Gold Stock Bull

We profiled one of our favorite alternative energy plays, Nova Biosource Fules (NVBF.OB) back in September of 2006. Check out Riding the Biodiesel Boom with Nova if you haven’t already. Admittedly, it is a speculative play that declined shortly after our review and has been trading sideways around $2.50 ever since.

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There are 441 operational nuclear power reactors around the world today, with the IAEA reporting that 130 new nuclear power plants are either being built or are in the planning stages. These are conservative estimates, with the actual number of new plants likely to be much higher.

Supply & Demand
China plans to build two new nuclear reactors every year for the next 14 years, which would more than triple their annual uranium demand from 3 million pounds currently to over 10 million pounds by 2010. India has also stated its intention to ramp up nuclear capacity, which will double their demand for uranium from 1 million pounds currently to 2 million pounds in 2010 and 4 million pounds by 2020.

We can also add Russia and the United States to the list of countries committed to nuclear energy and needing to secure massive amounts of uranium to keep up with increasing energy demands.

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With 2006 now behind us and a fresh year on the horizon, let’s take a look at how well our stock picks have performed in the context of the larger gold market and the stock market in general.

Gold for the year is up about 23% and Silver is up 46%. The (HUI), which tracks a basket of 14 leading (unhedged) gold miners, failed to provide the leverage it usually offers to metals, increasing by only 13%. Still, impressive annual returns considering that a record-breaking year for the Dow Jones Industrial Average produced only a 16.7% return and the Nasdaq gained just 10%. Even more impressive considering that the gold market underwent a major correction during the third quarter of 2006. With the threat of a recession looming in 2007, we think the Dow might have just posted its best results for the foreseeable future.

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