The Next Big Energy Boom: How the Green Scam Collapse Is Driving a Historic Bull Market

“It was the single most important financial event of my career.”

My friend and resource investing legend Rick Rule once shared this with me, reflecting on his experience in the uranium market during the last bull cycle—where extreme supply and demand imbalances triggered massive booms and busts.

Rick was referring to Paladin Energy, a uranium stock that skyrocketed during uranium’s last bull market from less than one cent ($0.007) Australian dollar (AUD) per share at its bottom in April 2003 to AUD $9.57 at its peak in April 2007.

It was a peak gain of over 130,000%—a greater than 1,000-fold increase. In other words, a $1,000 investment could have exploded into more than $1 million—had someone picked the bottom and top perfectly. Of course, that is not realistic, but as we can see in the chart below, even being within a year of the absolute bottom and top would have been enough to generate some phenomenal returns.

Other uranium stocks also multiplied their share prices during the last bull market. However, Paladin was a rare and unique example. It was the best-performing company in the industry during the previous cycle. However, as stunning as Paladin’s performance was, it’s important to remember that past performance does not indicate future results—for any investment.

I suspect it won’t be long before Western governments turn to nuclear energy in a big way. There are indications they are already doing that.

In short, the Green Scam delusion is an enormous market distortion—a blessing in disguise. Distortions in the market allow shrewd speculators to get positioned for big potential profits as they collide with reality. It’s making uranium’s already attractive supply/demand situation even more appealing.

Uranium mining stocks stand to be a primary beneficiary of this trend.

In short, it is difficult for producers to ramp up production while uranium demand is rising. It often takes years for them to catch up. As a result, price is the only way for the market to resolve itself.

That’s why the uranium price can have extraordinary spikes.

However, the uranium market often doesn’t just settle into equilibrium during these periods. The uranium price often overshoots where it needs to go to balance the market, creating an enormous bull market.

It’s a cycle that has played out three times before, and I think it will occur again soon.

Looking at the Big Picture for uranium, I see a precarious supply situation, a long lead time to develop new mines (roughly ten years), dwindling inventories, and an unstable geopolitical situation in which countries are scrambling to secure their energy supplies. Yet, at the same time, there is growing (inflexible) demand for new nuclear power plants.

With supply shrinking and demand rising, I think the stage is set for uranium prices to overshoot to the upside, just as we saw in the previous three bull market cycles with similar dynamics.

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