Courtesy of Russ Winter of Winter Watch at Wall Street Examiner
The markets and economy are horribly maladjusted, trading on one trick ponies, hooks, rumors and bizzarro world “investment themes.” I am attempting to develop a more bottoms up approach to operate in this “algo like” environment, but still it seems the same Alice in Wonderland patterns trade day after day.
As investors with money we still all have to consider how to position ourselves. One over-riding theme that I am evaluating is the energy arena which has been disrupted by China excess and hoarding, money substituting, and capital destroying gambling. Overlaid against the booms, and now inevitable busts, is my fundamental belief that peak oil is here in spades. A capital destruction bust in energy, such as that occurring in coal, nat gas, and alt energy will lay the seeds for severe price spikes sooner, rather than later.
I also believe the Iran black swan is still lurking as a much higher event risk than is generally perceived. I also believe money tends to flow to energy (as a money substitute) when the monetary authorities get active. This is not the primary reason to buy (can be a hook), but with monetary doves and nutwings still in control, I had guessed that this would occur if Brent Sea oil traded below $100. That is now here. The next Fed meeting is June 19-20. The ECB, China, and Japan could also panic at any time, and they may do a one trick pony in unison.
Within the energy sector bust is that there is one asset, uranium, that is not being subjected to maladjusted overproduction, or where one does not have to await the demise of some insider- sand- box-turd-playing gangster firm like CHK for resolution. In additional uranium is an energy asset that has been already been marked down and where supply is dissipating.
Bullish sentiment for uranium has vanished in the wake of the earthquake in Japan that crippled the Fukushima Daiichi nuclear complex. Uranium has fallen from about $70 to $51. Much of this is a consequence of the Japanese selling inventory on the spot market. The 2007 spike was too brief to bring on any new supply.
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