Now regarding this year… Like yourself outside of my bonds I am staying on the sidelines. Right now we are looking for a piece of property (vacant lot that is). We are looking for the perfect piece of property….

Uranium has gone up 10 fold in the last year or two. Over here, we are seeing uranium companies list at a huge rate - most with no mines and questionable management.

Personally, this looks like a huge bubble to me. All the easy money has been made.

The key reason I am a non-believer is as follows: when you do some caclulations on the amount of uranium they need to sell to be at a PE of 10, you soon realise that most of these stocks are
a) overvalued; and
b) never going to produce that much uranium, and if they do, only for a very short mine life.

That ignores the costs of startup, the govenrment permits, the costs of refining and the huge mine costs currently.

Two things you don’t hear these people talk about: environmental protests and resistance to nuclear reactors, and the fact that uranium is a source of energy that is not consumed at a large rate. It isn’t like gas that you burn a huge amount of every second. Nobody seems to talk about the glut in uranium that will occur once these new power plants have their starter uranium.

I know many people of low skill levels earning close to six figure salaries working on the gold and nickel mines - many young guys work on a fly in fly out basis to get what I consider crazy amounts of money.

It is very difficult for these small companies to produce enough to cover the costs of workers - and I am certain uranium is no different.

China is a long term story I believe in, but right now I believe it is overvalued. Any market that doubles in 6 months has some froth in it. Personally, I am torn right now whether to sell out or to wait for a pull back to buy more. I am leaning towards waiting and just paying down debt for the coming year.

Phil

Whiskey and Gunpowder - Uranium