Joseph L. Shaefer

Profiting from Peaceful Uranium Use

On Jul 07 11:06 AM Gyoza Mimi wrote:
…it is a stretch to call Russia a "nation with lightning-fast armored, mechanized infantry and fine special operations forces” [and regarding uranium] …During the bonanza of 2007, everyone join the Uranium mining business, so there is no shortage of new discoveries and upcoming mines. What time period do your projections cover?

///// Reply: Gyoza Mimi, I apologize for the delay in responding. I wanted to respond today but also wanted to give the SA Editors a chance to reply to my earlier e-mail to them about how this title had been changed so that readers might believe it was about buying uranium stocks. In my Instablog post (the way most authors submit their articles, posting there with a request that SA consider it for publication) the title was, “Dear Iran, China, and North Korea: Sorry, Boys, No More Enriched Uranium.” The creation of a cartel to control who gets uranium could be the most important breakthrough in years to cripple Iran and N Korea’s ability to threaten the rest of the world.

Regular correspondents, like you, will likely at least skim my new articles, but “Profiting from Peaceful Uranium Use” will attract a very different new reader than the originally-titled article! I am convinced most SA readers care about the world in which investing takes place, not just about what stocks to buy. That was the crux of this article – geopolitical and geostrategic actions.

I understand that SA must change the titles for search engine and other reasons but it is my intent to argue that we need not live in a world of increasing danger; not to recommend uranium stocks! So I can address your first comment in the context of the article but must venture my personal (and unresearched beyond the article’s references) opinion as to uranium…

My view of Russian military capabilities comes from long and close-up study of the culture, mindset, and social and economic factors in that nation as well as first-hand interaction with Russian military leaders. That doesn’t make my analysis correct, or even suggest it is widely-held.

But like many military members, I never underestimate my enemy or potential enemy. There are those without experience in counterterrorism or counterinsurgency who underestimated the Afghans and Iraqis, as well, saying things like, “The world’s most powerful military will whip a few ragheads in a matter of weeks.” Those tribesmen, like the Americans in 1776, are lean and sinewy. They know their terrain while we are just learning it. Their lines of supply consist of getting a little nan-e Afghani (bread) and some water that would give us dysentery.

I would not underestimate today's rebuilt Russian military. The Russians went through some terrible economic times and their military felt the brunt of many of the cutbacks. Your examples above clearly demonstrate that. I remember being in “der alte DDR” (the old East Germany) in 1990 when Russian soldiers were reduced to selling their uniform items to buy food. Russia didn’t want a bunch of disciplined, trained warriors back on its soil and there was nothing for them to do in East Germany. So they sold their medals and insignia and posed for pictures with Western tourists, as their NCOs and military (as opposed to political) officers tried to maintain some semblance of discipline and morale.

I don’t like to see the resurgence of militarism in Russia, which is one reason I advocate so strongly in my article trying to work together to control who gets uranium. I’d rather see the Russians regain their dignity working in economic, social and diplomatic circles. But, absent genuine engagement and, in some areas, cooperation, I strongly believe that under Putin they will turn to militarism if we don’t engage them in other areas.

I further believe that their military shortcomings are rapidly being upgraded and are now almost to the level at which we thought of them, even absent nuclear weaponry, as a true military peer competitor not too many years ago. In short, what I believe about my own nation – don’t mess with us; we make a far better friend than an enemy – I would increasingly warn about the Russians…

As for uranium, as I stated in the article, I want to restrict its passage to irresponsible nations. So I may be the wrong person to fully discuss its investment characteristics. My time horizon covers from next week to the next ten years. I believe that, as Western nations come to its senses and build more nuclear electricity-generating plants, uranium will be of ever greater value. We cannot continue to do insanely stupid things like cap-and-trade, which will become a bureaucrat’s delight and a taxpayer’s nightmare. Solar and wind are so desirable that many have fooled themselves into believing they are current solutions. They aren’t. As we make strides in both areas, I believe we need natural gas and nuclear as cleaner bridges to the future.

Best regards,
JS

Profiting from Peaceful Uranium Use

On Jul 07 09:48 AM User 267997 wrote: In the short run, aren't those scrapped nuclear warheads going to be recycled into nuclear fuel in competition with traditional suppliers?

///// Yes. That's the safest and best use for them. But having commanded a number of linguists during START I and II (The Strategic Arms Reduction Treaty) I can tell you that this is a slow and meticulous process. Very little fissionable material comes on-line in any given month, so it adds only incrementally to the supply. In fact, during the 13 years the "Megatons to Megawatts Program" was in operation, it accounted for just 13% of total world requirements for existing power plants. What remains on the table is unlikely to equal this amount.

If you are interested in playing this as an investment theme, United States Enrichment (USU on the NYSE) has held the U.S.contract for "downblending" the nuclear material taken primarily from dismantled U.S. nuclear warheads into the low-enriched uranium fuel used by nuclear power plants.