Uranium target price
I think it’s silly sometimes when I see some silver target prices out there. I mean, I get it – there’s some mental gymnastics going on – and I LOVE silver. It is RATIONAL to see silver at $75-100 in the next 5 years. I’ll walk you through that in a second. However, I’m seeing uranium investors in a mania of sorts. I LIKE the uranium story. But for me, I look at uranium like when I was back in my 20s – she was a girl I liked going out with, had a fun time with, but sparks were missing to be “the one”. It’s someone I was drawn to, but felt there was someone else out there for me. That, for me, is silver.
With uranium, I think everyone loves the Rick Rule stories. “The prices will go up or the lights will go out, and I’m betting the lights won’t go out. ” He then bet on I believe 5 uranium junior miners, where the “worst” of them had a 22x. In this case, Rick had a lot going for him. He had access to understand the best 5 juniors, and he had a situation where spot uranium was far below the cost of production. For me, my timing for the uranium entrance was 2023, however the SPUT situation might actually have me bypassing the sector altogether – OR waiting awhile.
One thing Rick has bought up at times was how Kazataprom has a very low cost of production – I think it was like $15 per pound. And, they have a bunch of it, AND he said it was “in situ” so they may have paused production, but it may not take a long time to get it spun back up. Then – there’s the refining process – I get it.
When you have these commodities that are produced, then have lots of supply – it can drive down the price to discourage production. This is the supply/demand reality. You have to ask yourself, “how much does uranium cost to produce” – and with this, factor in a profit to keep the lights on. I believe Rick said this was somewhere around $60. Back in the day in the early 2000s, this may have been less – there was a torque there – massive amounts of supply needed, and not much supply laying around. The higher price then incentivized people to get in the business of making it. What you then saw, essentially, was a mushroom cloud explosion of price upward (forgive the pun).
Recently, you saw this tough $50 and come back to $43. Cigar lake and I thought the Kazakhs had stopped production – and SPUT was sucking up all available supply. To me, this accelerates the scarcity of the yellow cake. I get it. But if the Kazakhs can produce it for $15 or even $25, why wouldn’t they start back up again? If SPUT takes price up to $65, and the Kazakhs are producing AND Cameco fires cigar lake back up, price might overshoot to $70-$80 – but think about all of the people in SPUT that bought at when price was $35 and now have a double or more? They start selling. Perhaps at some point SPUT then decides to sell millions of pounds back into the market. This is your emergency relief valve.
Meaning – it is possible we may not have the massive moves to $150 per pound like in 2007. Rule also seems to be cagey about uranium this time around, saying a lot of the juniors are priced as if yellow cake was already $60-$70 per pound. I feel like he might be taking some flyers here, eventually, but to me uranium right now seems like gold in summer of 2020. It double in price to $50 quickly, and is consolidating back. I learned a lesson about gold/silver with this, the hard way. While you cannot pick a bottom, you might find an arc to see the bottom reversal in play over time and play some chop. That might be where I get interested.
I’m not a uranium expert – but if you have the largest supplier who can make a profit when uranium is $25, why would they not produce when uranium is $45-$50? In anticipation of SPUT sucking up many more millions and sending price up, I’d be licking my chops if I was Cameco at contract time and pointing to how it is imminent prices will hit $70-$80. If I may a decent profit at $60, and I can sign contracts for $65, I’m in. Same with Kazataprom. Then you have SPUT accumulating pounds and competing with who? They would be driving the price up on spot, but the major suppliers already would then have contracts locked in. You’d be bidding up spot for SPUT but not for industry.
So, I can see a touch to $70-$80, but I am in a long term holding pattern waiting for gold and silver to launch so I can take profits after a major leg up and roll into other things. Yes, I’m waiting – but I’m down on a lot on things, on paper – and do not actually LOSE money until I sell. And I’m thoroughly convinced gold and silver have a strong, strong move up in 2022.
Before any of you uranium guys out there go after me, I’m not a uranium analyst. I read the 30 page report Brien Lundin provides to his subscribers and are aware of the macros. My issue is I do not see the same price explosion as 2007 and with that, many of the stocks I liked (and had owned) are up 5-6x from when I did own them. Unfortunately, I held the stocks for months and nothing happened. I took that money, put into gold/silver, and missed out. I cannot see it going up 5-6x from here. So, I’m chasing where I can get 5-6x value.
Silver target price
To me, silver is more like uranium in 2005 than uranium today is to uranium in 2005. When you go out to eat at a restaurant, I once heard you take the cost of the food and times it by three for how much you charge. One third is food cost, one third is labor, and one third is building/utilities/equipment. Makes sense – and if you charge too little, you go out of business. If you charge too much, people may eat elsewhere. So you have to find that sweet spot.
You find some companies have stupid low anticipated costs to produce silver. I think I saw somewhere that Silvercrest was like $8 an ounce. Some of these have stupid high grade, and with the high grade, you are looking at having to run less pay in order to extract your metals. The same can sort of be said for mining, where 1/3 or more of the cost of mining is fuel/energy. When costs of fuel go up, naturally the cost to produce it go up, and you may also see this reflected in futures prices. They are smart enough to realize that $140 oil makes silver cost more to produce, and if they don’t have higher prices, they will get smacked upside the head. The idea with these managed silver prices is to try and find that sweet spot – where price is enough for most to stay in business, but not too much so people then use substitutes.
You then have a Discovery silver, where Taj Singh once said, according to my notes (silver was $17 at this time) that this project is a home run at $20 silver. Discovery had found over a billion ounces, but it was low grade – they then re-did the plan to make it higher grade and only 600 million ounces. Bear Creek is also massive, but low grade. First Majestic I believe had some mines they put on care and maintenance because it cost $35 to extract from there. The futures prices do not give a shit about a primary silver producer. They realize most silver is found as a byproduct to other metals and with that, they literally do not care if Discovery ever builds a mine, because you have a MAG and SILV who can make silver cheaper.
The problem is, that float of silver, like uranium, is being sucked up. PSLV has done a good job collecting a lot of it. But in my study with the BoA short, you can literally see piles of silver being sold behind the scenes with EFP and off the COMEX, then potentially long hedged. This float – when it runs down – is when we will have that uranium 2007 moment in silver.
See – energy costs will rise, no doubt, but byproduct silver accounts for 88% or so of the silver supply – IF we are buying into the silver institutes supply/demand numbers. That means primary silver providers are essential to support the total supply – but I really have demonstrated that IF Butler’s numbers are correct, the silver shorting behind the scenes supplied about 30m extra ounces per month to the industry to keep prices from going insane. The idea? Dissuade investment demand, and with that, eventually there will be a surplus to re-stock that massive pile that is used to short into the market. However, with insane silver demand now for running on 2 years, part of me feels this giant pile that was shorted could be in danger of being extinguished in 2022. When BoA sold 25m on the COMEX in December, they hedged with a 10m long buy in January.
Maybe they also hedged long somehow in the OTC OR bought 15m in physical back on the OTC. I don’t know.
Uranium has been able to be kept down due to Japan shutting down nuclear plants and thus having tons of supply in the system. We have seen with Chris Marcus’ book “The Big silver Short” how JPM amassed a giant pile of silver – by what appeared to be shorting it into the market to drive prices down, then going long to accumulate lower. They appeared to continue to do this – and all of these people that were then buying silver in a mania at $30, $40, and $50 were disenfranchised from ever investing in silver again when JPM could unload a double barreled shotgun into the markets to drive prices down. They had a pile, and be selling short so much, they were able to “direct the price” with “legitimate hedging”.
My point here is this pile, and other piles like it, were part of these 8 big commercial shorts that you hear people talk about. They either have metal in SLV, perhaps so they can sell later at $50-$100 and hedge these to preserve value and protect against downside movement – OR – they are leased piles they are actively shorting at times into the COMEX or OTC to make money at $27 and then buy back at $22 over, and over, and over again. I felt this game is only over when they can no longer hedge long and be confident the supply can be provided.
To me, this then exposes the 30m oz+ shortage per month the shorts may have been hiding up with a legit pile that becomes extinguished. I saw the COMEX options smash break after 16 months, as it appears there is an entity out there like a BoA that hit the bid on low smash downs in order to buy back what they sold at higher prices – and they WANT to collect. The issue is, will these contracts be settled for cash or can they take delivery from the COMEX? Well, as long as registered is showing 82m, they can short/go long. But as this slides down lower, this sell short/hedge long game may end.
To me, this is the same torque we saw with uranium. Either Apple gets its 800,000 oz of silver per year or iphones and ipads are no longer created. Tesla gets its 5m oz of silver, or no Teslas are made. Toyota gets its 15m oz silver or no cars go off the line. And this is when we can adapt Rick Rule’s saying, “the price goes up or production stops. I’m betting production doesn’t stop”.
So where do they get this silver? IF the “big pile” is close to exhaustion, and the lease can be bought out rather than replaced, then we have several sources:
- Registered – 82m would be approximately 2.5 months of supply of this delta. IF you see a MASSIVE down month in COMEX, like 20-30m removed, to me that signals when the pile is near exhaustion or this shorting game has ended, because they know they cannot replenish it.
- Eligible – this is NOT for sale at spot price, but maybe we can assume a lot of this can be sold at higher prices – this is perhaps 8 months of industrial supply.
- Stackers – you need $50 to really shake loose some loot.
- ETFS – as prices go up, you will see many get out and take profits. I see a lot of bars that can come to market.
So if you see this play out over the next 5 years, I see in the near term $30 breached. 1H22? From there, I think you will get a lot of sellers back to $30ish, and $30 is the new channel. This starts to get rabid buyers, and with no concentrated or manufactured shorting into this, there really is a supply issue. A serious one.
$50 is a big number because it was hit twice before, but I believe it will run through it like butter this time, as who the hell on the COMEX is paper selling silver when inventories are significantly depleted and industry needs it? The only sellers then would potentially be physical buyers – and the physical buyers could easily overrun the physical sellers. To me, $50 then is breached and we hit $60-$70, then lots of long term stackers – perhaps those with a dollar cost average of $4, are finally unloading stacks at $60-$65.
Price goes to retest $50 as a lot of physical has come from homes.
5. Tea sets, silverware, jewelry – While you have Jeff Christian talking about the 25B in this category, he doesn’t talk about what appears to be a hard limit of 200m or so per year they can scrap. What’s more, is there is more jewelry being bought than scrapped – at least according to the silver institute. I feel at $50, you will get a lot of this, but I also did a study on this bottleneck. If you look at the scrap over the last 10 years or so, you see a number of 150-200m. Meaning, if price is $100 and everyone wants to turn in grandma’s tea sets, it won’t matter because it will be sitting in piles in a warehouse for months or years before it can be turned into 1,000 oz bars – which does NOT solve the demand issues and further drives up price. IF we are at this point, we may have refineries expanding or working more shifts or something – perhaps we can somehow get to 300m per year in scrap from 200m. However, I mentioned we had over the last years potentially 400m per year of a gap? You would need whole refineries to be built. From $50-$100 is easy because the refineries cannot produce enough in silver turned in to meet production demand.
6. The dump – Jeff Christian also talks about the 30b oz in computer circuit boards, mirrors, TVs, and in the dump. There is “silver recycling” now which can retrieve silver from circuit boards, but the cost is $75 per ounce to do this. And, there is no real size at this point to perform recycling. There will be a day when silver hits over $100 where these recycling plants pop up to mine the dumps, if you will. Now, when we are at $50 silver, I’m really looking into the silver recycling companies, because in a short time, these guys will be tapped.
7. Mines – you WILL have mines like First Majestic coming back online. You will have silver from Discovery hitting at maybe 20m-30m per year. But at the same time, many base metal producers may be finding less and less silver. Ore grades are going way down, and you can see silver in the earth’s crust at just under 2:1, and we treat it as 15:1 at best, and 75:1 now. To me, silver is going to be harder and harder to find, has had zero exploration, and, fuel prices will be much higher 5-10 years from now. You will have Silver Elephant with the $40 cost of production silver in Ethopia becoming a thing. You will see Chesapeake Mining produce 19m oz of gold and 530m oz of silver – but the silver is 14gpt and extremely low grade and as a byproduct. We WILL get more supply – it will just cost a hell of a lot more for primary miners to get it. And, if primaries now make up 12% of supply, and we are at massive deficits, you can see $100 silver easily. If gold gets to $3,000 – 30:1 is not out of the realm of possibility.
My timeframe for this is 5 years – as we are seeing massive deficits now, and no hope of closing these deficits without much higher silver prices, we are about to have a uranium 2007 or palladium 2016 move. Could it be 2022? Well, with the highest inflation in 40 years, debt to the moon, tons of demand with EV/solar, and gold about to catch a bid – it’s extremely likely we see $100 silver inside of 5 years. This also leads to a potential path of $200-$300 silver by end of decade IF miners have no means of replacing all of the ounces they did not explore to replace. Most morons think you flip a switch for more silver, but do not realize that we could have a decade lag here due to this demand frenzy. The $100 price is tremendous, but when you realize how many more EVs they will want to sell and how many more solar panels are needed between 2026-2031, it is very, very easy to see the forecasts of $200-$300 silver by end of decade.
It’s math, mostly – and understanding the supply/demand fundamentals, bottlenecks, and sourcing.
Probabilities and forecasting
I’m going to keep this section short. Many guys like me come out and say what sound to be some crazy shit. If you look at some of my writings, you can see some significant levels of research that go into these. But there is no certainty. You have a deflationist camp, a hyper inflation camp, and then an Oliver camp who feels a long, drawn out recession could take hold. No one knows what is going to happen.
I say this because there are a few out there I despise, and I won’t name names. They are pompous, arrogant, and think a line on a chart is certainty. It is not. It is your best guess, given evidence you see, using your one tool.
The best guys I listen to represent a lot of different tools and methods. Oliver, Patrick, Wadsworth, Brady, to name a few. Some of these guys use charts. Some use different tools on charts. Others use macros. Others – like St. Angelo, may use history as a means of understanding where we might go. And, I might disagree with Steve on 5% of his stuff, I find his research to be thorough and agree with the other 95%. But the best guys out there – speak in PROBABILITY.
It is “more likely than not” that Fortuna is very undervalued to its peers. It is LIKELY, given all of the events going on, that silver will have a good year in 2022. It is LIKELY that the lease/shorting has led to silver price suppression, but like palladium, can only continue until a run on the physical dominates the paper. It is likely we are soon there.
It is more likely than not that silver will outperform gold over the next few years. It is likely we will see higher uranium prices. In MY opinion, it is unlikely we will ever see $150 uranium again.
So – I can present evidence for my case in all of these. And, I LISTEN to others on their evidence, because I may have missed something – AND – dare I say it – I can LEARN from someone with a different opinion than me.
I don’t believe in the milkshake due to my belief is that gold may become the international backing for money, if Russia, China, and the BRICS+16 have anything to do with it. This is different from Western thinking where we can print fiat to oblivion. There is a reckoning happening, and I believe gold is about to have its day. I just heard yesterday that the DXY was once 97 when gold was $400. It’s now 4.5x higher and the DXY is 97. Fiat currencies, in tandem, are devaluing against anything and everything else. The East is about to stop that. That being said, I think Brent has a well-thought out premise here and he might be right – the West might win this fiat battle, and in this scenario, it is likely the milkshake can win.
So – enjoy a lot of different thoughts out there, and try and learn from others, as it might help you look inside to see what you might miss in your thesis and help you strengthen your own thinking.
If you look at these ideas as probabilities rather than certainties, it may also affect how you look at investing. What I SEE are a lot of people trying to adopt a religion of a Hunter or an Oliver – where you need to understand the mechanics of what they are saying to then form your own thinking. Most don’t do that. They want an EZ button to then click “buy” and get a 10x.
Appearing in videos
I’ve now been on 5 videos outside of my own channel. Two for Palisades, one on NorthStar BadCharts, one with citizens for sound money, and one for Arcadia Economics. I enjoy “talking shop” and come to all of these with a presentation/slide deck that I usually send ahead of time to the interviewers so we can discuss some interesting topics. I think I’ve gotten 100% better from my first interview until now, as doing this more and more on camera builds a skill set I wanted to refine.
IF you enjoy talking shop, let me know, maybe I can join your show! Because I have a real job, and real family commitments, I have a limit how much I can do and am pretty selective – so I can’t do all of them, but am open from time to time to do these.
Some things that interest me now to discuss are the supply/demand fundamentals in silver which very few understand to the degree I have researched. I am also wanting to learn new things every day, so I relish learning about new topics to discuss.
Those of you who go on shows and just talk – I commend you. I usually have a structured approach with big picture concepts with supporting details/charts. I’ll probably do a few solo videos over the next few months in the below topics:
- Top silver companies, based on financials
- Top junior silver producers, based on financials
- BoA short selling?
- Silver supply/demand fundamentals – a deep look
- Fortuna Silver Mines will outperform everyone else in their peer group in 2022, by a lot.
- Solar panels – my experience and outcome
- Gold as an international currency with the blockchain taking over from the USD as world’s reserve currency