George, I will be happy to discuss.

From what I have seen in the uranium market, it appears to be a tool for policy makers looking to garner public interest in one direction or another.

In the rise of clean energy, nuclear power was championed as a domestic source of cleaner energy for baseline power production which could replace a misconstrued popular view that oil, imported or otherwise, was the main producer of baseline power. Erroneous! The US baseline power is produced from coal (22%), natural gas (21%) and crude oil (11%), whereas nuclear power is only responsible for 8% - Full list here: http://www.eia.doe.gov/energyexplained/images/charts/us_energy_production_by_energy_source-large.gif

Now, one could hypothesize that at 8% of the pie, nuclear energy has a lot of room to grow. However, I will disagree with that argument based on A) Coal; B) Natural Gas; C) Alternative Energy.

A) Coal

Even if coal is nominally an expensive power source as compared to historical prices and will likely increase (Source: Bloomberg - http://www.bloomberg.com/news/2011-01-05/coking-coal-contract-price-may-rise-33-on-australian-floods.html), it still remains greatly less expensive than building nuclear plants as the infrastructure and future contracts are already tied up for energy production. From the US Department of Energy: “With coal likely to remain one of the nation's lowest-cost electric power sources for the foreseeable future, the United States has pledged a new commitment to even more advanced clean coal technologies.” (Source: http://www.fossil.energy.gov/programs/powersystems/cleancoal/). As one can note from the previous source, the US DOE is explicitly saying that they want to explore and expand on clean coal technologies and that they will fund companies that want to pursue these avenues.

B) Natural Gas

The facts for Natty are pretty straightforward. Natty is trading at record lows ($3.50-$4.50 range) and is being held in record inventories in the US and Canada (Inventory reports: http://ir.eia.gov/ngs/ngs.html). It is a locally produced source and abundantly available- more so with the unconventional source that will come on line such as the Bakken Shale etc. Moreover, infrastructure for Natty based power is already in place and the DOE is currently implementing programs and subsidies for additional Natty fired plants (Source: http://www.fossil.energy.gov/programs/powersystems/index.html)

C) Alternative Energy

After Oil ran to $140 in 2008 and contributed to the crash of speculative assets (read all assets!) and ensuing recession, alternative energy became a buzzword and a huge growth industry. Obama campaigned on the back of alt energy, the wind and solar industries grew exponentially and the equities such as FSLR just shot up. Ultimately, the US Government policy is outlined in the The Waxman-Markey Bill “The American Clean Energy and Security Act of 2009” which can be viewed here: http://www.accf.org/media/dynamic/3/media_387.pdf

It is unfortunate, but I believe that the alternative energy craze is a pure function of marketing for political clout on the democratic side of the isle versus the “Drill Baby Drill” mantra on the Republican side.

….. Uranium

It is largely being pushed aside by Western nations and remains to be a China growth story: “The World Nuclear Association was quoted as saying China is planning to construct an additional 187 nuclear reactors. The agency estimates China's annual uranium consumption would reach 20,000 tons by 2020, about a third of 2009 global output. The report said China's Nuclear Energy Association has estimated future plants would require more than 400 tons of uranium each to start operating. China's uranium imports last year totaled 17,136 tons, three times higher than in 209. Currently, the United States, France and Japan are the world's major uranium consumers.” (Source: http://www.upi.com/Business_News/2011/03/08/China-to-become-largest-uranium-user/UPI-41971299565158/#ixzz1KdeeeyEi)

Conclusion:

The business of energy investments, exploration, production and operation is a politically laden one. From an investment standpoint you cannot neglect the direction the governments are pointing in. I have only really looked at the US domestic position here which follows my previous post on Japan. I have not dealt with Western Europe at all and they are a big part of the equation.

My strategy and outlook for the energy complex:

My overall bullishness in the energy complex is based on the overwhelming population pressures we are experiencing worldwide and the improvement in global living standards and energy intensive activities and food production. In the short term, I think we have had a serious run and unless we come back a bit here a stabalize at a new normalizing price level, the inflationary pressures will be too large to ignore and we could see a collapse like in 2008. Therefore, the short term bearishness sets up for a medium term hold/accumulate position that is based on a larger overall view that the energy complex will rise but may be ahead of itself for the moment.

For more info on the Uranium sector: http://u308.biz/