“This Exact Same Crisis Has Happened Twice” (and this ad has been pushed at least three times)

What's up with the latest nuclear story from Dr. Kent Moors' Energy Inner Circle?

We hear a lot about Dr. Kent Moors here at Stuck Gumshoe — he has been one of the more heavily promoted “experts” in the energy space, with several newsletters based on his ideas being churned out by Money Map Press over the last few years, and several of those heavily promoted ideas have flamed out pretty badly — though I should be fair and note that for much of the time Money Map has been promoting him it has been a pretty weak period for investing in energy stocks.

His last few pieces were mostly about solar energy, including the big push he made late last Fall for SunEdison that was quietly revamped into a pitch for a different solar company after his original recommendation started to really sink into bankruptcy… but over the past week or two Money Map has started to recirculate his nuclear energy pitch that first popped onto Stock Gumshoe’s radar in May of 2014.

And I was perfectly content to ignore it this time around, frankly, since I wrote plenty about the ad back then — and was at least somewhat persuaded by the logic of the argument, though the expected catalyst of a rising uranium price never appeared and the companies never had that boom and experienced 100,000% returns. I figured it was just a rerun.

But, as our reader (and quick puzzle solver) modernrock has noted a couple times in answering this teaser pitch for other readers in recent days (you guys are often faster than I am, good job!), it looks like Moors’ publisher is using the same technique that worked so well for themwith solar stocks over the past few months: using a “tried and true” ad but changing the specific teaser hints to focus on a different company.

So I’ll take a look. If past promotions for Moors’ newsletters are any indication, we’re going to be asked about this one a lot, and if it’s a small stock the price might well go wonky — so let’s see if we can confirm modernrock’s answer and see if there’s anything else to the ad.

If you want to take a trip down memory lane and see my piece about this ad that was written in 2014 and updated last year, that piece is here. And the chart for the three investments he hinted at in that ad is here (the green line is one of the not-terribly-accurate price gauges for uranium, which you can see hasn’t really gone parabolic as so many folks expected):

So what’s Moors saying this time?

Pretty much the same thing he said last time — that there’s a developing supply gap in uranium that could create “total chaos” because 16% of the world’s electricity comes from nuclear power, and that “this exact same gap happened twice before in the history of energy” and drove “a handful of companies” up by 1,000% or more.

Heres a little taste of the ad, in his words:

“Already, Saudi Arabia, the country with more oil and energy than anyone on the planet, is investing $80 billion in this one type of electricity.

“In fact, nearly every nation on the planet – including the United States, India, Brazil, and Russia – is rushing to expand its use of this type of electricity.

“China is so worried, they’re planning on boosting their use of this electricity 26-fold… an incredible 2,566%.

“Like I said, this exact same situation has happened twice before in the history of energy. And… it’s happening right now.”

Some of the details in the ad have changed over the years, but you have to read them side by side to really notice — his big argument is that more nuclear plants are coming online but that uranium prices, depressed by the shutdown of German and Japanese nuclear plants after Fukushima, have remained so low that the miners won’t increase production. That will create a supply crunch that will drive prices higher, and make the mining stocks spike higher — as they did the last couple of times that uranium prices rose sharply (and, indeed, when any commodity gets so cheap that production is shut in — low prices are pretty reliably the cure for low prices when it comes to commodities, though sometimes it takes a long time for the cure to set in).

But the underlying numbers in the ad have changed a bit — back in 2014 he noted that demand exceeded supply by 40 million pounds, and the number he now cites is 20 million pounds… and stockpiles in 2014 were disappearing at the rate of 465,000 pounds per day, whereas now they’re disappearing at the rate of 395,000 pounds per day. And now he says those stockpiles “might only last six months,” which is more specific than he got last time. The price of uranium has continued to generally be flat or drift down most of the time over those past two years.

The uranium business is pretty opaque, and we often get tricked into thinking we understand it because we know about the publicly traded miners and how they’re doing… but mining, processing and selling uranium is a highly regulated and very strategic business, and it’s nowhere near being an open market. The uranium spot price is something we can watch for indications of whether short-term demand is going higher or lower, I guess, but it’s not really a free-trading commodity — most uranium is sold on long term contracts, most consumers have substantial stockpiles, and nuclear plants are not price-sensitive to uranium (fuel is a small portion of their operating costs).

So what really matters is how many nuclear power plants there are, and whether stockpiles are depleted enough that plant operators and governments will want to start buying up a lot more uranium from the mines, driving prices high enough to inspire more mine expansion or new projects and the acquisition of little uranium miners by the big operators. Dr. Moors, with all his talk of being an “insider” who meets with world energy leaders, would seem like someone who might understand it better than I do, despite the fact that his prediction hasn’t quite worked out over the past couple years.

It’s not just Moors, of course — I was pretty convinced of the logic of a uranium bull market two years ago, and uranium continued to essentially do nothing… so now I confess to having no idea when or how things might turn. Japan is gradually restarting its reactors, though it will take a long time, many of them will not be restarted if there are any seismic or safety concerns, and they must have abundant stockpiles after having so many reactors closed down for so long… and China, South Korea, India and other countries look like they’re going to continue to build new plants more quickly than the first-generation plants in the US and Europe are decommissioned, which should increase demand.

So if this really does finally bump prices up, what does one buy?

Like Moors did last time, he first mentions Cameco (CCJ) as the “uranium blue chip.” That’s been the easiest proxy for uranium in the stock market over the last 20 years, based primarily on the value of their huge and incredibly high-grade mines in Canada. Here’s what he says about Cameco:

“It comes down to this… if you’re looking for a world-class ‘blue chip’ that offers good upside, Cameco is a good bet. Again, the stock is trading at $11, and based on their uranium assets, as well as their well-diversified business model, I see the stock hitting $20 in the coming year.”

Which is really just an update of what he said back in November of 2014 (I can’t find my copy of his May 2014 version of the ad), which was this:

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“It comes down to this… if you’re looking for a world-class ‘blue chip’ that offers good upside, Cameco is a good bet. Again, the stock is trading at $16.50, and based on their uranium assets, as well as their well-diversified business model, I see the stock hitting $38 in the coming year.”

So take those projections with a big ol’ grain of salt — as always with a commodity stock, the company’s share price is moved both by the price in the commodity and, usually to a lesser extent, the o