The Energy Report: Would you tell us about your thoughts on energy investing?
Louis James: I'm seen as a metals and mining guy. Many people think I'm a goldbug. I think gold is a good thing to invest in and to speculate in right now, but it's not the only thing.
For example, I think oil's day in the sun is coming.
Ideally, you want to buy necessary things when they're hated, when everybody thinks they are terrible investments. Gold has been range bound and it's making people nervous. That's a good thing for buyers. The same thing is true for oil. The Organization of the Petroleum Exporting Countries (OPEC) is trying to tighten production, but the shale producers keep swamping the market. There's a war going on in the oil space. The failure to rise when they wanted it to has disappointed many energy investors.
People are also worried that Tesla Motors Inc. (TSLA:NASDAQ) is going to eat oil's lunch. All these electric cars are going to put OPEC out of business. Actually, I agree with that idea. I just don't think it's going to happen for 10, 20, maybe 30 years. Ten years may be way too fast. It's going to take a long time for enough electric cars to take over the marketplace to really shut Big Oil down.
In the meantime, in the time frame that's relevant to most investors and speculators—the next few years—there's no question that oil will remain the world's dominant energy source. Yes, there's more production coming out of shale oil. Yes, there are questions as to whether OPEC can keep things together or not.
But there's no question that as the global population keeps growing, the number of cars in the world will keep growing. The Chinese are buying cars as fast as they can. They want oil to put in those cars. I actually think oil is a more interesting investment and speculation right now than many people give it credit for. I'm not calling a bottom necessarily. But it is a commodity that will and must go up at some point. So, if you're a patient investor, you can get in now and simply wait to be right.
TER: Are there any specific oil companies that you are watching?
LJ: Because oil can go down before it goes up and that scares investors, my favorite picks in the oil patch now are the midstream companies. They don't explore for or produce oil. Nor do they run gas stations that can get squeezed on margins. They have pipelines and ships and other transmission vehicles for oil. As long as oil is being pumped and going to market, these people get paid, whatever the price of oil is.
A prime example of this would be Kinder Morgan Inc. (KMI:NYSE). It's a solid company. It makes money hand over fist. It's not going anywhere. But it will benefit from higher oil prices. It shouldn't matter, but when oil goes up, Kinder Morgan goes up. You don't have to worry about this company drying up and blowing away. I like companies like that.
TER: What are your thoughts on uranium?
LJ: Uranium is hated, so I love it. It's one of those things that you want to buy because there's blood in the streets. There was a price rebound earlier this year. A lot of people got excited and piled in, but now uranium is retreating again and people are panicking. There are great uranium stocks on sale again right now. And uranium is also very much a commodity that must and will go up.
Maybe in 20 years we won't need uranium. But over the next two, three, four, five years, there's absolutely no question that we have to have it. And it's going into supply deficit. Our projections are that uranium, which has long been in a surplus, will go into a supply deficit by the end of this year. That makes uranium very much a "when," not "if," story. That doesn't mean I think it's going up next week. That just means I think it's a good value, and the stocks offer a lot of leverage.
TER: Are there any uranium companies you have your eye on?
LJ: In the uranium space, the go-to name is Cameco Corp. (CCO:TSX; CCJ:NYSE), but it has an issue with the tax man. I like the company, and I'm sure it's going to do spectacularly well when uranium recovers. But until the issue with the tax man is settled, I see it as too risky. But word to the wise, if Cameco suffers an adverse decision from the Canada revenue people, that might create the perfect buying opportunity. The company is not going away. And uranium prices, I'm absolutely convinced, will go up.
To buy right now, I like Fission Uranium Corp. (FCU:TSX; FCUUF:OTCQX; 2FU:FSE) a lot. It's super high grade. It's near surface in the Athabasca Basin, Canada's premier uranium mining district. I think it's going to be a mine in the not-too-distant future. Meanwhile, it's discovering new deposits on the property. It could end up even bigger and better than it now looks.
TER: Any final thoughts?
LJ: If readers want to find out more about what I'm researching and what the latest results are, please stop by CaseyResearch.com and click on the button for the International Speculator. That's our flagship publication. I'd be happy to help you out some more with these types of investments.
TER: Thanks for your insights.
Click here to read Louis James' thoughts on gold investing.
Louis James is at Casey Research, where he's the senior editor of the International Speculator, Casey Investment Alert and Conversations with Casey. Fluent in English, Spanish and French, James regularly takes his skills on the road, evaluating highly prospective geological targets and visiting explorers and producers at the far corners of the globe and getting to know their management teams.
