Casey’s “Why Are Trump Insiders Pouring Millions Into This Mysterious Energy?” Pitch

What's being teased for the next uranium bull market?

By Travis Johnson, Stock Gumshoe, March 13, 2017

“Why Are Trump Insiders Pouring Millions Into This Mysterious Energy?

“One that history has shown could mint all-new millionaires.

“But NOT in fossil fuels or renewals. Instead, it’s an unusual kind of fuel that’s critical to his energy plans… his climate plan… even his foreign policy…

“This kind of fuel has boomed ONLY twice before – and both times, investors had the historic opportunity to turn every $1,000 invested into $1,044,000.”

That’s the intro we get for the latest pitch from Nick Giambruno for Casey’s Crisis Investing newsletter ($1,999/year)… and, as you probably already realize, it’s about nuclear power and uranium.

More from the ad:

“… while nothing in the market is guaranteed, our research shows that this commodity is on the cusp of a new bull market. Simply put, it delivers immense value to its users, there’s no substitute, and production is falling while demand rises.

“Plus, this time, there’s an extra trigger turning the market around: Donald Trump.

“Trump loves this commodity. It fits right in with his ‘America First’ platform.

“This commodity is critical to an industry Trump says he’s ‘very in favor’ of. And it’s critical for securing the country’s energy independence.”

OK… so why buy now? Apparently Giambruno is calling the bottom… as several other newsletter pundits have done, somewhat disastrously, for uranium a few times since the Fukushima disaster six years ago. More from the ad:

“… stocks in ‘Trump’s favorite commodity’ spent much of last year ‘carving a bottom.’ This is when an asset class stops falling, trades sideways for a while, and then starts rising.

“Trump’s election signaled this commodity’s new bull market—which I think has the potential to deliver the same eye-popping investment returns as its previous bulls.”

The hook to this ad is that Donald Trump tweeted about this “mysterious fuel” on December 22, and that the stocks who peddle in this fuel went soaring as a result… and that this is just the beginning, because this industry has had two crazy bull markets (and collapses, we interject) over the past decade or so and is on its way, sez Casey and his editor Giambruno, to another.

The “secret fuel” is, of course uranium … and the promise of uranium riches is one that has been sold many, many times over the past three or four years. Lots of the newsletter folks were convinced that we had bottomed out on uranium prices a few months after the Fukushima disaster in 2011, or late in 2013 as the Russian “megatons to megawatts” recycling program ended, or during various political debates about nuclear energy in Germany, or restarting the reactor fleet in Japan, or about new reactor construction in India and China.

And still, uranium has gone almost straight down over the past several years. Uranium is generally sold on long-term contracts, but even those are drifting down in price considerably… and as the prices have dropped we were told over and over again that most uranium producers couldn’t produce the stuff for $40, so production would be cut and that would produce higher prices because of the continuing baseline demand… and when that didn’t work we were told that these miners couldn’t profitably produce uranium for $30, or for $25, or $20.

So that is the biggest caveat: That all of these arguments make sense, there is not enough supply to fuel the current reactor fleet plus the new reactors being built (mostly in China), the costs of production are too high for miners to sustainably produce uranium at $20 a pound (or even, for some miners, twice that level) … but these arguments made pretty much exactly as much sense three years ago, too, and uranium has still continued to fall (it did bounce a little bit in the Summer of 2014, then started to fall yet again). Here’s the price chart for uranium over the past 20 years as reported by industry giant Cameco (like many industrial commodities it was pretty much flat before that for decades… at least in comparison):

So you can see those two modern-era spikes in the uranium price, in 2007 and 2011, and those did indeed create some tremendous wealth for those who were fortunate enough to be speculators at the right time. Even the big players enjoyed some boom periods during those years when uranium prices spiked, as you can see from the chart of Cameco (CCJ), which is really the proxy for uranium among institutional investors:

But you can also see the disastrous results you’d be sitting on now if you had bought into the uranium recovery story in 2013, or 2014, or 2015… even this strongest of the uranium stocks has been falling for years.

I’ve gotten ahead of myself, though — first, we need to ID the stock for you. The ad makes clear that they’re looking at highly-levered companies, which probably means junior miners — here’s a little more of the pitch:

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“Thanks to Doug’s connections in the mining space, he also identifies the most lucrative plays that are leveraged to these resources.

“Miners that have the potential to soar 10x, 50x, even 100x more than the actual price of the metal itself.

“And he recommends them while they’re ‘hated’ and incredibly cheap – BEFORE they take off.”

So what are the stocks? Let’s get right to the clues:

“2017 Uranium Supercycle Play #1: One Tiny 85-Cent Stock Is Positioned for
Historic Gains on the Trump Nuclear Boom

“This explorer may be tiny, but its mine isn’t.

“It’s proven to have a whopping 106 million pounds.

“And it’s positioned right in the heart of Canada’s famous Athabascan district.”

That’s Fission Uranium (FCU.TO, FCUUF OTC in the US). That is an explorer with a large deposit in the prime North American uranium district, near Cameco’s mines, and it did enjoy a nice spike as uranium recovered from $19 to $23 and animal spirits came back to the mining space after the election. It’s still exploring its PLS uranium project, which looks like it might be very large and low-cost, but I have no idea what the timeline might be for actually getting to mine development. You can see their latest investor presentation here if you’d like some more of the basic details — it’s already a $400 million company, so it’s clearly an exploration junior but it’s not exactly teensy.

And… that’s about it, they don’t hint at any other nuclear stocks they might like, the rest is all about the inevitability of uranium prices rising.

There’s also a big “insiders are buying” argument being made — not for this company specifically, but for uranium and nuclear in general… and, particularly, that “Trump Advisors” are buying into the sector:

“Peter Thiel, billionaire co-founder of PayPal, seed investor in Facebook, and Trump advisor…

“Put down $1,250,000 into Trump’s campaign when nobody thought he would win.

“He has also put down $2 million into this energy, calling it ‘necessary to replace fossil fuels’.

“Billionaire Robert Mercer, Renaissance Technologies CEO and the Trump campaign’s biggest donor… is also in on these ‘fuel stocks’.

“In fact, his total investment amounts to over $5 million!

“It’s not just Trump insiders though…

“Microsoft co-founder, billionaire Paul Allen, has helped raise as much as $200 million for this energy.

“Not to be outdone, Microsoft’s Bill Gates put down an undisclosed amount, but the Financial Times reports it’s in the ‘hundreds of millions.’</