|
|
Good Morning Readers.
This morning I want to focus on my picks in
Rare Earth Elements. My readers who regularly follow my blog have seen my
recommendations getting crushed this week. My gold, silver uranium, rare
earth and lithium mining stocks are trading at significant discounts. I
do not see these pullbacks as a reason to throw in the towel but instead I
see it as an opportunity to add to oversold positions at secondary buy
points. As I wrote yesterday General Moly (GMO) had pulled back to the
support level of $4.50 and recommended to add to the position at this level.
I doubled my position and cut my dollar cost average by $.50 per share.
General Moly is the largest holder of undeveloped molybdenum in North America
and as soon as the permitting process is concluded I believe we will see this
stock move quickly to $10.00. This stock is certainly a long term play and I
can only assume that the sell off is not coming from China, Japan or South
Korea but from the faint of heart investors who are unwilling to wait for
this beautiful tree to bear fruit. All of the mining stocks have recently
underperformed the underlying metals on their recent move into new highs. I
can only assume it is due to the geopolitical upheavals and political unrest
we have seen globally. I believe that investors are nervous holding mining
stocks during these uncertain times. While the dollar has been crushed and
oil prices have risen, the major producers have been hurt by lower margins.
The rise of risk in the Middle East, Africa and the pervasive feeling of
economic uncertainty in this country have caused investors to favor metals
that are already are out of the ground. I believe that the pullback in gold
and silver will be quite beneficial for mining stocks. I, like most
investors, have been waiting for a consolidation in gold and silver to rotate
into high quality mining equities. Just like the hysteria we saw in silver
bullion we will see this hysteria move into Rare Earth Element stocks as
investors realize that gold and silver is not the only precious metals and
also realize the potential of expanding valuable precious metal assets that
are building wealth in the ground. A certain amount of education is necessary
because while most people see gold as a currency hedge, it is important to
remember that these Rare Earth Elements are necessary for the economic
recovery. We must remember that if these elements are necessary for the
production of IPads and IPods they are surely necessary for the rebuilding of
our nation’s infrastructure, new hybrid cars and a myriad of items that
will create jobs and stimulate the economy. A good example of this is an
article that came across my desk yesterday. Bill Gates, the father of
the personal computer and quite the tech powerhouse, said one of his
brightest hopes for the future was for clean; cheap power is a new form of
nuclear power plant that reuses waste uranium from existing nuclear reactors.
It's kind of like radioactive recycling, and, on its face, can sound like a
miracle. Speaking at the TED Conference in Long Beach on Tuesday, Gates said
that to create energy independence for not only this country but the world we
need “energy miracles.” Bill Gates is putting his money where his
mouth is. As we know, most nuclear power plants today use
radioactive elements like uranium to create nuclear fission and then produce
electricity. The main problem is that reaction leaves behind uranium waste.
To make matters worse, the United States hasn't identified a safe place to
store the waste from the country’s nuclear reactors. That's where the
technology promoted by Gates comes in. Gates has invested tens of millions of
dollars in a company called TerraPower. TerraPower is working to create
nuclear reactors that generate hyper-fast nuclear reactions able to eat away
at the dangerous nuclear waste.TerraPower's traveling wave reactor (TWR) will
offer a path to zero-emission, proliferation-resistant energy that produces
significantly smaller amounts of nuclear waste than conventional nuclear
reactors. After an initial start-up with a small amount of low-enriched
material, this innovative reactor design can run for decades on depleted
uranium – currently a waste byproduct of the enrichment process. An
established fleet of TWRs could operate without enrichment or reprocessing
for millennia. See below a picture of this new form of reactor.
Gates concluded his remarks by saying that the
backlash against nuclear power is overblown. Gates pointed out that “if
you compare it to the amount of people that coal has killed per kilowatt
hour, it is way, way less. When an accident does occur, however,
its effects are much more visible. Coal kills fewer people at one time, which
is highly preferred by politicians.”
I point out Mr. Gates’ remarks to
emphasize the point that the selloff of uranium stocks is completely
unfounded.
We
can build new safe nuclear reactors and become energy independent. We can
mine the Rare Earth Elements we need to become independent from the Chinese
who have cut their exports in half. By doing this we can create jobs and get
the economy back on its feet. This country can be great again. The question
remains - do we have the gravitas to do it?
|
|
