For the sake of the planet, people everywhere would like to see human carbon emissions reduced.

Yet the world’s population of 7.3 billion keeps growing. And no one wants to use less power.

[ad#Google Adsense 336×280-IA]Solar, wind, hydro and thermal are not yet ready for prime time. And the natural gas bounty in this country does not exist overseas.

That’s why some analysts believe nuclear power is on the verge of a resurgence.

One of them is Spencer Abraham, who – aside from being a former U.S. senator from Michigan – was George W. Bush’s Secretary of Energy.

Today he is the Executive Chairman of Uranium Energy Corp. (NYSE: UEC), a publicly traded uranium mining and exploration company.

I had dinner with him the other night at the Park Hyatt Aviara in northern San Diego.

Abraham is a congenial man with a self-deprecating wit and enough insider stories about what really goes on in Washington to make your hair stand on end. But he is an enthusiastic proponent of nuclear power, and he pointed to, among other factors, a recent uptick in the export of U.S. nuclear technology.

There are more than 60 nuclear reactors under construction right now in China, Russia and India. (China alone has 26 plants under construction.) These reactors will need uranium to power their cores.

Industry leader Cameco (NYSE: CCJ) believes annual uranium consumption will increase from about 160 million pounds today to 220 million pounds by 2025. Supply may not be able to keep up, as projects are being delayed and even canceled as uranium prices remain too low to make most projects economical. Secondary supplies are diminishing, as well.

(Uranium does not trade on the open market like other commodities. Due to unique requirements for its storage and transportation, uranium contracts between buyers and sellers are negotiated privately by independent market consultants Ux Consulting and TradeTech.)

Cameco isn’t just talking its own book. In anticipation of higher prices, the company has stepped up efforts to increase production and develop new mines in Canada and Australia.

This surprises some investors. After all, Germany has loudly proclaimed its intention close its reactors down in the wake of the Fukushima disaster a few years ago.

When a nuclear accident occurs, the price of uranium plummets. And the tsunami triggered by the Tohoku earthquake on March 11, 2011, was a bolt out of the blue. (Some refer to it as “a black-swan event.”)

The price of uranium has plunged from more than $70 a pound to less than $30 today.

Yes, the prices of competing energy sources oil and gas are exceptionally low right now. But human beings continue to pump more than 40 billion tons of CO2 into the atmosphere each year. As the world population grows – and the demand for reduced carbon emissions increases as well – nuclear power should make a comeback.

Nuclear power is efficient, reliable and inexpensive. And the new class of reactors today is considerably safer than older models.

How do you play this potential resurgence? Two possibilities are the small cap Uranium Energy Corp. or industry leader Cameco.

No one can say exactly when uranium will lift off again. But with more than 60 plants under construction – and dozens more planned – it’s only a matter of time.

It’s a contrarian play, but a potentially lucrative one.

Good investing,



Source: Investment U