Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Uranium Stocks -- Ignore unavailable to you. Want to Upgrade?

To: TheSlowLane who wrote (9282)	3/18/2007 8:31:19 AM
From: TheSlowLane	Respond to of 30341

...and... "The fury of the uranium equities has caused rampant appreciation for all levels: speculative to fundamental. We maintain that with the appreciation of the uranium price investors should remain focused on three subsets of uranium stocks; producers, imminent producers and those development stories with fundamentally solid assets aggressively moving towards production."

To: TheSlowLane who wrote (9282)	3/18/2007 10:37:26 AM
From: Anchan	Respond to of 30341

Re: Paladin and possible "overseas" acquisitions smh.com.au

To: TheSlowLane who wrote (9282)	3/18/2007 4:14:43 PM
From: russet	Read Replies (4) \| Respond to of 30341

You have to be careful about your Sprotts. Tardif is employed by Eric Sprott and many of Tardif's ideas about mining stocks come from Eric and the people that surround him. This is the Sprott asset management group with a heavy exposure of their funds to commodities. Then there is Sprott the brokerage house which was sold by Eric Sprott some time ago. They are no longer affiliated with Sprott the asset managers. Sprott the brokers do however have a vested interest in the commodity boom as they owe a lot of their revenues and profits to providing buy and sell side brokerage services to exploration companies. Both these groups are heavily involved in the pump up of uranium and mining stocks in general. Analysts without this vested interest have different charts and graphs and different predictions of demand and supply of all the metals. They don't ignore negative influences on commodity prices like most proponents of high and higher metal prices. Many of these analysts presented their views in the technical sessions at the recent PDAC. Some contrast strongly with the don't worry be happy messages coming from both Sprotts. Most people buying or owning mining stocks now actively look for confirmation of their decisions and are not open to the negative possibilities. Their mind can only grasp the positives as admitting the negatives are possible is in direct conflict with their actions. It's important to know what the vested interests of the analyst is before concluding that their scenario is the likely outcome. Now here is a simple construct to ponder. First the U.S. economy is 70% consumption based and is the world's biggest consumer sucking 25%+ of all goods produced in the world. China is the world's biggest exporter of physical goods exporting at least 50% of everything they make. The U.S. government during the little bush/greenspan years has thrown more cheap government money at their consumers with tax breaks, military buildups, low interest rates etc., than any time in history. That together with some of the lowest relative commodity prices, cheapest labor prices, cheap borrowing rates and slack borrowing rules has resulted in the biggest consumer pigouts of all time throughout the world. Many governments have copied the U.S. lead. Now comes the hangover. China is the biggest consumer of many metal commodities in the world, but the vast majority of that consumption is because of exports of other goods to other nations, with a major portion of that going to the U.S. consumption pigout. 50% of Chinese goods made are exported, but the biggest part of the other 50% is related to capex to allow the 50% of exports in the first place,...plants to build the exports, roads and rail and docks to get the raw materials to the plants and finished goods back to the docks, buildings to house the workers for the plants, and then all the supporting goods and services for the workers. It's called the multiplier effect in economics. The consumption boom of the last few decades peaking in the last 5 years has lead to the search for the cheapest labor which lead everyone to China to build manufacturing plants which lead to the China boom. Now what happens when the U.S. consumer stops getting fed with cheap easy money. It's the multiplier effect in reverse. A very small percentage drop in consumer growth for anything but short periods of time are going to be magnified down the production line to the end,...China. If consumption actually drops back to 2000 levels before the days of cheap easy credit the ramifications for China will be severe. No wonder China supports the U.S. buck so much by buying U.S. debt denominated in U.S. bucks,...they're making sure the U.S. consumer can continue to buy China's exports as cheaply as possible. I should point out that the need for energy is directly related to the consumption boom. Cheap abundant energy not only runs the manufacturing of consumer goods but the distribution network as well, and provides the power to run many of the new goods,...air conditioners, electronic gadgets, cars etc. The multiplier effect will work on energy consumption too. Currently everyone is talking $200 uranium and $100 oil. If the U.S. consumer takes a break and goes back to past levels of consumption, we will more likely be talking much lower levels for uranium and oil than current levels. Oil has already reacted downwords and electricity prices in Ontario at least have fallen in the last six months. I think the downturn is accelerating with loan loss provisions on cheap car loans and cheap home loans coming to roost in U.S. financial companies. It's already caused a wave of consumer and corporate bankruptcies and a hardening of credit requirements for loans of all types not just in the U.S. but associated countries as well. The U.S. consumer is being shutdown, and the U.S. is looking for a quick exit from their world policing duties as well which will have large ramifications for anyone whose job supports that effort. The military machine happens to be a large part of the U.S. economy too. Suddenly demand for oil drops significantly around the world as the U.S. consumer and war machine turns down. If these levels go back to pre 2000 levels,...well take a look at electricity and oil consumption levels pre 2000. They are much lower than todays levels. Will this silence the demand for many of those new reactors? Why build a multi-billion dollar reactor if electrical power demand is adequate and cheap. Are there any levers left for the U.S. government to pull to bring us back again,...any more wars? (will U.S. citizens tolerate another), will interest rates drops help? (I think at this point the world could really punish an interest rate drop with an unloading of U.S. dollars and investments that could sink the dollar, further aggravating consumption drops),..how about another tax reduction for a heavily indebted country?. Maybe it's time for the good ole U.S. to suffer the hangover,...then it's the multiplier effect in reverse. Now back to Tardif and Sprott,...will they care? Well Sprott the broker will as underwriting grinds to a halt, and with stock prices dropping their retail brokerage revenues will hit the skids. Tardif and the Sprott asset managers that hedge will feel less pain at the bigging until the redemptions start,...but they are already richer than most of their clients so their lifestyles won't change too much,...probably they will have more free time to travel, and travel costs will be dropping around the world as consumption levels drop and competition drives prices down. Maybe they'll join Jim Rogers on his world adventures. When prices drop enough, and consumers pay off their debts, we can start the cycle anew and hopefully most of us will still be here to participate :-[)