Monday, October 29, 2007

Price of energy value of Uranium: $20,000 a pound

As I had predicted in my earlier article, OPEC is now blaming speculators for high prices. Regardless what OPEC is saying now or will in the future, it will not derail in the oil bull market. Oil will eventually reach over a $1000 a barrel. No that is not a typo. In the next 10-15 years the export market will contract by over 70%. Assuming essential services required to keep society functioning at whatever level feasible are still around, that would mean that the average person in the US would have to cut his consumption by 90%. I think it will take prices at least 4 fold higher from here to achieve that. That multiplied with the Fed's aim to use the US dollar to put “Charmin” out of business will result in at least $1000 a barrel. But the road will a long and jagged one. Prices will spike and dip at every turn. Rumors of alternate energies being developed will cause “limit down” down days and threats on oil infrastructure will have the opposite effect. Through it all Joe Kernen and his his band of illiterate merry men on CNBC will keep trying to tell you that speculators are destroying your life. Sharron Epperson will keep telling you that oil is going down on a particular day because 2 and half weeks of world oil consumption were discovered somewhere. Although production should start after 5-8 years will make little difference to her astute explanations. (Those who saw her reaction after Devon's Jack discovery know exactly what I am talking about).

Finally I would like to add that in spite of the long term outlook for oil prices being incredibly bullish it is possible that a pullback to $70 -$80 could happen at anytime. This does not negate the long term fundamentals. I have stated my case above for why oil could go up 10 fold or more over the next 10 years. The fundamentals for uranium are even better than that for oil. Although uranium is used exclusively for electricity whereas oil is hardly used for that purpose, in an energy starved, global warming aware world it is also highly likely that Uranium will eventually trade at about BTU parity with oil. That means uranium at over $20,000 a pound. Seems a bargain at $80 a pound.

Friday, October 19, 2007

Paladin Says Uranium May Rise to $110 a Pound in First Quarter

By Claudia Carpenter

Oct. 18 (Bloomberg) -- Paladin Resources Ltd., which runs a uranium mine in Namibia, expects the price of the metal to rise to as much as $110 a pound in the first quarter of next year, a gain of about 40 percent.

``Availability is the issue,'' Paladin Chief Executive Officer John Borshoff said at a BMO Capital Markets meeting in London today. He forecast first-quarter prices at $105 to $110.

The spot price of the metal that's processed as fuel for nuclear reactors rebounded to $78 a pound last week, halting a decline from a record $138 a pound in June, according to TradeTech LLC, a Denver-based pricing service.

``I heard a utility participated'' in the transaction, Borschoff said. ``It wasn't just some hedge fund.''

Perth-based Paladin plans to produce 900,000 pounds of uranium this year and 2.6 million pounds next year, he said.

Macquarie Bank Ltd., Australia's largest investment bank, this week lowered its 2008 forecast for uranium to $100 a pound, from $140.30, citing in part stockpile sales by the U.S. government in August.

To contact the reporter on this story: Claudia Carpenter in London at .

World Nuclear News