Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
If You Don’t Understand Bonds, You Don’t Understand Investing - 25th Aug 19
Gold's Next Move - 25th Aug 19
Fresh Water Crisis Unfolding - 25th Aug 19
Newbie Guide to Currency Pairs in Forex Trading – Review - 25th Aug 19
When A 16-Year-Old Earns $3 Million, You Know It's Not A 'Silly Fad' - 24th Aug 19
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Abelications of Abenomics on Uranium and Nuclear Power

Commodities / Nuclear Power Jul 13, 2013 - 10:21 AM GMT

By: Richard_Mills

Commodities

There's a three year downward trend in Chinese imports underway. The chart below, from Nomura Global Economics, shows the trend quite clearly.

China's exports and imports declined again in June. Exports fell 3.1 percent yoy - the most since the global financial crisis in 2008 - while imports dropped 0.7 percent. The poor June report follows a May collapse in export gains - fake invoices had inflated data for the first four months of the year, the bogus data enabled exporters to evade currency controls and bring extra money into the country. Trade growth might come in below the government's target of eight percent for the year.


The governments self imposed target of 7.5 percent economic expansion is also at risk:

  • June's export growth was down from May's year-on-year gain of 13.5 per cent and import growth was down from 8.2 per cent.
  • China's global trade surplus contracted by 12.4 per cent compared with a year earlier to $27.1 billion. Exports were $174.3 billion while imports were $147.2 billion.
  • Growth in exports to the United States, China's biggest foreign market, fell to 1.8 per cent from May's 3.5 per cent. Exports to the 27-nation European Union contracted 3.9 per cent.
  • The trade surplus with the U.S. contracted by 15.5 per cent from a year earlier to $17.5 billion. The surplus with Europe shrank 20.3 per cent to $10.2 billion.

China's communist leaders want to pursue a slower, more self-sustaining growth model based on domestic consumption, this model reduces reliance on trade and investment. China can handle slowing exports as long as the slowing is accompanied by rising internal consumption - a successful switch from being an export led economy to a consumer one. But since the start of 2013 a very different scenario is taking place, one that's definitely not under our dear communist leaders control, imports and exports are both dropping, Chinese trade is being gutted while Japanese exports are rising on higher shipments to the US and China.

How did this happen?

To put it as simply as possible; a depreciation of the Japanese yen is making Chinese exports less competitive in the world market and Japanese imports more attractively priced for Chinese consumers. Less Chinese made goods are being bought at home and abroad.

Japans monetary policies - dubbed Abenomics (deregulation and economic stimulation by easy monetary and fiscal policies), after Japanese prime minister Shinzo Abe - are waylaying communist plans.

Japan, the world's third largest economy, is currently an economic ray of sunshine - the Japanese economy grew at an annualized 4.1 percent in the first quarter and their stock market is soaring. Abenomics goal is to end a long miserable decade and a half of deflation by kick starting the economy, this will happen because of massive yen creation. The fiat balloon will induce consumers to spend and corporations to reinvest profits, convinced by a rising stock market and surging exports that all is well.

The flood of fiat has depreciated the yen, over the first six months of 2013 the yen weakened the most against the U.S. dollar since 1982. The yen also dropped 12 percent against the euro and seven percent against the sterling, threatening European trade.

Japanese efforts are starting to pay off as factory output is rising (the most since December 2011), retail sales are slowly climbing and some inflation is starting to creep into consumer prices. The weaker yen is drawing investment away from emerging markets and toward Japanese equities - the Nikkei 225 has been soaring.


Jpn exports


Chinese exports

Nikkei 225

The Bank of Japan has driven down the yen against the dollar over the last six months in an effort to increase exports and cut imports into the country resulting in Japan throwing a very large monkey wrench into Chinese plans. As we can see Abenomics is having severe Abelications (Abe-li-ca-tions), but the worst is yet to come - the ignition of a brutal currency war in Asia.

China will, in response to Japans deliberate and massive yen depreciation, allow its currency the yuan to depreciate forcing all other Asian countries (and the EU and Uk) to do the same to keep their exports competitive with China's and Japan's.

Currency War - when countries around the world start competing (competitive devaluation) to make their currency cheaper than everyone else's as a way to boost trade.

So how do currency wars get started? From Wikipedia comes the following:

"Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a particular currency falls so too does the real price of exports from the country. Imports become more expensive. So domestic industry, and thus employment, receives a boost in demand from both domestic and foreign markets...The policy can also trigger retaliatory action by other countries which in turn can lead to a general decline in international trade, harming all countries."

Japan started a currency war with China and the world. But not with the U.S., the U.S. will be the beneficiary of all the tit-for-tat repercussions with a strong dollar.

Opportunities

There's an investment opportunity in this mess that I'm paying attention to: uranium.

How do I get uranium out of a weaker yen and a stronger dollar? The cost of Japanese imports is really climbing, month after month of increases, remember energy imports become more expensive when you weaken your currency against the world's reserve currency, the U.S. dollar, and Japan has been obliged to pay more for dollar denominated energy purchases - as has everybody else.

Japan imports most of its energy and utilities are being forced to keep thermal power stations running at full capacity to make up for the closure of most nuclear power plants since the Fukushima Daiichi incident in March 2011.

There's no way to reduce fuel import volumes, the resulting massive cost to the Japanese economy and return to a trade surplus, unless they turn back on their nuclear power plants. And that, at the same time the HUE ends, will kick start the 'Global Civilian Nuclear Renaissance.' That's why I think current uranium investments are going to benefit from Abenomics.

Conclusion

Japan has 55 nuclear reactors using 21.3 million pounds (mlbs) of uranium - 12-13 percent of annual global uranium demand. A six-fold increase in China's installed nuclear capacity is expected by 2020. The HEU agreement ends late in 2013 and removes 24 million pounds of uranium supply from the market.

Current annual global uranium consumption is 190 million pounds, annual global mine production is 140 million pounds, inventory draw downs, the down-blending of weapons-grade material and the enrichment of tails material are a large portion of supply and currently make up the difference.

However with inventories dwindling and the HEU agreement ending, the drying up of most non-mining uranium supply sources seems certain.

NuCap Ltd., a London-based industry consultancy, says the annual consumption of uranium will increase to 265 million pounds by 2020.

According to The Australian newspaper global demand for uranium fuel is going to increase to 280 million pounds U308 by 2030.

A near term uranium producer is definitely on my radar screen, have you got one on your screen?

If not, maybe you should.

By Richard (Rick) Mills

www.aheadoftheherd.com

rick@aheadoftheherd.com

If you're interested in learning more about the junior resource and bio-med sectors please come and visit us at www.aheadoftheherd.com

Site membership is free. No credit card or personal information is asked for.

Richard is host of Aheadoftheherd.com and invests in the junior resource sector.
His articles have been published on over 400 websites, including: Wall Street Journal, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Pinnacledigest, Uranium Miner, Beforeitsnews, SeekingAlpha, MontrealGazette, Casey Research, 24hgold, Vancouver Sun, CBSnews, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, Financial Sense, Goldseek, Dallasnews, Vantagewire, Resourceclips and the Association of Mining Analysts.

Copyright © 2013 Richard (Rick) Mills - All Rights Reserved

Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

Richard (Rick) Mills Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules