2003 to 2007 was a proper bubble. And underlying it all was an utterly compelling, believable narrative.
- An energy crisis was looming.
- Oil was running out (remember “peak oil”?). Nobody was fracking yet. No new oil discoveries in safe, cheap jurisdictions were being made.
- Blimey, in those days even the natural-gas price used to go up. Alternative energy could not hope to meet the developed-world’s requirements, let alone those of the developing world.
- Everything was about powering the incredible growth of China, which had to build “x hundred” power stations by some date in the future.
So the question was: “where is the uranium going to come from?” No new mines had been built in decades, Russia was no longer selling off its old weapons supplies – the easy conclusion was: “quick, buy uranium!”
Like all bubbles, once the narrative took hold, the spivs and the scams soon followed.
Jim Mellon rode the bull market perhaps better than anyone. In 2005 he co-founded UraMin with resource investor Stephen Dattels, with $100,000 of seed capital. It floated on Aim in 2006 and was bought by French nuclear giant Areva for €1.8bn a year later at the top of the market. Said to be worth over half a billion pounds, UraMin was Mellon’s single greatest investment success.
He sold, but many investors in the last uranium boom didn’t – or at least, not until it was too late. They’re the ones who need convincing now. Scars run deep following a bubble. As far as I’m concerned, it’s only a matter of time. Uranium may or may not be quite ready to take off, but it makes sense to book your seat on the plane while it’s still going cheap – at least research the seat you might book.
But Germany and Japan are only coming back on line slowly. Stockpiles dwindling, several mines have suspended ops BUT others coming online. Taking a long time to play out, but with 5 year view should be OK. Book your seat.
Dominic thinks that April to June is time to buy. Putting series of higher lows.
NOTE: Reasons for the bubble forming in early 2000s are not in place now. China slowing, reactors only coming online slowly. Or are they? Fracking is running out of steam. Clean energy is still in demand. Sentiment is turning on nuclear?
