Hey There Income Hunters,
I’ve been talking about uranium a lot recently because I’m not sure traders understand the full impact of the demand coming out of India and China.
Realistically speaking, net carbon emissions based on middle class income growth in the next 20 years means that China & India actually need 300-400 new nuclear reactors just to replace their massive coal consumption (1,360 coal plants).
There are 200 million people between India and China without electricity, 1 billion without a car, 1 billion without air conditioning and as middle class income grows, all the current assumptions on demand for energy will have to be revised upwards.
The Chinese government has never been shy about its interest in nuclear energy and they recently singled it out as the only energy source with specific interim targets in its official five-year plan.
These are important developments and today I’ll give you a uranium trade to jump on.
China’s $440 Billion Nuclear Buildout
China is planning at least 150 new reactors in the next 15 years, more than the rest of the world has built in the past 35.
The chairman of the state-backed China General Nuclear Power Corp. stated that their longer-term goal was to power more than a dozen cities the size of Beijing.
China is catching up as the west is showing reduced interest in nuclear power.
The Fukushima meltdown really reduced interest in nuclear energy. However, new technologies and safety innovations have improved the reliability and efficiency of nuclear power plants.
The global energy revolution will force countries to reconsider nuclear in order to meet their net-zero carbon emissions goal.
Many of the uranium stocks are back to the top of their recent trading range so I think it’s time to add physical uranium to the energy portfolio.
Sprott Physical Uranium Fund (Ticker: SRUUF)
I have done some analysis within th eUranium sector and when compared to the spot price of the commodity versus companies that you can purchase the Sprott fund looks cheap.
Notice the second bar from the right. This was Tuesday’s trade and the volume was the highest we have seen since September.
Sprott is currently an OTC stock so it doesn’t offer options yet. I will buy half of my total positions in shares tomorrow at the market.
Bring It Home
I am a bit frustrated that my bearish TLT strategy is not working. I am going to do some more digging into the Fed’s numbers to see if they are buying more bonds than usual. It is not logical that money would continue to flow into bonds based on recent inflation and growth forecasts.
Tomorrow is a key day with the employment report announced at 8:30pm.
I think we will get a strong number with higher wages as well and that should pressure bonds.
Next week will be a very big week with $120bn in bond issuance and the inflation (CPI) report so if anything I will add tomorrow. Until then …
Live and Trade With passion My Friends,