Making Money Off of the Climate Crisis

 Making Money Off of the Climate Crisis

Unfortunate weather could be on its way to us. There are a lot of warning signs that a global environmental disaster will happen in the next few years or decades, and many intelligent people have spoken out about it. Almost daily, the world's media broadcast the same message, which comes from the brilliant mind of James Lovelock. His plan B: quickly sequester the carbon dioxide emissions and bring online additional nuclear reactors.

What about the other option? Relocate to an Arctic locale where the temperature stays a lovely 74 degrees Fahrenheit all year round. The results were published in the journal Nature not long ago. A phenomenon known as the Paleocene Eocene Thermal Maximum (PETM) occurred approximately 55 million years ago. A massive emission of greenhouse gases, including carbon dioxide, heated the whole planet during this PETM event. That kind of heat could be visible later this century, according to Lovelock.

"Investment Implications of an Abrupt Climate Change" is the title of a 56-page report that was released by another intelligent man with whom we have had numerous conversations this year. Global warming and climate change will have far-reaching consequences for the financial sector, according to a persuasive argument put forth by Market Strategist Kevin Bambrough and Eric Sprott, CEO and Portfolio Manager of the illustrious money management firm that bears his name. It is highly recommended that you peruse it.

Opt for Affordable Arctic Real Estate or Nuclear Power?

Dr. Lovelock's findings make us quickly think of optioning to purchase huge expanses of property around the Arctic Circle, but what else can we do to save our finances? There is probably too much reality to deal with right now, what with climate change, global warming, and the impending end of the world. However, in the next 10–30 years, what are your plans? We spoke with Julian Steyn last week; he and U.S. Senator Pete Domenici wrote a book called A Brighter Tomorrow. Even as a reasonable and conservative man, he expressed his agreement with Lovelock's concerns in an email, writing, "I am afraid I do agree with him."

A reasonable person would want to begin safeguarding their assets today to guarantee the survival of their family and lineage in the future if they find validity in the statistical analysis offered by the United Nations Intergovernmental Panel on Climate Change (IPCC). Respected experts have sifted through reams of data and predictions regarding the effects of climate change, including melting glaciers, increasing temperatures, rising sea levels, and more. No one else feels the same way, and smart people aren't praising solar panels or wind farms as "the solution." Their view is that nuclear fission reactors are essential, and the sooner they go online, the less effort we will subsequently have to put in (figuratively speaking).

A viable solution has been proposed by Eric Sprott and Kevin Bambrough, who have presented a convincing argument for why we should not waste time anymore. The authors of the paper did not intend for you to be alarmed and encouraged to assassinate any environmentalist or anti-nuke activists you may encounter. Ladies and gentlemen. Policymakers and governments can follow the steps laid out by Sprott and Bambrough. The most critical thing is that they have offered us very controversial recommendations for preventing financial losses in the impending catastrophe.

Keep in mind that it won't merely be a meteor crashing into Earth (though that is also possible). When the planet warms up, it's like putting water on high heat. As it warms up, it continues to warm up. The temperature rises with time. So, the water comes to a boil. Put simply, the impending disaster will languish for some time, ushering in economic and political unrest, among many other problems that are likely best characterized in biblical terms. Unfortunately, the majority of us will remain in bed until the next Hurricane Katrina passes a short distance away before we go up and about.

In the first part of the paper, the writers discuss climate change and global warming from every angle conceivable. It is possible that the crevices discovered by Messrs. Sprott and Bambrough will cause you concern. Did you know that the melting glaciers that filled the Ogallala aquifer in the US are causing it to dry up? This is the biggest aquifer in the world. A third of the global population currently lives in areas with inadequate access to fresh water. Even when we are in close proximity to water, we could not have access to a glass of drinkable water. Find out from the Saudis why they are constructing desalination plants at a breakneck pace. Think about it if that dry climate persisted over 90% of the Earth's surface.

When global temperatures rise, what happens? One consequence of rising urbanization, GDPs, and desire for "civilization" amenities is an increase in carbon dioxide emissions. Earth is projected to become a boiling pot before the century ends because to deadly CO2 emissions, which increase global temperatures, poison air, and kill plants (and humans).

More Uranium is Necessary for Nuclear Expansion.

Kevin Bambrough sounded the alarm, saying, "This IS the perfect storm," not in the meaningless cliché sense but as an irate voice urging decision-makers to seriously consider the consequences of carbon dioxide emissions. "More nuclear reactors are needed now," he informed us. He put us in touch with environmentalist Patrick Moore, who argues that the United States should go from using 80 percent fossil fuels to using 60 percent nuclear power.

Bambrough extended the 2030 predictions made by the World Nuclear Association (WNA) under the scenario put forth by the former co-founder of Greenpeace. From the present 368 Gw, generated by the 441 nuclear reactors worldwide, the demand for nuclear power is projected to skyrocket. In 2030, when the total power demand may reach 31,500 Twh (according to the WNA), he calculated that nuclear reactors would generate 18,900 Twh of that demand using Moore's premise of 50% nuclear reliance. According to Bambrough's calculations, the world will need approximately 2,700 nuclear reactors by the year 2030 in order to generate that amount of electricity. While planning for the "potential" 600% increase of online nuclear reactors in around 25 years, Bambrough also determined the amount of uranium needed to power those reactors.

Bambrough claims that the world's uranium mining production is currently hovering around 100 million pounds. If nuclear power continues to grow at the rate that Moore claims it should, global utilities will need almost 1.3 billion pounds annually by 2030. When asked about the possibility of a global nuclear power plant, Bambrough stated, "The supply of uranium may well be the most limiting factor."

The new rationale for a long-term increase in the price of spot uranium might be this. "To attract enough investment capital to meet the growth in demand," Bambrough stated, "much higher uranium prices." The last six years have seen uranium prices soar, so this has already started. Compared to its spot price of $6.40/pound in late 2000, the current high of $46/pound for long-term uranium is tenfold greater. In the end, Bambrough was right. The 1950s were uranium's heyday, but today the expense of building an underground mine is astronomical. Construction of any uranium-producing facility, including an ISL operation, is slowed down and costs more due to environmental restrictions.

"Marginal mines will become price setters," Bambrough stated. This provides some context for the heavy investment in Strathmore Minerals (TSX: STM; Other OTC: STHJF), Energy Metals (TSX: EMC), and other firms by the Sprott Asset Management funds. Strathmore Minerals' CEO Dev Randhawa said us in our June 2004 interview that the company's plan was to buy uranium properties that were uneconomical at prices below $20 per ounce in the hopes of profiting from a sustained surge in the price of the metal. With each increase in the price of spot uranium, his plan has continued to benefit stockholders. Assuming Bambrough is correct, the junior uranium developers may find success as Internet sensations. This past November, newsletter writer James Dines came to that same conclusion, and others have reiterated it in various reports.

For decades to come, "Large low-cost producers may be able to reap Middle East-like oil profits," Bambrough said. The smaller uranium companies are poised for great success if the gap between production costs and spot uranium continues to expand. The firms that delayed uranium mining will eventually sell their output at a profit-to-production spread comparable to what ExxonMobil or ChevronTexaco enjoy today.

While utilities are concerned about rising building costs, fuel traders are likely more irritated by rising uranium prices. Nuclear power plants actually have fuel costs that are ridiculous. "Fuel costs (for nuclear) are merely 4.5 percent of total costs, even with uranium at $40 per lb," Bambrough stated in his paper. Nuclear power would only see a 6.75 percent increase in cost if uranium prices reached $100/lb, an additional 150 percent increase. The price of coal as a fuel is 35% and that of gas is 73%. Additionally, they contribute significantly to atmospheric CO2 levels.

Unless every country on Earth agrees to use nuclear power, what else can be done? Potential challenges may persist. According to Lovelock, we should have dealt with the issue of CO2 emissions fifty years ago. The atmosphere needs 50–100 years to completely deplete those emissions.

Food, water, and energy supplies will all experience disruptions, according to the Sprott report's co-authors. They foresee issues with national security, skyrocketing food costs, and the increased investments required to supply water and energy to those who aren't underwater in debt. As a result of central banks flooding the money system with liquidity, they anticipate a currency crash. In the face of overwhelming economic disaster, gold will naturally play the role it has always played.

Am I exposing you to too much reality? Shall we simply observe the outcome for the time being? We may not have such good fortune. “Global warming has sped from a problem that might harm our descendants, to one that could seriously alter the social and economic conditions of our lifetime." (CERES report from March 2006) A number of specialists, including Swiss Re's chief claims strategist, expressed this concern.

Put simply, the assumptions and conclusions drawn by Messrs. Sprott and Bambrough are spot on. Stop procrastinating and start making progress right now, not in thirty years.

We sent the Sprott report to David Miller for a second opinion before finishing this essay. He is an expert on uranium, geology, nuclear power, and politics, in addition to being a consultant to the International Atomic Energy Agency, a third-term Wyoming legislator, and president of Strathmore Minerals (TSX: STM). "Coal was the fuel of the 19th century," he said fairly directly. On this century, oil was the fuel of choice. The economic cycles of both have passed. In the approaching century, uranium will play a pivotal role as an energy source. Every year that passes in this new millennium, the demand from nations seeking nuclear power increases in volume. Maybe Moore's energy mix will materialize, or at least the nuclear industry will experience significant growth, bringing it closer to his desired 20%.

Our two-year study of uranium and nuclear power has left one critical question unsolved. Even though we have received several responses, we are still not convinced. The question of whether the world's nuclear reactors have access to enough "already mined uranium" and ongoing mining production to fulfill the expected worldwide demand for power remains unanswered. For the question posed above, the decisive word is "available." All around us, uranium can be found. Worldwide, there is around 1.7 billion pounds of what is known as "already mined uranium" in storage. When the time comes, though, will there be an adequate supply of uranium for the utilities?

In the absence of such a regulation, the current spot price of uranium may one day resemble the price of gasoline around 1965.

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