Either This Commodity Goes Higher... or the Lights Go Out

I just talked to one of my most trusted insiders in the natural-resource space about what he calls "the ultimate contrarian investment."   Nobody on Wall Street is paying attention to this commodity.   Longtime readers are familiar with the story here... But I'm not sure you understand the scope of the opportunity...   This insider – Casey Research Chief Investment Strategist Marin Katusa – appeared on a recent episode of my S&A Investor Radio podcast. We discussed a sector he considers a "must buy" today – uranium.   As we've showed you before, the Fukushima nuclear disaster in Japan destroyed the uranium market in 2011. The spot price of uranium is still down around 45%. As a result, shares of uranium producers – like Cameco – have yet to recover.   As you can see in the chart below, URA – an exchange-traded fund that holds several uranium stocks – has sold off 65% since the disaster...     Today, most uranium producers are losing money.   Marin says African uranium producers need prices to hit $75 per pound for them to make money. For most of Europe, it's over $65 per pound. And in the U.S., you need between $45 and $50.   The current spot price of uranium is just $40 a pound.   And as Marin put it, if uranium prices don't head higher from here, most companies will have to turn the lights off.   Then Marin explained another shocking statistic...   "If you want to get delivery of uranium five years out, you have to pay $68 [per pound] today."   Marin's talking about the "futures" market. Sectors like trucking, airlines, and utilities use the futures market to lock in prices for years down the road. They do that so they don't have to worry about big fluctuations in energy prices.   In other words... right now, companies that need to secure uranium supplies for the future are willing to pay $68 a pound – a 70% premium to spot prices ­– because they believe prices are going to be even higher than that five years from now.   If that was the setup in gold or silver today, people would be buying hand over fist. But that's the great thing about buying uranium stocks here. That is the situation... and nobody's paying any attention.   I've never seen this setup before in my investing lifetime.   Cameco (NYSE: CCJ) is the biggest uranium producer in the world and a good trade on a recovery for the sector. However, if uranium producers do rebound from these depressed levels, the biggest returns will come from the more speculative names.   Now, I don't suggest rushing out and buying every small uranium stock you can get your hands on. You need to do your research. And the No. 1 priority in considering a uranium investment is the people who run it.   "Do you trust them? Are they focused on the company... or do they have five other companies?" Marin asks. "If there's a management team that has no money in the company, they're paid a high salary, they do consulting for other companies, and the only interest they have in this company is their salary and their options... Do you want to invest in that? No."   That factor takes away a huge percentage of small uranium miners. But do your research. If you invest in the right companies, you could be sitting on big gains a few years from now when the rest of the market finally catches on.   Good investing,   Frank Curzio