2008 playbook

I started this blog initially to just cover the energy and commodities market but with the bearish overtone the past few months I don't think many people would have read my blog.

So I want to write why I'm convinced of a uranium mining bull market to an even greater extent then what we have already experienced.

My big expectation is that oil companies are going to be looking into the future and seeing the demand of uranium increase as nuclear power plants start to be built in earnest worldwide in the course of a few years. Of course, this has already happened but for oil companies to begin an earnest commitment they need to be more convinced then a few wide eyed speculators.

Many of these uranium miners have great claims, are actively defining their resources, geographically diversified, and cash rich. These oil companies will start to pick them off one by one unknown to the public who are wary of these shares since the fabulous run up and down of the value of these companies. Remember that oil companies were the largest owners of uranium claims in the seventies.

Bull markets have three legs up and two legs down which are corrections. That is the Dow Theory which I am a proponent of.
The first wave of the uranium market was in 1996. When uranium hit $14lb then sold off with USEC, a former government agency, dumping uranium on the open market (sound familiar). Several mining execs start to speculate and grab cheap land claims.

The second wave was catching the secular bull market in energy starting in late 2002. The last hurrah was in March 2007. Savvy investors start the chain rolling and hedge funds end it as subprime explodes and the government sells uranium on open market sending the price of uranium down $30 from speculative highs.

The third wave will be the titans of industry buying these companies, at first, cheaply but the stampede will run the value of these companies to obscene prices only multi-billion dollar companies can do. The end will be Cameco merging with XOM. (AOL and Time Warner)

I have no crystal ball and don't even want one. But I need a game plan to get me through this ugliness and this is the one I have. Hope it helps.