The Dominoes Are All Lined Up

Written by Gerardo Del Real
Posted June 13, 2018 at 10:39AM

Over the past several months, I’ve been urging you to do your due diligence, pick your favorite uranium juniors, and get positioned now.

On May 22, 2018, I wrote:

The bottom line is the interest of the major state-owned entities and lowest-cost producers in the world is now to act in a manner that forces prices upwards.

I anticipate more cuts and I anticipate them happening in a coordinated way throughout the year.

Just over a week later, more shoes have dropped.

On June 1, 2018, Bloomberg reported that Trump administration officials are making plans to order grid operators to buy electricity from struggling coal and nuclear plants in an effort to extend their lives.

The article went on to explain that the Energy Department could exercise emergency authority under a pair of federal laws to direct the operators to purchase electricity or electric generation capacity from at-risk facilities, according to the memo obtained by Bloomberg News.

The agency is also making plans to establish a "Strategic Electric Generation Reserve" with the aim of promoting national defense and maximizing domestic energy supplies.

The memo was only a draft, but it was presented to the National Security Council for consideration.

In separate but important news, Kazakhstan announced it plans to cut uranium production this year to 21,600 tonnes, Energy Minister Kanat Bozumbayev said.

I explained that I felt more cuts were coming, and again, I don’t believe this is the last time a major supplier announces production curtailments.

A new physical uranium investment vehicle, backed up by supplies from KazAtomProm, has announced an IPO.

"Yellow Cake" seeks US$150–$200 million in a London IPO to buy 8.1 million pounds of U3O8.

The new firm has arranged to buy US$170 million worth of uranium from KazAtomProm at a 7.7% discount to spot.

This represents 5% of global production and takes more spot supply from circulation.

Hedge funds are once again making calls to take positions in uranium equities and physical uranium.

This hasn’t gone unnoticed by the utilities, and, like the executives running majors in the precious metals markets, they’ll come in after all the smart money is positioned and fuel the next several legs higher.

Remember that when it’s time to take profits — but that’s years away.

The supply cuts are important, but I’ll reiterate that the major catalyst will be the utilities coming back to the market.

In the latest round of Trump vs. everyone (except the Russians), Trump has managed to attempt to make a villain out of Canadian Prime Minister Justin Trudeau.

It’s interesting to see how that back-and-forth will work itself out.

I can’t help but consider that if I were on the Canadian side (hi, Canadian friends), I’d be quick to point out that the U.S. relies on 93% foreign uranium to run its 99 reactors, 33% from Canada.

Every day the trend becomes clearer. The only indicator that worries me a bit is that newsletter writers who have been wrong for the past six years are bullish again. But I suspect that’s just a contrarian flinch on my part.

This time is different, and the dominoes are all lined up.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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