Dr. Keith Barron is co-founder and director of Aurelian Resources Inc. (TSX: ARU), founder and director of U3O8 Corp. (TSX-V: UWE) and director of Kimber Resources Inc. (TSX: KBR). He is proprietor of the website http://www.straighttalkonmining.com
These are his thoughts on Gold & Uranium:
I am extremely bullish about both Gold and Uranium; so much so that the new venture I am currently working on will be a company with a unique gold and uranium exploration asset.
Gold: You would have to be living in Bin Laden’s cave for the last half decade to not see the present US dollar decline and gold bull run coming. Remember those relentless TV ads with the fat guy who kept losing his home loan applicants to the competition? Any thinking person could see the unsustainability of a vertically-trending housing market fuelled by debt, and the inescapable pain to come when the housing market ceased levitating. Now that the music has stopped, the politicians have tried to downplay the extent of the damage, but unlike the demise of Long Term Capital Management in 1998, which was a one-time event, the sub-prime debacle will continue to hurt for months and years to come as mortgage resets ignite defaults and foreclosures. Ben Bernanke and the US Fed have already stepped in and temporarily bailed out financial institutions with “sub-prime” exposure, and longer-term this will continue through relaxed interest rates, and other inflationary measures. A recession would be therapeutic to the economic system, but if allowed, the Republican Party would self-immolate in the next election. Disaster will be staved off by injection of huge seas of liquidity. All of this is the “Perfect Storm” for the US Dollar and the “Perfect Bullish Scenario” for gold – the ultimate safe-haven currency. I can see gold far surpassing the highs of ’79-’80, especially as Asian holders of US-denominated debt jettison the greenback for gold.
Uranium: Last week John Howard, Prime Minister of Australia, signed agreements with President Putin to supply Russia with uranium. Australia now has agreements to sell uranium to Russia, India, and China as well as many western nations. This is quite significant because at various times these three new client countries have claimed self-sufficiency in uranium. Apparently that’s not the case, or, these countries see a supply crunch coming. They all have aggressive plans for new nuclear build.
For many years much reactor supply has come from decommissioned warheads; the nuclear equivalent of turning Cold War swords into ploughshares. Much of that supply has now been consumed and the world is now in a deficit situation, which can only be corrected through new mine supply. The vertical trajectory of the uranium price over the last few years is the recognition of the problem, especially against the backdrop of the worldwide fashionable embrace of Green Energy alternatives. That price trajectory was halted in July by a US Department of Energy telegraphed uranium sale (to be held this month) in order to pay for “clean-up of facilities” announced the day after an alleged earthquake-induced accident at a nuclear plant in Japan (first hyped as a fire and escape of radiation into the Sea of Japan – later revealed as only the benign overturning of a couple of 45-gallon drums of low level waste – lab coats and such. It was fully contained.) I think the timing was a bit contrived for we know-not-what reasons. In August, the knock-on effects of the sub-prime crisis prompted a few funds who have invested in yellowcake to sell their positions, and because the uranium market trades largely by appointment, the spot price gapped downwards. This is just a correction and the price has now stabilized. I believe that the uranium price has now fallen as far as it will go – and that the bullish scenario for uranium is almost as compelling as it is for gold. It’s been in the paper this last week that oil companies are considering new nuclear builds to provide steam to extract the oil from tar sands in Northern Alberta. Oil is flirting with an $80 per barrel price. The fundamentals just get better and better for the energy alternative of choice - Uranium.
Thank You Dr. Barron!
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