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Why Chris DeMuth Jr. really likes the commodity uranium (0:35) Nuclear energy and emotional tradeoffs (3:20). This is an abridged conversation from a recent Investing Experts podcast.
Transcript
Daniel Snyder: Chris DeMuth Jr., he runs Sifting the World. If you haven’t checked it out already, I highly encourage you to do so. This guy focuses on arbitrage and litigation and he is a master at what he does.
So Chris, let’s dive on in. I want us to kick things off. Uranium. Last time we talked, you were talking about it. You mentioned you had a position in the Sprott Physical Uranium Trust units (OTCPK:SRUUF). Do you still have those? Are you still favoring uranium at this time?
Chris DeMuth Jr: We do. Happy New Year. Great to be here, Daniel. It’s a significant position. It is my only kind of direct commodity position. We own some uranium equities, but it just hasn’t been a sector where I’ve been able to fall in love with many of the companies and management teams.
But we sure like the commodity. I would say that even since we last spoke, things further tilt towards a kind of consensus that the kind of — right of center, kind of more free market, more capitalist-oriented, more pro-energy side, is really being joined by more and more left of center governments in Europe and across the world, willing to look at nuclear and reclassifying nuclear energy as clean energy, which of course it is, clean energy, cleanest and safest.
And I mean, there are individual hydroelectric projects, especially in the less developed world that have had far more deaths than the entire history of the nuclear industry. It’s safe, it’s clean. And that consensus where greater energy production is needed is really going to drive this.
Something that I like that some of my friends have noted, but it is kind of my jam, is I’m very interested in massive scale mismatches where somebody can enrich me at a scale that matters a lot to me, but it doesn’t matter that much to them. It’s not a huge deal.
And the uranium input in the utilities is just not that big a price. It can be 2x, 3x, 4x, 5x from here without getting anybody fired. And so, that I think is an interesting part of the opportunity. I think it’s going to be a big part of our energy future.
I think that alternative intermittent energy is faddish. It is occasionally useful some of the time, some of the places, but it’s never going to be this big part of our energy needs, which are going to be filled by petrochemicals and by nuclear.
That coal, that is probably where the environmentalists have more progress to make on lessening its environmental impact, if they’re willing to go with nuclear. But if they say only intermittent energy it’s just unserious, that just kind of excludes them from a serious part of the conversation.
DS: Now, there seems to be a lot of fear around nuclear energy for a large cohort of people, whether it’s approximation near localities, or the idea that if we ever go to war, somebody might focus on targeting those specific infrastructure.
Do you think that’s warranted, or is that kind of just the trade-off of if we’re going to lower our energy, coal dependence and try to reduce the energy costs here for Americans, is that just kind of the trade-off that we need to accept? Any thoughts?
CD: Yeah, I mean, I really believe in the Tom Sowell view that there are no solutions, only trade-offs. So I think it’s a legitimate concern, but it’s largely emotional. I mean, it is safe, it is clean, and hardening our infrastructure against enemies is an important deep topic. It’s one that I think nuclear opponents raise cynically and inconsistently.
There’s a lot about our grid that could be hardened more, but nuclear plants are actually probably some of the safest and some of the best defended already. It’s the same word as nuclear bomb. It’s not as if there’s going to be a mushroom cloud over one of these even in a disaster. But I think that connection has this emotional pull that is hard to avoid.
DS: Chris is always writing new ideas on Sifting the World. Go check it out here on Seeking Alpha.
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