I think he is right but notice he says he doesn't know WHEN uranium prices will head up. Right now EFR and all other U producers are hurting due to low spot prices, which are putting pressure on long term contract negotiations as well.
I have been bullish on U308 but the Japanese utilities that operated all those nuke plants are hurting. No revs and having to buy LNG at the highest prices on the planet to make up for the missing power is not a formula for success.
The Japanese utilities are raising cash by selling the excess U308 in the cash markets. That is depressing cash prices below $40/lb.
There have been several newsletter writers pumping U stocks during the past year. Maybe they will get you in before a big spike or maybe they will have you sitting with dead money for many months.
Until the Japanese restart several of their nuke plants, the excess supplies will remain. US utilities have long term contracts for supplies. With the current low prices, they can buy any shortfall supplies at very low prices.
I have been tempted but have decided that just like gold and silver stocks, I will wait until I see prices for the commodities head up before considering buying the mining stocks.
So I would watch for news that the Japanese have cleared nuke plants to reopen. Last I saw, they were saying that no existing plants would be allowed to reopen until they get Fukashima under control. They are still having radioactive water escaping into the ocean and can't stop it. The utilities have done safety studies and upgrades to various plants but with Fukashima still leaking like a sieve, I don't see officials allowing them to move forward.
The Japanese nuke plants were supposed to open in 2013 but now I don't think they will open until mid 2014, at the earliest. Until that happens, the Japanese utilities will continue selling their excess U308 into the cash markets, depressing prices. Remember, because of their long term supply contracts, they are still getting deliveries of U308 right now. So their supply on hand will continue to grow unless they sell into the cash markets.
There are dozens of Chinese plants under construction. I would be surprised if they aren't slowly buying in the cash markets and negotiating longer term contracts at low prices. As they lock in longer term contracts in the $50's instead of the $60's, they will hurt future profitability of the U miners.
Most of the production from actual producers is tied to long term contract prices so Cameco is still making a profit but even they are cutting back on capex and production.
That's my view on U stocks. I'm waiting until I see some definitive proof that the Japanese nuke plants are using U308 again.
Good luck. Bobwins
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