Huge Move In Uranium Prices

Uranium spot price is now back above $40. Price for uranium fuel has not been this high in years.

No joke, the recovery is now.

Long CCJ.

A magnanimous 7 years, and here is to 7 more.

I have very much enjoyed my time with this site. My stint goes back to the days of the old Peanut Gallery, when any reader could chance to write. I gathered myself a small little following, which I used to take down competitor after competitor.

Eventually, I was approached about joining in a permanent station.

Today I repurchased a position in BTU for $11.80. This move doesn’t make sense on some level, since this removes some of my losses for tax season. However, I’ve liked coal for a while now and BTU has a key advantage over other possible positions – I’ve already done due diligence on them.

I was already toying with the idea, and watching Fly move into BTU today got my own legs going.

I had purchased NADL betting that a deal with Russia’s Rosneft would come to fruition in the fourth quarter. However, oil prices and sanctions have clearly left Rosneft thinking it best to delay the transaction. Leaving me holding a very rough (albeit technically competent) operation.

NADL is no good on its own. Deep sea extraction in this environment is terrible, given the price of oil. The company itself is debt burdened. The only thing that made NADL sweet was Rosneft buying up such a large part of the company with assets and cash – the buying price was something akin to $9 a share, or more.

I bought NADL because the deal was sweet and would have completely changed the calculus for holding investors.

I bought the deal. Not promises of the deal.

I’m not waiting around for another eight months praying the Russians make good on their world. The word of a Russian is worth dick to me.

15% loss on a full position cost me 1.5% net. It will get rolled into tax season. Otherwise, my positions are doing well. We’ll see if they keep it up.

Most of my focus has been on the oil market lately, because when this kind of drop off built on this sparse level of evidence presents itself, you take it fully committed.

But a longstanding dark horse investment of mine has been the uranium industry. So confident in the resumption of this industry am I that every year since the Japan disaster, CCJ has been my pick for the stock of the year contest.

The sector has long been correcting and unloved. This comes from two sources.

The first source is fundamental to how uranium is bought and sold. The market volume is paper thin, and nuclear reactors remain well supplied with upwards of three years worth of fuel at all times. Unlike a coal plant, which takes delivery of fuel almost continuously throughout the year, nuclear power plants are tiny islands of isolation.

The second source is a lack of good news to build excitement in the uranium industry. Shares of uranium stocks have traded like deliveries of uranium – bidless.

Both aspects may be changing though. We are far enough out now from the Japan disaster that reactors are beginning to make adjustments to their supply agreements. As CCJ’s data has well supported, the long term supply agreements have not been prone to the massive drawdown that has plagued the uranium spot price.

Japan’s announcement that they are (finally) beginning the process of restarting reactors (after untold hardships in the face of stubbornness) is the critical breath of life missing from the equation. Nuclear stocks and uranium in particular can begin to get back on the minds of fickle fund managers. Investment can pick up in the sector.

Currently, I am showing uranium spot price in the mid to upper $30-40 range. This is a huge recovery from the high $20’s range that spot uranium was trading in just this spring.

If pricing can keep working upward, steadily, into the $40’s, I’d say we’d be getting close to a big and much needed pick me up.

No I didn’t forget about the elections.

I was lurking in the shadows, you see. Watching Democrats discover that you actually can’t buy elections. There was only minimal reason to speak. Better to let the rocks fall on their own. Besides, what more do I have to say, that I didn’t already say?

I have to confess; even I didn’t imagine just to what extent the last two years would go.

I mean, the president completely fumbling the signature legislation of his first term through gross negligence? Who could have predicted that? That’s epic stupid. STOOPID.

Or Obama casually wading into the shark infested waters that is the gun debate without any game plan? He was a lame duck half a month before his second term even started.

Or the almost-impossible-to-count scandals blowing up chunks of his administration? Ultimately, much of my choice to vote for Obama rested on confidence that he had put exactly the wrong people in charge of the wrong tasks, and that any new executive would simply be too late to catch it and clean it up. Except like, a factor of ten times bigger than I ever guessed.

And along the entire pathway, somehow, Barrack Obama – a man once labeled as the smartest, savviest political force in a century – managed to look terrible at every junction.

I’m not even getting into the first term. Or the continued ramifications of PPACA, which I suspect may have the distinction of being the first sweeping government entitlement to be repealed in US history, at the demands of the citizenry no less.

That has been the true cornerstone of Obama’s presidency. The trampling of old political rules of thumbs.

Back in 2012, I made an analogy that voting for Obama was equivalent to chaining the bad captain’s ankle to the wheel of the ship, so that he couldn’t run from it. Who possibly could have known that Barrack Obama was the kind of man who would respond by chaining his entire party to himself?

President Barrack Obama now has the title of being the worst president of the modern era. But what’s more, his own party is going to carve the tomb stone and write the eulogy, while still losing anyway. Strange times, indeed.

The path ahead is complicated, and I question whether the GOP is up to the challenge. With men like Cruz in their ranks, …sometimes a dumb ally is worth two enemies. On the flip side, Democrats suffered this loss in no small part thanks to Obama – who is the only major piece on the board not changing.

To those of you who have been quietly calling for Obama’s remaining two years to be reminiscent of Bill Clinton’s, you could save your breath. Barrack Obama is not Bill Clinton. He is Barrack Obama. I doubt he has the ability, even if he had the desire.

I suppose we shall see. But for the moment, sitting here in my 9th floor office gazing from the darkness; a smile crosses my lips. And the curtain closes.

The oil market is in the middle of another sharp leg lower. This is going to jolt the players and be painful. Today will not be fun for me. I’m going to have to grin and bear it and distract myself with a bag of popcorn and the spectacle of fifty million hardcore Democrats breaking down live on public access television tonight.

The impetus for the announcement might be, allegedly, a December price cut by Saudi Arabia to US markets.

This is the key takeaway here:

Top global exporter Saudi Arabia increased its December official selling prices (OSPs), relative to benchmarks, to Asia and Europe on Monday, but lowered prices to the United States, a smaller export market.

Which is to say that Saudi Arabia actually raised prices in December.

Guys, come on. Saudi Arabia’s oil market is Europe and Asia, almost entirely. They don’t sell diddly in the United States. Our oil comes from South America and Canada. You can easily check this via public records – the EIA, I believe it was, keeps detailed records about global oil sales, including by country of origin and destination.

If Saudi Arabia is lowering prices on little to no volume sold, then Saudi Arabia is not lowering prices.

In practice, this leg lower probably has less to do with Saudi Arabia and more to do with what is to be expected in a correction like this. This is not the first time I’ve been in a position that bleeds out, to see a moment of stability followed by more sharp bleeding.

APC comes to mind back when that oil well blew in the Gulf. Uranium prices did the same thing. And shares of gun manufacturers after Sandy Hook.

You get a big blowup, some tepid stability, then another collapse.

The second collapse is usually the best buying point. Usually…