Governments Supporting Uranium and Rare Earth Mining
The high volume breakout in the uranium sector may have occurred this past Friday when the uranium mining ETF soared over 6% on more than five times average volume. The uranium mining ETF's largest holders are Cameco (CCJ), Denison (DNN) and Paladin (OTC:PALAF).
The real reason for the jump last week was the decision of the Greenland government to overturn a 25 year old ban on uranium and rare earth mining. One of the positions in the uranium miners ETF which benefited from this move is Greenland Minerals (OTC:GDLNF) which soared over 60%.
This reminds me of the move by the Australian Government to overturn the uranium mining ban in Queensland back in 2012. Countries are realizing that there is great demand for uranium as more nuclear reactors are being built now than before the Fukushima Accident. Uranium and rare earth mining (REMX) could be two areas where Austrailia and Greenland could create a lot of wealth over the coming decade when uranium demand will exceed supply. Outside of Germany, governments around the world support uranium mining and nuclear power.
Sweden and the EU are actively supporting this heavy rare earth miner which I updated my premium readers earlier this month. The stock has reacted nicely to the update on high volume. This company owns the 4th largest heavy rare earth asset in the world with one of the highest percentages of heavy rare earths. Sweden is very supportive of mining and is one of the most supportive jurisdictions in the world. This asset could be essential to some of the large end users in Germany such as Mercedes Benz, Volkswagon and/or Siemens. .
Keep a close eye on the junior uranium miners which could see incredible growth over the long term. We may be witnessing a short term uranium glut from the shutdown reactors in Germany and Japan, but over the longer term we will enter a supply deficit as there are more reactors being built now than from before the Japanese Nuclear Accident in March of 2011. As 2013 ends, so does the Russian uranium supply agreement which provided around 25 million pounds of yellowcake to the U.S. annually. Now the U.S. will have to make up that deficit with new U.S. producers. Look to the Wyoming junior uranium miners which I have followed for years. I could never imagine that they would be priced this cheaply as they began entering production. One of the uranium miners in production which I own and follow in my premium service just announced they received $34 million from the State of Wyoming at a very low 5.75% interest rate. This is big news as the State is supporting low cost uranium production. This announcement may soon benefit this NYSE uranium miner in the exciting Powder River Basin who should receive its $20 million State of Wyoming loan shortly. One can buy them near all time lows despite being in construction and on the verge of receiving a $20 million low interest rate loan from Wyoming.
Read my full article, "Why Did The Uranium Mining ETF Advance On Its Highest Volume In 3 Years?"
A catalyst for this rotation into junior miners could be caused by a large sovereign nation selling U.S. debt and dollars and not finding willing buyers. We could see increased volatility in the foreign exchange markets, interest rates and commodities due to capital seeking inflationary havens. There is a rising fear of a U.S. dollar collapse. The real estate and banking sectors could turn lower quickly with interest rate spikes forcing the Fed to stop all taper talk and possibly increase QE. The weak housing numbers and high unemployment rate shows the economy is still on shaky legs.
It is important to remember that some junior gold miners are so undervalued with minuscule market caps that are only fractions of what they spent on advancing the project. This junior gold miner with a resource of over 20 million ounces of gold sports a market cap of less than $50 million and has invested over $250 million advancing this project through feasibility. This sounds like a discount bargain opportunity to me. Since our last update to premium subscribers last week the stock has risen close to 70% on high volume.
Read the full article, "Avoiding The Dollar Crash With Historically Discounted Gold And Silver Junior Miners".
I will be meeting with many of the mining companies at the New Orleans Investment Conference from November 10-13th and will report my findings to you in my premium newsletter. I hope some of my subscribers may be able to join me there. I would love to meet you in person. It is an excellent chance to attend, network, hear the great list of speakers and meet with some of the active companies that are still attractive even in this depressed market.
We may be at a crucial turning point in market history and I will be going to learn, network and search for only the best stories which have been able to thrive and advance their projects in this difficult market. If you want to be a part of this year's event visit www.neworleansconference.com to register and to see which companies are exhibiting.
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