Every time you turn around these days, there is another “guru” that knows the answers to successful investing. Certainly, some of them know something and a few may be on the ball. But none have the miracle crystal ball. Most just spin up a bunch of hype and convince people they know what’s what. I listened to a presentation last night that was 25 minutes on before even my prodigious patience was taxed. I got sick of the canned testimonials and hyperbole and never found out what the secret was…. I just left.
Certainly you, too, have seen the many programs you can buy, all promising the “secrets” to investment millions. Some probably have sound logic and practices behind them, but usually you have to wade through more hype than substance to find out if they do. In the end, you gotta think that the person who profits the most is the one selling them.
So, I wont go there. I wont put you through that or insult your intelligence. Instead, Ill just tell you what the SECRET to profitable investing today really is. Are you ready?
The secret is SCARCITY.
In times past, even recent times, we were taught to believe in emergent technologies. Think of the “dot.com” bubble, for example. “Always be in front of the pack with the latest thing, and you cant lose,” was the thinking. To a great degree, that has not changed. Being first is better than last. But it is also something of a gamble, hoping that your “big thing” will take off and be a hit. Only then can you pat yourself on the back for being smart enough to “read the trends.”
But today you don’t need that guesswork and hand wringing. You just have to find out what is scarce or better yet, is ABOUT to be. Today, the bywords are “scarcity driven need.” Let me give you another example.
China, the United States and many other nations are poised to base their energy needs on nuclear power in the coming years. Hundreds, if not thousands of new reactor permits are being submitted around the world. India plans to have 25% of its energy needs supplied by nuclear energy in the near future. And every one of these reactors will need enriched uranium to function.
The problem is there is a potential shortage of this material. The celebrated deals with Russia to supply down-grade weapons uranium are going to end next year. This means everyone, including the Russians, will have to resort to mined uranium. As it stands now, that resource can just meet current demand. Well… it can IF we actually get it out of the ground. Currently most of it remains in the raw state and unrefined, even as demand for the stuff has only one place to go – UP!
Think I’m nuts, or crying wolf? The price of uranium has gone from $40/lb this time last year to a peak of $75/lb in January, 2011. It is now down at $58, thanks to the tragedy in Japan. But NO ONE is pulling out of their plans to build reactors because of the Japanese calamity. If anything, they are shoring up, revamping their plans using the lessons learned at Japan’s expense. We stand to see more ROBUST reactors, but not fewer of them.
Flatly put, in the next decade or so, there may not be enough uranium when everyone wants it. When the Russian deal ends next year, the U.S. alone stands to lose 10% of it’s nuclear fuel sourcing. Even if we could utilize ALL of today’s global mining capacity, some 3.3 million tons, it would only meet TODAY’s need, according to the European Nuclear Society. And we are not gearing up fast enough to do even that, as far as I can determine.
If we’re to be honest here, the rapid growth of former “backwater nations” like China and India has caught us with our collective pants down. So unless a big, solid uranium meteor crashes into the earth, we are gonna have yet another fuel supply problem, this time with nuclear fuel (well, a uranium meteor impact would be another problem altogether, but we wont get into that).
Keep in mind this is not guessing, this is fact. This projected scarcity isn’t all that hard to see. Nuclear reactors are going to be built – NEW ones on top of what we already have. They will ALL need fuel and there is a finite quantity NOW. When that demand increases, so will prices. Those who have invested in uranium in advance of this demand will profit.
The point here is not to run out and buy uranium stock. It would be a good idea… but it’s not what I’m specifically driving at. What I want you to see, wannabe or seasoned expert, is that whatever we are going to need in the future has to come from somewhere – and we can determine what that is without much trouble. I’m talking about things like oil, food, water, uranium, transportation, rare earth elements – – you name it. This is not “emergent,” newfangled stuff, but the objects of necessity. And it seems to me that where need exists along with a shortage, there is profit if you prepared for it.
And in the end, that is the greater point behind ALL investments.