that Bloomberg gives far too much weight to one side of the story here. Maybe prices will go down. But to do that, the market will have to overcome the tremendous demand we are seeing in China and are starting to see in India. Those bullish fundamentals haven't changed.
Uranium future start trading on the NYMEX today. Shares of uranium miners and the Uranium Participation Corp (the Canadian uranium ETF) have sold off in anticipation, because most traders expect futures to herald greater transparency in uranium prices and that should bring prices down in the short term.
The last uranium auction set the price at $113 per pound. Bids have dried up in anticipation of the start of uranium futures trading -- that is, utilities believe they can get a better deal through futures rather than auctions. Also, historically speaking, the introduction of a new contract has usually meant an intermediate high in prices.
I think one thing a lot of people could be watching is if the near-term uranium futures contract closes above or below $100 per pound today. If it's above, that may signal that we won't see much more of a pullback in uranium mining shares. In other words, a short-term dip in prices is already priced in. If uranium stays in triple digits, that shows pent-up demand is very strong.
If the uranium contract closes below $100, that may tell us the long-anticipated price pullback is here. For me, that has buying opportunity written all over it. It could be our best chance to buy near-term uranium producers for the rest of this year. The fact remains that longer-term, the fundamentals driving the price of uranium are strong and getting stronger. A short-term dip is a gift to investors.
There is a third alternative no one is talking about -- that uranium prices may immediately go higher and not look back. While it doesn't seem likely, in the futures market anything is possible.
The good news is my subscribers are well-prepared no matter what happens. I've recommended taking gains in Red-Hot Asian Tigers and Red-Hot Canadian Small-Caps recently, so that means plenty of cash onhand to buy miners on the cheap. Both portfolios are bristling with great uranium stocks. And the subscribers who bought my two uranium reports have open gains AND the potential to add to positions if opportunities present themselves.
It's going to be a wild day. Check back tonight and I'll post uranium's closing price.