http://seekingalpha.com/article/1040...

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As difficult as it may be for precious metals investors to sit on their hands, that may be the best “action” for surviving this hazardous transition from deflationary to inflationary times. In this exclusive interview with The Gold Report, Gold Newsletter Editor Brien Lundin explains why it is absolutely inevitable that inflation will trigger a rise in gold and hints that a December “surprise” could end the waiting game. While his advice is to let this round of deleveraging and deflation end before making any serious plays, he names a few bargains that stand out even in a downturn.

On the uranium front, I like Hathor Exploration [HAT: TSX.V]. This company is one of the only bright spots in today’s junior stock market. They have a tremendous high-grade uranium discovery in the Athabasca Basin and have only explored about a third of the structure that hosts the uranium mineralization. Roughly outlined, they’ve probably got close to 40 million pounds—once that’s drilled out to a compliant resource, it’s probably worth about $300 million even in today’s market. But Hathor’s trading for well under half that value right now, and the deposit should grow much larger. So I really like Hathor as a stock that almost assuredly will trade for considerably higher prices down the road.

TGR: You follow uranium quite closely. Can you just give us an overview? What’s the outlook for uranium juniors?

BL: Uranium is a great long-term story, but when prices reached $110 to $120 a pound, it did get very much ahead of itself. Since then, we’ve come back to earth, and hard. A lot of that drop in price can be attributed to the diminishing outlook for the global economy. But a significant part of the decline has to do with the fact that hedge funds were speculating in uranium on the long side and they have obviously deleveraged. Some of them no longer exist.

The bottom line is that a lot of the uranium positions—not just the companies, but actually the metal itself—have been sold down. Uranium’s long-term story remains bullish, but it’s not going to develop as quickly as everyone had hoped during the ‘urani-mania’ a couple of years ago. We’re going to have to see China grow considerably, for example. A lot of the uranium forecasts were based on the number of nuclear reactors that China was going to build as well as the rest of the world. But it takes a long time to build a nuclear power plant, even in China. The long-term trend is up, but along the way there will be bumps and corrections like those we’re experiencing right now.

TGR: So even a recommendation like Hathor, which has been pounded down by the market in general along with the drop in the price of uranium, would take awhile to bounce up?

BL: Hathor is such an exciting, high-grade story that its prices are being driven by its exploration success, making it largely independent of the short-term uranium price. Granted, some analysts have made rough calculations of its net asset value and then, rather than assign a price target that’s a multiple of its NAV, end up with a target that’s just half of its NAV. Unfortunately, that’s a function of today’s uranium market. But Hathor will be driven by drill results over the next three to six months, while the rest of the sector will remain pretty moribund. Most uranium explorers need a price over $80, because a lot of uranium in the ground becomes economic around that level. And we’ll need sustained prices around $100 before lower-grade uranium projects become viable and lead the representative stocks to rise.

TGR: At what point will existing nuclear facilities begin to consume enough to push the price up?

BL: When uranium was trading for over $100, everyone agreed that was the time. Now that uranium is in the mid-$40s, I just don’t think that anyone can predict when we’re going to sustain those higher prices again. The decline in the broader commodities market and the corresponding strength in the dollar are having an effect here. Again, I think we need to get through this temporary deflationary phase and the stronger dollar. A weakening dollar will start to bring up commodity prices. That’s when uranium will creep back. But it could be late 2009 before we can see that happen.