Dines -- "we would be in no hurry to take profits" -- siempre lo mejor

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Date Posted: 10:22:37 09/11/05 Sun
Author: siempre33
Subject: Dines -- "we would be in no hurry to take profits"

Jim was referring to his U stock recos, of course....since this letter contains no proprietary info, here it is fwiw..

By James Dines
The Dines Letter

Nine centuries ago Europeans swarmed southward during the Crusades to recapture the Holy Land from Muslims, prepared to perpetrate brutality, cruelty, butchery, treachery and sadism. As generations of violent types trickled southward through Europe, locals were eager to see them pass through as quickly as possible. Such a traveler was called a passager, from an Old French expression for "one who passes." Over the centuries the term gradually attached tofreight that passed along the roads in commercial vehicles. Locomotives might have pulled cars with passengers as early as 1833, but it was not until much later that riders became abundant enough to warrant trains specifically for people rather than cargo who began to be called a new word in the English language: passengers.
There can be no doubt that the primary commercial topic of the day is the soaring price of oil, which affects transportation, cargo and passengers alike. Normally, a rising commodity price leads to less use of it. Yet, remarkably, we are told that that has not yet happened even though car drivers are shocked here in California when paying more than $3/gallon.
Is gasoline really that expensive? Four years ago The Dines Letter repeatedly expressed shock in these pages that a gallon of gasoline sold for less than a bottle of "yuppie bottled water" and way back in 1942, 63 years ago a gallon of gas cost $1. Actually, it is amazing how cheap gas prices are at $3/gallon; no wonder bin Laden accuses "Crusaders" of "robbing" Arab oil, as the sins of our eleventh-century forefathers are visited on us. Irony by DINOPA. The Dines Letter (TDL) for decades has warned of "The Coming End of the Age of Petroleum," but the truth is that we had expected it some time around mid-century. We did predict $10/gallon at American pumps, which no longer seems "impossible" to the casual observer.
The chattering classes are baffled as to why oil prices have now moved to an all-time high at $67/bbl, and have been reduced to comparing it to the previous peak "adjusted for inflation" in a manner that implies oil prices aren't really all that high now. Adjusted for inflation, oil reached an all-time high in 1981 at $86/bbl after the Iran/Iraq war began. Instead we suspect that something brand-new has entered the equation. Personally, brushing aside the excuses everybody else offers, we think it was Matt Simmons' book Twilight in the Desert indicating that Saudi oil has peaked, ending the delusion that their supply of oil to us was infinite, that was a contributing factor.
Exxon now warns that oil production outside OPEC will reach its peak in the next five years, and Chevron (America's second-biggest energy company) adds that "the era of easy oil is over. Inaction is not an option." Simmons' book showed charts that prove once an oil field reaches its peak, production usually plunges steeply. Right or wrong, the huge new demand from China, India, Central Europe and Africa all adding their straws to the same oil pool means that this precious commodity will disappear faster than anyone now expects, which we sadly see as confirming our longstanding predictions.
On the other hand, the end of oil might be a blessing for humanity because it causes global warming that scientists warn might be irreversible. Those who insist that global warming does not really exist, or is part of a normal cycle, seem gleefully willing to accept the risk that - in case they are mistaken - the ice caps will melt and the world will be submerged under water irreversibly. It seems to us a matter of simple prudence to immediately attempt to diminish the discharge of carbon-based fuels into the environment so that our descendants will not have to snorkel their way to work!
Accordingly, we see the efforts to find more oil as wrong-headed, and at best a temporary solution until we switch to another energy base. For example, much is made of Canada's Athabascan oil sands, which admittedly contain a great deal of petroleum, but even this is ultimately limited and only buying time. Worse, natural gas is used to extract Athabascan oil sands, substituting a clean energy source for a dirty one. But no matter how much more oil is found there will be increasing demand for it if only because every nation in the world will seek "energy security" by building up its own strategic oil reserve - as America is still doing today.
As oceans warm up there are increasing numbers of hurricanes spawned in the Atlantic Ocean, and Portugal is now enduring its worst drought in its history. Oceans becoming more acidic as they absorb increased carbon dioxide released into the atmosphere by carboniferous fuels could lead to a catastrophic destruction of oceanic life. As the gas is absorbed into oceans it forms carbonic acid, making oxygen more difficult to extract from the water by animals such as squid. The acid will make it increasingly impossible for animals to form shells, reefs to form and many plankton species will be wiped out. Are we bequeathing our descendants a world without seafood?
Comparing photographs taken some decades ago with present shots proves that glaciers are disappearing worldwide. For example, Austria's largest glacier, the Pasterze, has been shrinking 13 to 26 feet a year, and the melting of the Polar ice caps needs no further proof. When there is not enough ice to reflect the sun's heat back out into space, an acceleration of the Earth's heating will begin, possibly irreversibly.
What about Russia, which was supposed to have been a big supplier of oil to world markets? Finally comprehending that oil and gas represent unique commodities vital to Russia's own future, its government has drafted legislation stopping foreigners from buying more than 49% of "strategic" assets that include oil and gas; the law has not yet cleared Parliament, but investors are waiting on the sidelines for the outcome so as to gauge potential for profit. Meanwhile, the automobile market in Russia is booming, with double the number of foreign cars imported as compared with last year, adding to the "Coming Automotive Age" in China and India. In fact, Daimler Chrysler and Toyota have begun building factories in St Petersburg to take advantage of tax breaks; local labor costs are a fraction of those in Germany's as workers everywhere suffer under increasingly-ruthless deflationary competition internationally.
Real leadership requires following the High State of Truth anywhere it goes and then waiting there patiently for others to arrive, firstcomers to profit more than latecomers. We have planted our flag squarely on uranium as the only realistic alternative to carboniferous fuels in the long run, a mineral that could provide us with energy for billions of years once we master breeder reactors. All fuels are dangerous, all of them kill people, and we don't like any of them, but they are all better than shivering in the dark. There will be casualties, no doubt, but the shift to uranium is unstoppable, in our opinion.
The world does not yet seem to fully realize the profound shift in political power as a result of "The Coming Oil Crisis." For example, not only are the world's oil producers demanding a greater percentage of the "take," but Venezuela and Iran are shifting their production to emerging powers such as China and India, and could cut off our supplies; that would be as troublesome as a terrorist managing to blow up one of Saudi Arabia's export terminals. The world is hanging by a thread - if the bin Laden revolution succeeds in taking over some Islamic countries, power would shift tectonically. In fact, oil affects the price of almost anything made in a factory, food and whatever is transferred from one place to another, not to mention plastics, on and on. But China seems to be more awake than any other nation, scrambling to build nuclear facilities as they grasp that their lights could go out in a couple of decades - maybe sooner.
There are 60 nuclear-power plants scheduled to be built in the next decade, which might sound like a lot but is in fact a pittance compared to what would be needed for a transfiguration of our energy sources to nuclear. Starting with basics, after a long depression, the uranium industry is in no position to produce large amounts very quickly, as it takes 5 to 10 years to build a new uranium mine. Constructing nuclear plants will again take a lot of time and, while nuclear plants could produce large quantities of hydrogen, the infrastructure to deliver it to automobiles on the road would again take a great deal of time. And the world has not yet even begun to comprehend the required urgency! That is why, hoping to Serve you, we have led those who would listen to the uranium-mining shares in what appears to be the biggest beneficiary of what appears to us to lie ahead.
It's not only that energy-producing countries are demanding a bigger share of the profits, from Bolivia to Kazakhstan and Venezuela, but also that those nations will be the recipients of mind-boggling floods of new cash, many of them Muslim countries who will be vaulted from primeval poverty to propitious prosperity - and their newfound power will inevitably be expressed politically. Nations such as China will be forced to consider whether they want to cast their lot with the Arabs or the Israelis, selling advanced weaponry to whomever would send China its desperately-needed oil. Thus time is against Israel, so it needs to settle the Palestinian issues yesterday rather than tomorrow. While we take no sides in any of these discussions, it would seem to us that Israel's smart move would be to swap territory with the West Bank; absorbing its own largest West Bank settlements while trading away Israeli land containing Palestinians who are outbreeding Israelis in the area and who thus pose a long-term population threat to Israel's present majority. It might succeed, but we just work here and remain strictly neutral.
Nuclear power already precludes the production of over two-billion tons of carbon dioxide annually and is the only realistic way to reduce emissions to conform to the Kyoto Protocol. It would be delusionary to think that wind power would somehow replace oil, as there would need to be a windmill every thousand meters along the entire French coast to replace only one of their nuclear plants. For the moment, we see energy as the dominant area of profit-making potential for investors anywhere, especially since the demand for it will continue to exceed supply whether or not the inevitable recession arrives wherein oil will experience periods of temporary oversupply. But we still ponder about what hypothetical event might impact "The Coming Uranium Boom" up or down and, curiously, terrorism could do both. In a world where oil supply and demand are stretched tight as a drum, a revolution in any oil-producing country that somehow interrupted global oil supplies - a stated goal of terrorists - could precipitate a wild rise in oil prices that might suddenly finally startle the world into the realization that uranium is the only secure energy source available this century capable of replacing oil. And we are all woefully unprepared for a rapid switchover instead of a normal period of several decades. Or - while we fervently hope against it - a hypothetical possibility would be a terrorist event in Washington and New York again, which would probably send nearly all stocks lower (except countertrend gold, to which we will return below), but even then uraniums should also go up because investors still have to invest their capital in something safe and energy is the last thing people will give up. Another possibility might be President Bush declaring that he would release oil from America's strategic oil reserve. But nothing will change the basic fact that the amount of oil in the world is destined to disappear eventually and the only serious discussion is when.
It is difficult for us to imagine what could derail uranium from being a passenger on a likely road to profit for you, and the above is our reasoning for your possible consideration. If so, higher uranium values provide positive Fundamentals for its mining shares, our uranium charts show bullish Visual Analysis, uranium stocks are still unpopular so the Mass Psychology is propitious and investor's personal psychology would still rather chase Internet stocks than uranium, so the four factors in the Dines Rectangle Method (DIRECT) still point up for uranium-mining shares. Indeed, our 16th Interim Warning Bulletin of this year reported that the uranium price (spot) has risen to a new high at 29.85!
As the world risks sailing into a perfect storm, even the smoldering currency upheaval that we have long expected might have already begun, in slow motion.
Editor's Note: James Dines, editor of The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 17 issues, $195, published since 1960. Recommendations of The Dines Letter are based on mass psychology, technical and fundamental economics; thus studying both the company and investor behavior. Mr. Dines' insights have gained him a reputation as a well renowned, highly respected and regarded investment advisor.
Factors point up for uranium-mining shares. In his current issue, Mr. Dines indentifies companies that are in major uptrends and labels a number of uranium "Chihuahua" stocks hitting new all-time highs. The Dines Letter picks just one stock that will soar to unbelievable heights. Get in on the ground floor by subscribing to The Dines Letter now. New subscribers will get the big 2005 Annual Forecast Issue plus the last two issues free. To subscribe call 1-800-84-LUCKY or visit the web site at www.dinesletter.com.

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