Uranium - This Commodity Looks Set For An Imminent Boom

Why This Commodity Looks Set For An Imminent Boom

Date 08/09/2008

The Right Side

Ben Traynor

Commodities markets have been falling of late. My personal view is that we will likely see further downside, at least in the short run, as fears of an ongoing global slowdown affect sentiment.

But there is one commodity that could buck the trend.

The supply of this commodity has never been enough to meet demand. According to Garry White, our sector expert, the current shortfall is significant. World output provides between 60% and 80% of global needs — the gap is plugged from government stockpiles.

The problem, of course, is that these stockpiles are finite. Once they’ve been run down, one of two things will have to happen. New supplies will have to be found and brought to market. Or else the price will have to rise to "choke off" excess demand.

Garry provides several examples of why the former is, to put it mildly, wishful thinking. Producing this commodity is a tricky business — and producers are bedevilled by stoppages right now. At least two producers have been victims of flooding.

So it looks like the supply side of the equation will continue to remain tight. Meanwhile, demand looks set to soar. The commodity in question is currently used to generate 16% of the world’s electricity. In the decade ahead, its share of the global energy mix is likely to increase.

I’m a firm believer that fundamentals are the bedrock of any sound investment. The fundamentals of this market are very attractive. Supply is being hampered, while demand is rising. That suggests a price move is on the cards...

There are other reasons to be excited, too. You see, nothing in investing is guaranteed. If the price of this commodity goes up — and the signs are that it will — this will create an incentive to produce it more cheaply. Why? Because any company that can produce a valuable commodity for less than its competitors stands to make a killing.

Indeed, there is a new technology on the horizon that could cut production costs. Fortunately for us, though, Garry already knows about it. In fact, he’s planning to recommend the company behind it to readers of his newsletter!

Discover this commodity that looks set for a boom — as well as how you can play it!.

Brown accused of "economic masochism"

Stock markets around the world have been boosted by the news that the US Treasury will take over Fannie and Freddie, the twin mortgage giants. This is the long-awaited de facto nationalisation.

I fear, however, that the market exuberance will be short-lived. Yes, another milestone has now been passed. But the big western economies still face severe structural problems. Figures released on Friday, for example, show US unemployment at a 5-year high.

This side of the Atlantic the picture is even bleaker. There are fears that we too could be hit by a wave of unemployment. David Blanchflower, arch dove of the Bank of England’s Monetary Policy Committee, reckons unemployment could hit 2 million before the end of the year.

And today we read of another employment headache for policymakers to deal with. With less than a fortnight to go before the Labour Party conference, union leaders have again raised the issue of pay.

The government has offered a pay rise of 2.45% to the public sector. Seven unions support a motion at the Trades Union Congress (TUC) to protest against the rise — which contrasts with an inflation rate of 4.4%.

The pay offer is "absolutely wrong-headed" according to Brendan Barber, TUC general secretary. Barber also describes current government policy as "economic masochism".

Yet the government is in a bind. In a perfect world, I suspect it would love nothing more than to pay its workers more money. It would give the economy a much needed boost, and avoid the spectre of a modern day Winter of Discontent.

Of course, the government may choose to give the unions what they want. But it probably shouldn’t. Living standards are being eroded for good reason. The boom we’ve been enjoying is turning to bust. It’s the business cycle — the same one Brown thought he’d slain.

The unfortunate truth is that Britain’s getting poorer. It’s a subject I tackle in my latest report. In it, I look at what happened the last time Britain faced similar problems — and how you can prepare in case the same dire consequences visit us again.

Find out why the threatened Winter of Discontent is actually a symptom of a much larger problem — and what you can do about the crisis ahead.

Until tomorrow

Ben Traynor

Editor

Selected article: Garry White on the commodity that looks set for an imminent boom.

The Daily Reckoning - Back on the job...

USA Today was in a blue mood on Friday. The stock market fell more than 300 points the day before, after its reporter realized that falling commodity prices were not necessarily such good news.

"Investors fear that crashing oil, coal and platinum prices signal something far more sinister: a sharp business slowdown abroad that could crimp the economy here and hamper US corporate profits."

Retail sales are weak. Unemployment is rising...in fact, the latest figures show the number of people looking for work at a 5 year high.

Foreclosures, meanwhile have hit a new record high.

You can read the Daily Reckoning in full here.

P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.

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