Dines letter, from RSC board Dines Letter (04/03/2009)
"When exploring for leaders of the next bull market, one of the clues is an aggressive leap by stocks from their rebound lows. The accompanying awesome rallies in the last few months encourage our expectations that precious metals and uraniums will be among the leaders.
Many uranium-mining shares are selling at prices comparable to when uranium was around one-tenth its current term price of $70/lb. A rally challenging their previous all-time highs is not impossible, as they have already sold at those levels; and even higher prices are possible if "The Coming Uranium Buying Panic" actually materializes.
The latest Gallup Environmental Poll reports that nearly 60% support the use of nuclear power in this country, the highest ever. The U.S. Navy has used nuclear power for 50 years without a single accident that has released radiation, something that carbon-based fuels have certainly not equaled.
President Obama has so far been cagy about his position on nuclear power, insisting that more research needs to be done on waste disposal. We suspect that Obama's nuclear decision would be revealed by an anticipatory bull market in uranium-mining shares.
Smug overconfidence that oil production will last forever is negated by unanimous agreement by petroleum experts that the world's peak production of oil occurred in 1970 and is already locked in a solid downtrend. While nobody should presume to know the exact timing of the last drop of oil, we could all agree it is sure to come.
China wants to increase nuclear capacity to 75,000 megawatts, drastically higher than the 40,000 of its 2007 plan. It now has 11 nuclear reactors with a capacity of 9,100 megawatts, and has approved construction of 40 nuclear reactors in the last year alone. Chinese companies will be encouraged to buy foreign uranium mines because of its shortage of uranium. In addition to buying foreign uranium deposits, China's National Energy Administration stated that it plans to build uranium stockpiles.
Japan is also wide awake to "The Coming Uranium Buying Panic." While China has $2 trillion with which to lock up the world's raw materials, Japan is the second-largest holder of U.S. debt, and buying mining stocks is a convenient way for them to get out of their U.S. dollars."