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Good Morning Readers
At 2 AM EST, Japan has decided to raise
its assessment of the accident at the crippled Fukushima Daiichi nuclear
power plant to the worst rating on an international scale, putting the
disaster on par with the 1986 Chernobyl explosion, the Japanese nuclear regulatory
agency said on Tuesday. The decision to raise the alert level to 7 from 5 on
the scale amounts to an admission that the accident at the nuclear facility,
brought on by the March 11 earthquake and tsunami, is likely to have
substantial and long-lasting consequences for health and for the environment.
Some in the nuclear industry have been saying for weeks that the accident
released large amounts of radiation, but Japanese officials had played down
this possibility. The new estimates by Japanese authorities suggest that the
total amount of radioactive materials released so far is equal to about 10
percent of that released in the Chernobyl accident, said Hidehiko Nishiyama,
deputy director general of Japan’s nuclear regulator, the Nuclear and
Industrial Safety Agency. Mr. Nishiyama stressed that unlike at Chernobyl,
where the reactor itself exploded and fire fanned the release of radioactive
material, the containments at the four troubled reactors at Fukushima
remained intact over all. But at a separate news conference, an official from
the plant’s operator, Tokyo Electric Power Company, said the radiation
leak has not stopped completely and our concern is that it could eventually
exceed Chernobyl.
On the International Nuclear Event Scale, a
Level 7 nuclear accident involves “widespread health and environmental
effects” and the “external release of a significant fraction of
the reactor core inventory.” The scale, which was developed by
the International Atomic Energy Agency and countries that
use nuclear energy, leaves it to the nuclear agency of the country where
the accident occurs to calculate a rating based on complicated criteria.
Japan’s previous rating of 5 placed the Fukushima accident at the same
level as the Three Mile Island accident in Pennsylvania in 1979. Level 7 has
been applied only to the disaster at Chernobyl, in the former Soviet Union.
This is an admission by the Japanese government that the amount of radiation
released into the environment has reached a new order of magnitude. The fact
is that we have now confirmed the world’s second-ever level 7 accident
will have huge consequences for the global nuclear industry. It shows that
current safety standards are woefully inadequate.
I want to stress to my readers that the
simple fact is that nuclear energy is a key for the world to get off of
fossil fuels. In my opinion, the generation of nuclear energy is here to stay
for the foreseeable future. China, India and Russia will continue to build
the newer and safer plants and that means that mean they will need uranium.
As unseemly as it is to say, this catastrophic disaster will put all uranium
stocks on sale. I have positions in Uranium Energy (URG) and Denison Mines
(DNN) and I will look to add to both positions on what I expect to be a serious
pullback today.
Meanwhile the IMF has said that the U.S.
economy will expand at a slower pace than in 2010 due to an unemployment rate
that remains above the reported 8%, a declining U.S. Dollar, rising taxes,
increased costs for food and basic goods and a drop in consumer confidence.
It’s no wonder the consumer confidence is low. With a deficit in 2011
that could reach 1.5 trillion, fighting wars on three fronts, high prices at
the pump for gasoline, multimillion dollar bonuses for financial CEO’s,
the fact remains that our nation is broke. People may not be able to
articulate their fears and concerns but deep down in their “gut”
they know there is something very, very wrong and worse, they feel powerless
to do anything about it.
The media is chirping like birds about buying
gold and silver as a hedge against the devaluation of the dollar. This is the
right idea at the wrong time. Last December I recommended to my readers to
buy Gold (GLD) and Silver (SLV). Those who invested in these ETF’s have
realized some nice gains. Now would be the wrong time to buy into this trade.
Back in 2004 when I began to learn about the market I bought a lot of hard
assets. I was buying Morgan Dollars for $15.00 and Gold double eagles (one
ounce) for $750.00. While I learned that gold and silver were a great trade,
I also learned that owning hard assets are very illiquid. Last Tuesday, I saw
we were coming very close to the run up on silver so I listed 44 common
silver coins on E bay. It was a five day listing. I prayed that silver would
not crater before Friday. On Sunday I had sold all 44 coins for a realized
profit of 200%. This told me that this trade was done. To quote
the “Oracle of Omaha”, Warren Buffet, “Be fearful when
others are greedy, and be greedy when others are fearful.”
A look at this chart of GLD shows that
gold goes on sale every six months or so. Although, gold still has
some room to run it is becoming a risky trade. I suggest you wait for what I
see will be an eventual correction and then buy the EFT’s.
Today, it looks like there will be a broad
selloff. So I would look at some of the mining stocks to possibly begin to
open positions. I own General Moly (GMO) and would be a buyer at $6.25 or
lower. My dollar cost average is $5.47. Yesterday for reasons passing
understanding GMO sold off and closed @ $5.37. Even though I have an
overweight position in this stock if it continues to sell off I will be a
buyer, as I see this as a bargain price for this stock. As I have previously
reported this stock is experiencing water permitting problems but when they
are resolved (which should be soon) this stock will be a sure fire winner
because it mines molybdenum which is used in creating light weight, high
strength steel which will be sorely needed in oil rigs, new nuclear reactors
and rebuilding the infrastructure of Japan. Ucore (UURAF) is another stock I
own and yesterday it closed down 5% @ $.97. I have a dollar cost average of
$.84 on this holding. Please read some of my archives on this stock to get a
broad overview. I recommend this stock at under $1.00. I mentioned Uranium
Energy (URG) and would recommend it at under $1.50. I have a dollar cost
average of $1.25 on this stock. Another uranium miner Denison Mines (DNN) and
would recommend a buy under $2.75. I have a dollar cost average of $2.49 on
this stock. It closed yesterday @ $2.42 and I will wait and see how the
market treats the uranium miners before I buy more. We must remember that the
catastrophe that occurred in Japan was in a forty year old reactor. The newer
technology is infinitely safer and despite what the media reports China,
Russia, India and even the Middle East countries are moving full speed ahead
at moving to this clean form of energy.
Well, today there is more news than I could
ever begin to cover so I will monitor the situations in the market and ask
you to stay tuned!
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