Bigworld, >> without those loans those banks would be insolvent <<
Yes, and the Fed isn't going to allow a major banking crisis and unravelling of the financial system. Powell doesn't want to reverse course on rates, but he can't afford to watch the banking system unravel. So the Fed would flip to dovish to avert the crisis, and with that the stock market would take off.
Anyway, trying to predict stock market movements with any consistency is almost impossible. The one data point we have that has stood the test of time (several centuries) is that the long term trend for the stock market has been up. Another truism is that the broad stock market has matched or beaten inflation over the long haul, as have both gold and real estate.
Anyway, I figure it's best not to get too clever with things. For us investors, the more timing decisions we make, the more chances to be wrong. 3X is not investing, it's speculation, and is on the outer extreme nether regions of speculation. The only possible place for 3X in conservative investing would be to hedge a long portfolio of stocks for relatively brief periods. Naked 3X as you are doing is pure speculation.
Just my 2 cents, but I see you heading down a dangerous road. I was a stock gunslinger once, and wish someone had talked some sense into me. 3X is just gambling, and since you don't really need the additional money at this stage, the 'more money' aspect (greed) probably isn't the primary motivation. That would leave other motivations like the need for excitement, the need to 'be right' (ego), and believe it or not some people actually gamble to lose, because in some deep way they don't feel worthy, which I assume goes back to childhood. But whatever the actual motivation, I would 'lay off the booze' of speculation. It's a slippery slope that feeds on itself and ends in disaster.
gfp: I will probably exit SQQQ by the end of October. I never planned to hold it for a long time. If we get a crash event, which is possible, then I would sell it once the VIX started dropping more than 5-10%. One analyst I read or listened to was saying how many banks have taken loans out from the Fed to cover their losses in holding 30 year low yielding Treasuries. That without those loans those banks would be insolvent. He's not talking a few banks. Or a few dozen. He's talking HUNDREDS of banks. They bought 30 year paper yielding < 3% and were basically insolvent once interest rate went up. But the Fed is loaning them money up to the par level on those under water bonds. But if interest rates stay higher for longer.....does the Fed make those "loans" permanent and thereby increase it's own balance sheet up to $12-15 Trillion or higher? And what would that do to inflation? Fast food workers in California will be demanding $30 an hour. What a shit show.
>> $45 Trillion by 2029, sooner or later <<
Yes, all true, but the concerns you cite are mainly longer term. 3X is a very short term vehicle that will devour you in the short/mid term if you get the direction wrong, and will devour you in the longer term due to the 3X erosion problem.
Rinear is an experienced trader and I doubt he will be using a 3X short vehicle for anything other than short term trading. For a perma bear strategy like yours, the idea is to just stay on the sidelines in cash, or at most use a 1X short. If you are compelled to use a 3X, then make it a relatively quick trade.
Anyway, these are the time tested 'rules' of trading. Risk-wise, the last thing you want to do is hold a naked 3X short for 6 mos, a year, etc. You might get lucky but 3X is extremely unforgiving, just look at the SQQQ chart for 1,3,5,10 years - absolutely the worst of any investment that didn't actually go to zero.
gfp: Rinear predicted a few days of rebounding after such a down week last week. Plus at the end of the month you get investment funds buying window dressing and at the beginning of the month there is the influx of passive 401K buying. But we have a lot farther to drop. The UAW Strike is expanding and nowhere near resolution. The Auto makers won't be able to sell that many vehicles anyway, not unless they subsidize the interest rates. Then we have the government shut down, which is too little, too late. The government is currently racking up about a $Trillion in red ink every 13 weeks at the current clip. The National Debt clock estimates the ND to be at $45 Trillion by 2029, with interest payments due of about $3 Trillion a year. From an estimate $7 Trillion budget. Then we have the impeachment unfolding. Sooner or later a lot of people are going to realize that Dementia Joe's days are numbered, and the prospects of a President Harris, even if temporary, will be enough to bring the markets down another 20% at least. We have a perfect storm, it just hasn't hit our shore yet. But it's coming.
In terms of the recent sell off, it wasn't enough to make most investors even a little scared. The VIX didn't rise all that much. I will take profits on my shorts when there is real fear in the wind. When all the passive 401K investors start shifting out of stock funds into bond funds and money market alternatives because they can't take the pain. October could get interesting.
Bigworld, Based on the charts and TA signals, this could be a good time to cover short positions. The market put in a bullish 'hammer' candlestick on Wed, which typically signals a bottom, and was confirmed by the white candlestick yesterday, and the strength so far today. So it might be time to grab some of those profits.
That said, with the govt shutdown still on the table, it's possible the market's rebound will be muted, or there could be another deeper leg coming in the selloff. The S+P 500 didn't quite test the 200 MA (4198), so I figure that could still be in the cards, and the market might tank even more than that in the period ahead. Anything is possible, but shorting using 3X is meant to be a relatively short term trade, so probably best to 'grab them profits', at least the 3X portion. Just my 2 cents :o)
Bigworld, >> bullish on energy, oil <<
That jives with Buffett's growing presence in the energy sector. I have some modest positions in CVX, OXY, and XLE, and also small positions in the nuclear sector (NLR, URA, URNM, LEU). With more of the world in recession, demand for oil might be reduced for a while, but the other factors you noted have gotten the oil price rebounding. I figure it will get back to 100, but after that we'll see. Last year it peaked in the 120-130 range before falling to ~ 60 back in May / June.
I figure oil + gas are commodities, so not the best place for long term buy/hold, but if Buffett owns CVX and OXY it makes sense to have some. Actually, while Buffett has been steadily buying more OXY, he's been selling some of his CVX, so I'm leery of the sector and only have small positions. I'd rather go with buy / hold type stuff, and stay clear of the commodity and cyclical areas where you have to trade and make timing decisions.
Fwiw, I've been using the current market selloff to get the stock allocation back up to the 25% range, with the idea of long term buy / hold. The allocation model limits the stock exposure and thus controls overall risk, while the bonds, metals, T-Bills, cash provide diversification and reduce risk and volatility. While bonds and metals are not always inversely correlated with stocks, the T-Bills and cash reduce volatility and provide dry powder, and also earn a decent 5%. Anyway, I figure 'boring is good' :o)
GFP: Rinear thinks we bounce slightly here at the end of the month and into the early days of October. Then resume the downward trajectory. But he remains bullish on energy, oil in particular. Lots of analysts, not just Rinear, see $150 a barrel oil by next year. He says Russia and the Saudis are further lowering production, up to a 4 million barrel per day decrease. Dementia Joe has been at war with the fossil fuel industries so they have not invested in increasing production, and to do so takes many years. Add in the fact that he raided the Strategic Petroleum Reserve to help his party in the mid-terms.
Normally Rinear is a pretty short term trader. He uses technicals to determine when to open poisitions. If they go against him he bails fast. If the trade goes in his favor he takes his profits when he sees the stock losing momentum Some things, like precious metals, he keeps long term. And lately he has been moving oil and other energy plays into his long term hold category. He particularly likes XOM, OXY, MRO and VLO. I took on some VLO when he recommended it about 3 weeks or a month ago. It's done pretty well. The other ones are held by the XLE that I own a lot of.
Bigworld, >> significant pull back that has only just started <<
Looking at the current selloff, it got rolling via a combination of Powell's hawkish press conference, and then intensified with the govt shutdown soap opera. The shutdown seems to be the main cause of angst now, and based on the timeline (Oct 1), the S+P 500 chart looks like a test of the 200 MA might occur during this period. But the 200 MA is currently at 4194, which would only be a drop of ~ 2% from here (and a total drop from the early Sept high of just under 8%). If the shutdown happens and drags on for a while, then the odds of a significant breakdown below the 200 MA increases. The Repub politicians won't be helping themselves politically by doing this, as the public watches their IRAs and 401-Ks get hit, so I figure they end the shutdown fairly quickly. That's my best guess anyway.
But either way, the shutdown will come and go, similar to the debt ceiling soap opera earlier this summer. Therefore I'm mainly looking at this selloff as a potential buying opportunity. The other problems you cite are real, but have been ongoing for some time, or are longer term concerns. But for now I'm figuring we see a floundering market and then a recovery once the shutdown situation is resolved. While I started 'buying the dip' modestly, I plan to be patient since the market angst should continue until resolution of the shutdown saga occurs.
With the shorting strategy, don't forget to take some profits while they are there. 3X is not meant to be a long term perma-short type vehicle. Making money on the short side is great, but watching the profits evaporate and turn into losses, not so great. The current market selloff should reverse course once the shutdown is over.
In trying to get into a longer term buy + hold mindset, here's what I came up with (below). Anyway, seems like a plan :o)
Stocks -------------- 20-25%
Bonds --------------- 30%
T-Bills --------------- 20%
Metals + Energy - 15%
Cash ---------------- 10-15%
Bigworld, Nuclear power had been on the globalist's hit list for decades, but now they're being forced back into it due to China / Russia building nuke plants for the emerging countries around the world, along with tons of other infrastructure projects. That's a great way to rapidly expand BRICS, and dozens of countries are leaving the US/West orbit. So US world hegemony is in deep trouble, with the US scrambling to halt the mutiny and retain its (former) allies. A little late for that, so their measures will likely be increasingly desperate and risky. Anyway, that's my 'non-expert' analysis.
Another reason for the US to move back toward the nuclear enrichment side is that Russia does almost all the required enrichment for the world's nuclear fuel supply. So a fine mess -- Taiwan makes all the advanced semiconductors, China makes the world's manufactured goods, Russia does all the nuclear enrichment, etc. Meanwhile the US/West ghouls are still in their 'undermine civilization / build 1984' obsession.
Sometimes empires that are ripe to fall do in fact fall, but this one (US) has a massive military and nuclear arsenal, so who knows what disasters lie ahead for the world. The other aspect is that the competency level of the US/West 'ruling elites' is questionable at best, as well as their collective sanity, which would fit with the historical character of aging empires -
GFP: I have long wondered why Thorium technology hasn't been pushed harder. Maybe because BlackRock or Bill Gates or Warren Buffett hasn't cornered the market in Thorium. Yet. Or enough Washington DC politicians are not yet fully invested in the sector. If there were then the Federal Government would be printing Billions to speed up the process of commercializing thorium reactors. The thorium industry needs to realize that the path to success is paved with "free" money from Washington and giving the powerful elites a piece of the action.
gfp: The stars are aligning for a significant pull back that has only just started. If you look at the S&P 493 (the index minus the 7 high flyers that comprise 34% of the index) it is in negative territory for the year to date. The Russell has been in a bear market for essentially 2 years. The Index of Leading Economic Indicators has been negative for 17 straight months. The yield curve is the second most inverted in recent market history. We've had two Hindenberg signals. The economy is on life support. The government has added $1 Trillion to the national debt in a little over 3 months. Money printing is keeping the economy barley afloat. Some type of international deep state manufactured crisis is coming. There have been a lot of suspicious occurrences in the past several years with regard to our food production and storage. The Cushing Oklahoma oil tanks are the lowest since 2014. Biden drained half the Strategic Petroleum Reserve. The Wuhan lab has been and probably continues to conduct gain of function research. When one of our investigators visited Wuhan in the aftermath of the Covid release he found traces of Nipah virus fragments. Then recently there was a small outbreak of Nipah in India. I don't much believe in coiincidences. The powers running America and the collective west has so screwed the pooch that they need a manufactured crisis to deflect blame for their incredible mismanagement. Something big is coming. Cyber attack, Nipah virus, EMP, some false flag that envelops the world in WW3.....something. I'm sure the plans have been worked on for years.
Thorium reactors -
>>> Thorium Investing
Energy & Capital
Take a look at the word thorium.
What do you see?
Those familiar with Norse mythology or the Marvel comic books might notice the root of the word is Thor, the name of the god of thunder. Thor is known for his strength and power, wielding a hammer and controlling the lightning and thunder.
The name alone implies a superhuman power, a superior energy. And the element doesn't disappoint...
Thorium is a radioactive chemical element that can be found in soil and rocks. In its purest form, it appears as a silver metal, but when heated in the air, it becomes like a white light, like lightning.
Thorium is currently used in things such as light bulbs and camera lenses. It can create a high-quality refractive glass, and its high melting point can allow ceramics to resist high temperatures.
But light bulbs and ceramics aren’t what have the energy industry watching closely...
Heat resistance is.
You see, thorium’s ultra-high melting point can be useful in more than just ceramics. Heat resistance is something scientists and energy specialists alike have been trying desperately to achieve with nuclear energy.
One of the biggest issues with nuclear plants is the meltdowns that can occur if the uranium is not cooled properly. We saw that tragically exhibited in Japan in 2011, when an earthquake and tsunami caused a series of meltdowns at the Fukushima Daiichi plant. The fact that the only other disaster of that caliber was the 1986 Chernobyl disaster has done little to ease the minds of world governments and energy companies. This simply highlighted the tragedy that can come along with it.
Which is why thorium’s properties have become so coveted. If the material were virtually meltdown-proof, the clean energy possibilities would be endless.
There is only one problem: Thorium is unable to sustain a nuclear reaction on its own.
Thorium in Nuclear Energy
Thorium’s inability to sustain a nuclear chain reaction causes a problem, but it’s not one without a solution.
The material can actually prove quite effective when combined with a fissile material — one that is able to sustain a nuclear reaction.
These materials include uranium-233 (which is actually an isotope of thorium), enriched uranium (U-235), and plutonium (Pu-239).
The use of thorium in a nuclear reaction significantly lowers the waste produced; of the waste that does occur, radioactively decaying elements are lowered as well. Combined with weapons-grade uranium, for instance, one University of Oslo researcher found that thorium can aid in reducing radioactive waste by up to 95%.
And the safety of a thorium reactor compared to one using uranium is much higher. As mentioned before, thorium’s high melting point makes a nuclear meltdown much less likely.
But thorium can’t be used in just any nuclear reactor. Only seven types are safe for thorium reactions, including heavy water reactors, high-temperature gas-cooled reactors, boiling (light) water reactors, pressurized (light) water reactors, fast neutron reactors, molten salt reactors, and accelerator driven reactors. Molten salt reactors and accelerator driven reactors are still conceptual, though the other five have all been operational at some point.
The liquid-fluoride thorium reactor (LFTR), a type of molten salt reactor, is being touted by many as the best solution to thorium-powered nuclear energy. In these types of reactors, thorium and uranium fluorides are combined into a salt mixture that’s heated to a molten substance, which is then used to fuel the reactor.
These reactors have the potential to become self-sustainable, as they will be able to produce U-233 (the thorium isotope).
Flibe Energy, a company started by nuclear technologist and former NASA aerospace engineer Kirk Sorensen, is conducting research on LFTR technology with a view to eventually incorporate these reactors not just into electrical energy generation, but also into fields as vastly different as desalination, cancer treatment, and deep space exploration.
Creating the Nuclear Reaction
Still, the fissile material that enables a thorium reactions is actually fairly difficult to supply...
For years, the U.S. has had a steady stream of U-235 coming in, but that runs out this year.
Following the fall of the Soviet Union in 1991 and the Lisbon Protocol in 1992, the U.S. and Russia arrived at the U.S.-Russian Highly Enriched Uranium Agreement, or what came to be known as the “Megatons to Megawatts Program.”
Under the terms of the 1993 agreement, Russia would dismantle Soviet nuclear warheads and convert 500 tonnes of highly-enriched uranium to low-enriched uranium, which would be sold to the U.S. for use in nuclear reactors.
By 2013, ten years after the start of the program, all 500 tonnes would be converted. As a result, the U.S.’s steady supply of uranium came to a halt in 2013.
But for thorium, it might not be as bad as it seems. After all, U-235 isn’t the only fissile material that could be combined with thorium for a nuclear reaction...
U-233, an isotope of thorium, can react with thorium for a nuclear reaction. And this is the focus of the LFTRs, as it could lead to self-sufficiency of these reactors with the recycled waste.
It’s not easy. Thermal breeding, as the process is called, requires the reactor to produce more fissile material than it consumes, and it requires a highly specialized type of reactor.
Regular nuclear reactors are unable to breed to the point where it is unnecessary to add more of the fissile material. But many LFTRs are being designed as breeding reactors. While regularly adding thorium to these reactors would be necessary, adding U-233 would not. Enough fissile material would be created in the reactions to sustain it on its own.
Investing in Thorium
Investing in thorium can be tough, as it’s not yet used for nuclear power generation. Companies like Flibe Energy, which is focused on thorium reactors, are still private.
Uranium Mining Companies
Several uranium miners, like Cameco Corp. (NYSE: CCJ) and Unity Energy Corp. (UTY.V), are mining uranium in areas that also have concentrations of thorium.
Though neither company has reported on significant mining of thorium, both are well-positioned to profit should the demand for the metal skyrocket.
As thorium reactor testing continues in nations like Norway and India, and major investors like Bill Gates (whose company TerraPower has also begun testing thorium reactors) get involved, attention to the metal will only grow...
Research on these reactors will lead to implementation, and that will lead to profits for the well-positioned investor.
Thorium is the key nuclear fuel of the future. Keep a close eye on this one.
Bigworld, >> add more shorts <<
Another (safer) strategy would be to periodically grab the short profits as they build up, especially on the 3X side. Then you can always reload if the market stages a rally that runs out of gas. To be continuously short over long time periods is risky. Profits can be fleeting, and 3X also has the erosion problem.
Btw, looks like the nuclear sector is really breaking out. I had some exposure a while back (URA, URNM, NLR, LEU) and took modest profits when the sector seemed over bought. But after a brief pullback they've taken off again, and looks like it might be the beginning of an extended bull market for the sector. Anyway, I re-entered the sector, though just a token position, which I'll probably just sit with for the longer term.
gfp: Thanks. Everything is still on schedule for Oct 5th. I have the utmost confidence in my surgeon. He's so confident in his abilities that I'm scheduled to go home the same day barring any unforseen complications.
I've had a busy week. Family came to town for a cousin's wedding. We had a full house, a big pre wedding party, then the wedding. It all went well and the families had a great time.
The markets are flat-ish today. Last week was a good one for the shorts. Before today the Dow had lost almost 1,000 points in 6 trading days, the S&P almost 200 and the Nasdaq @ 700. I will add more shorts on any day the markets rally. There is a lot of downside to come in my opinion.
Bigworld, >> abolish The Federal Reserve <<
It's technically possible, and as I understand it would only require a vote of Congress. But if the process ever got started they (Fed banksters) would deliberately plunge the country into a financial crisis to derail the process. Remember the 'flash crash' of the stock market in 2010, several days before the Congress was voting on the 'Audit the Fed' legislation? That was an unambiguous warning shot from the Fedsters to demonstrate what would happen if Congress continued on that path. The Fed had never been audited since its creation in 1913, and the 'audit' approved by Congress was scaled way back, and the results from the limited audit were basically deep-sixed by the media.
But even that limited audit showed the extent the Fed went to in bailing out their 2008-09 Derivatives disaster. They doled out a monstrous 16 Trillion, much of it to European banks that were counterparties to the estimated 1 Quadrillion in outstanding financial Derivatives. These 'financial weapons of mass destruction', as Warren Buffett called them, had been illegal since the 1930s, but were ushered in along with the repeal of Glass Steagall in the late 1990s. Lending standards were then lowered to 'anyone with a pulse', and these risky loans were sliced / diced into tranches, with mountains of Derivative bets piled on top (eventually over 1 Quadrillion). So the predictable disaster wasn't long in coming.
Anyway, getting rid of the private Federal Reserve would be welcome and long overdue, but is basically impossible to achieve domestically. The best chance is for an expanding BRICS to eventually muscle out the US/West finance mafia. BRICS represents a clear and existential threat to the Fedster mafioso, so BRICS must be derailed at all costs. Exactly how this is to be accomplished, we'll see. The risky strategy with Russia -- grind them down until Putin is replaced (?) With China not so easy, after 40 years of 'globalizing' the entire world into near total dependence upon Chinese goods. So a fine mess, and the competence level of the current crop of globalist luminaries is a far cry from the Kissinger era.
The real solution for the US/West finance ghouls that would work would be to out compete China in offering infrastructure development projects for the world's emerging countries. This is a huge part of China's appeal -- they help these countries modernize with nuclear power plants, ports, roads, etc. This 'carrot' approach is how to win countries back into the US/West fold. But the hour is late and the US got too used to only using 'the stick' side during the 'unipolar world' decades of US dominance. But wake up, the unipolar paradigm is over.
Bigworld, GL with your upcoming knee procedure. My sister is getting hers done in the months ahead also. It seems like a fairly routine procedure these days, and patients are up and walking very quickly. I knew an orthopedic surgeon and he said the technology is light years ahead of when he started doing knees and hips. He said that knees are now so easy, he can almost do them in his sleep :o)
Btw, I assume you'll be stopping certain supplements like Turmeric a few weeks prior to the procedure. And Omega 3s can also interfere with clotting, as can Vitamin E at higher doses, and garlic can also have that effect. Vitamin K could be trickier since you need it to clot, but too much may interfere with the anti-clotting meds they use during the procedure (?)
Anyway, GL :o)
gfp: I am high on energy as you know. Uranium is just one component I own for the long haul. I own it. I don't watch it every day. Energy is the necessity the world cannot function without. I see oil easily hitting new highs above $150 eventually. Natural gas is still going to be vitally important for home heating and electric generation. Other countries, especially China, are still using vast amounts of coal. Energy in various forms should be at least 10% of your portfolio. I think I'm approaching 20% at this point with the oil price rebound and the precious metals running in place so far.
gfp; Couldn't agree more. I wish it were possible to abolish The Federal Reserve. But with the stupidity and cowardice of our political class in Washington that will never happen.
>>> Uranium Investors Bet Big On Nuclear Renaissance
By Alex Kimani
Sep 24, 2023
Dozens of governments and influential bodies that were formerly opposed to nuclear energy are now openly embracing and hailing it as a necessary player in the global electrification and decarbonization drive.
Uranium markets have lately been on a roll after prices for yellowcake gained more than 20% YTD.
Global uranium production dropped by 25% from 2016 to 2020 amid low prices before recovering slightly to 49,355 metric tons last year.
Uranium and the nuclear energy sector are enjoying a renaissance. There has been a palpable shift in support for nuclear power amid the transition to low-carbon fuels as well as a renewed push to enhance energy security after the global energy crisis triggered by Russia’s war in Ukraine.
Dozens of governments and influential bodies that were formerly opposed to nuclear energy are now openly embracing and hailing it as a necessary player in the global electrification and decarbonization drive. And few have been as monumental as Finland's Green Party which voted overwhelmingly in 2022 to categorize nuclear power as a form of sustainable energy after decades of strong opposition. A third of Finland's electricity is generated by nuclear power.
“I am very happy and proud. This is a historical moment in the history of the green movement, as we are the first green party in the world to officially let go of anti-nuclearism.” said Tea Törmänen, a voting member and chair of the Savonia/Karelia chapter of Viite, the pro-science internal group of the party, shortly after the vote.
Other European nations quickly followed suit with Belgium, Spain and Sweden supporting nuclear energy.
Not surprisingly, uranium markets have lately been on a roll after prices for yellowcake gained more than 20% YTD, better than any other metal and topping $65/lb for the first time in 12 years.
Uranium-based investment vehicles and ETFs have performed even better than the metal they track: Global X Uranium ETF (URA) is up 29.2% in the year-to-date; Horizons Global Uranium Index ETF (HURA.TO) has returned 40.3% while VanEck Uranium+Nuclear Energy ETF (NLR) has gained 28.5%. Uranium miners have not disappointed either: Cameco Corp. (NYSE:CCJ)+75.2%, Uranium Energy Corp. (NYSE:UEC)+40.1% and Consolidated Uranium Inc. (OTCQX:CURUF)+30.7%.
Uranium Shortage Bites
But the biggest bullish catalyst yet for uranium bulls has been supply deficits at a time when demand is surging. Global uranium production dropped by 25% from 2016 to 2020 amid low prices before recovering slightly to 49,355 metric tons last year.
The coup in Mali, which produces ~4% of the world's total, and Cameco's falling production due to difficulties at its Cigar Lake mine and Key Lake mill in Canada have also constrained supply. Global supplies remain constrained mainly due to years of under-investment in new production, monopoly of state-owned entities, transportation risks and geopolitical uncertainties.
Meanwhile, in its latest biennial report, the World Nuclear Association has predicted that demand for uranium used in nuclear reactors will surge 28% by 2030 and nearly double by 2040 as governments ramp up nuclear power capacity in a bid to meet zero-carbon targets.
Sachem Cove Chief Investment Officer Michael Alkin has told The Wall Street Journal that the uranium market remains “very tight’’ and prices are likely to move even higher heading into 2024. Alkins says he expects utilities to start ramping up talks for uranium conversion and enrichment through private negotiations during the fall or requests for proposals.
Cameco says the dual agendas of clean energy and energy security have so failed to translate into a stronger primary supply pipeline. According to the uranium miner, the uranium market is still in the "relatively early stages of the cycle as uncovered uranium requirements by utilities remains elevated," and only "sustained long-term uranium demand will ultimately drive the company's future production plans."
Cost and Policy Risk
Like all investment theses, uranium bulls will have to contend with some key risks. First off, over the decades, the nuclear sector has become notorious for huge cost overruns by uranium projects. Unfortunately, project managers, financial planners and financiers do not appear to be any closer to solving this conundrum in this age of AI.
Not only has the cost of building new nuclear plants sky-rocketed in recent years but plants currently under construction are massively exceeding cost estimates. A large 3,200 megawatt (MW) plant planned to be built in southwest England by France's EDF , the world's largest nuclear operator, is now estimated to cost ~$40 billion, or 30% higher than the initial estimate. Smaller projects are not immune to this problem either. NuScale Power’s 462-MW plant under construction has seen cost estimates increase from $58 per megawatt hour in 2021 to $89/MWh in 2023, a more than 50% jump in the space of just two years.
Second, another major nuclear accident like Three Mile Island or Fukushima might rapidly sour the public sentiment and even force a policy shift. A major thorium breakthrough might spell doom for the uranium sector since thorium reactors do not carry the same risk of a catastrophic meltdown inherent in nuclear reactors powered by uranium.
Bigworld, >> more useless spending <<
The spendthrift ways will continue as long as politicians have the blank check of fiat money created out of nothing. Fiat money is dangerous enough, but in our system the money is not just created, but is lent into existence at interest. So every dollar created is also a dollar of debt, thanks to the privately owned Federal Reserve. The US Treasury could have created the same fiat money itself without the debt aspect, in which case you get the inflation but without the national debt. Under the Fed we get both inflation and debt.
So the real problem is the privately owned Federal Reserve System, the financial tapeworm we've been saddled with for over a century. These banksters gained control over everything, but eventually the cumulative debt created must end in repudiation via hyperinflation, a bailout by a larger entity (IMF), or some type of bankruptcy. The new BRICS financial system could be seen as the world fleeing a sinking ship, in favor of their own gold-backed, non-debt based system. The US/West finance mafia have to somehow stop this mutiny, so some dangerous times ahead.
>>> "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy".<<<
Ombow, Here's a new board for stock ideas -
I own the highlighted ones (modest positions), and the others on the list are under consideration. I know you are into the tech oriented sectors, and the list includes a number of them, from hardware, software, and IT Services, so you might find some of these interesting.
A key criteria with the list is that the charts must have a nice upward trajectory over the long term, and without excessive volatility. So these companies have a long history of steady growing revenues (as reflected in their long term charts), which helps reduce the angst component of owning stocks. That's the theory anyway :o)
gfp: Then after the shut down drama is resolved (by more useless spending) or by the kicking of the can beyond the next election (more probable because it's the coward's way out)...then we will have the Impeachment drama gaining steam. All the Biden crime family members will by brought to answer questions in front of the Congressional Oversight Committee. This is a drama the GOP will want to drag out for months. Well into next year to try to hurt the chances of Democrats in general in 2024. Biden will not be the nominee, one way or another. Which is going to cause quite a bit of upheaval in the ranks of the Democrats. All their "Plan B" candidates are too old or otherwise flawed by being incompetent. So I welcome a government shut down. For months if needed. Washington DC needs a reality check. They need to start cutting, DEEPLY, immediately. We can;t afford them any longer.
Looks like a govt shutdown is the next worry for the stock market -
>>> A federal government shutdown looks more and more likely: What to know
Bigworld, Thanks. That analysis makes sense, but if the main concern is for a market crash (ala 2008, 2020), here's how the energy sector fared in those crashes vrs the S+P 500, gold, silver, and the miners (approx figures) -
XLE - (60%)
CXV - (47%)
SPY - (52%)
GLD - (32%)
GDX - (73%)
SLV - (60%)
XLE - (63%)
CVX - (57%)
SPY - (35%)
GLD - (14%)
GDX - (50%)
SLV - (39%)
SIL - (53%)
Anyway, looks like most everything gets clobbered in a market crash. GLD did the best ('least bad'), but better off to just be in cash during these periods. Cash now pays 5%, so seems like the logical choice if the main concern is for a market crash.
As 'hedges', these sectors (energy, miners) all got clobbered as bad or worse than the overall stock market. Of course the next crash might be different, if the problem stems from a dollar crisis / flight from the US dollar. Then the hard asset type sectors might do better, but as Rickards says, during a crash people sell everything to raise liquidity. And if one's 'hedge' is traded as part of the broader stock indices (as energy stocks and miners are), then they go down with the broader indexes. Rickards recommends a hefty amount in cash / T-Bills, and then you can step in during the aftermath and pick up all the bargains.
gfp: There will be inevitable pull backs. But we are in the beginning of a commodity super cycle. And an energy starved world. Brent Crude is already almost $94 a barrel. WTI a little below that. Russia is redirecting most of it's energy production to their far east, extending pipelines, building huge LNG facilities, developing cooperative ocean shipping routes. Vladivostok is going to emerge as the second most important city in Russia after Moscow. China is investing $12 Billion into the port facilities there. So the best option would be to Dollar cost average into XLE and hold onto it for a few years. Don't bounce in and out due to 2% moves. Oil is going higher. It's math. And any escalation in Ukraine (which is being promoted with supplying Ukraine with long distance rockets) or a breakout of hostilities in Taiwan and oil could jump 20% overnight. Now if Trump gets back into office he will certainly reopen all the potential drilling areas and even allow even more widespread areas for future exploration. So if that happens perhaps the time to sell energy will be after his first year in office. In any event you should have 10-15% of your investment capital in energy...oil, natural gas, coal, and nuclear. Energy is the lifeblood of civilization as we know it. Nothing else happens without it.
Oil keeps climbing, and looks like the 100 level is in the sights. The Saudis and Russia both extended their production cuts to the end of the year, and other oil producing countries have reportedly extended theirs even further into 2024. So looks like a tailwind for the oil sector for a while.
I only have CVX and OXY (small positions), but will probably add some XLE. I don't like that sector's volatility, so have been reluctant to get a sizable position. The SPY does have 4.4% in the energy sector though, so at least that's something.
The broader market seems to be gaining some buoyancy, so hopefully Powell doesn't rain on the parade too much next week. Timiraos indicated no rate hike next week, and possibly suggests the hiking cycle may be completed (?) If that is reflected in Powell's guidance next week (a big 'if'), then the stock market may have a favorable period ahead. Fwiw I would be wary of being short, and especially using 2X / 3X, which seems excessively risky either way imo.
>>> An Important Shift in Fed Officials’ Rate Stance Is Under Way
The central bank is likely to pause rate increases in September, then take a harder look at whether more are needed.
September 10, 2023
Bigworld, Another potential angle to the Biden impeachment saga was mentioned in Rickards' article -
>>> It’s unlikely the Senate will have that many votes to remove Biden. But the possibility could be used as leverage by the Democrats to persuade Biden to resign or not run again for office. Such a decision by Biden would then clear the way for Gavin Newsom or others, including Michigan Governor Gretchen Whitmer and Illinois Governor Jay Pritzker, to run for the Democratic nomination for president. <<<
It's also possible that this decision was actually made by the higher 'powers that be', who now see the need for a younger and more capable President. They are faced with the reality of a rapidly expanding BRICS 'mutiny' away from the US orbit, and they need an energetic / capable leader in the White House, or at least not a senile dotard. Biden may be reluctant to step aside, so the 'powers that be' push him out.
It's interesting that by next summer we could see both Trump and Biden out of the race, replaced by younger contenders. That would actually be a relief, and the US could sure use a fresh start. The problems for the US are piling up -- Saudi Arabia joining BRICS (end of Petrodollar), the new gold linked BRICS currency (end of dollar dominance), and those are just the tip of the iceberg. Having a senile octogenarian in the White House doesn't help the situation.