Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

New Uranium Bull Market?

Commodities / Uranium Jul 30, 2010 - 12:58 PM GMT

By: Justice_Litle

Commodities

Best Financial Markets Analysis ArticleUranium soared from $10 a pound in 2000 to a stunning $136 a pound in 2007 - and then the bottom fell out. After three lean years, could another bull market be ahead?

According to the Ux Consulting Company, which tracks the price of uranium, the July 26 weekly spot price for U308 was $46 per pound. That is a 15% spike from the February lows around $40 per pound.


So does uranium at $46 per pound count as cheap, or expensive? That depends on how you look at it...

In the year 2000, uranium was well and truly dirt cheap. Thanks to a seemingly endless supply from decommissioned nuclear stockpiles, no one wanted the stuff... and the price of U308 (a standard mix of uranium oxides) fell to just $10 per pound.

Seven years on, however, uranium was at the pinnacle of a stunning bull run, riding a wave of increased demand for nuclear power plants around the globe. By the year 2007, U308 had hit an incredible $136 per pound - more than a 1,200% price increase from the bear market lows.

But then the bottom fell out for uranium prices - again - as hard assets got abandoned in the great financial meltdown. So now, in the mid-$40s, the uranium spot price is well off its year-2000 lows, but merely a third of bull market highs. Does that make it cheap?

China seems to think so...

The Dragon Inhales

"China is buying unprecedented amounts of uranium," Bloomberg reports, "signaling that prices are poised to rebound after three years of declines. The nation may purchase about 5,000 metric tons this year, more than twice as much as it consumes, building stockpiles for new reactors..."

Keep in mind, too, that China is buying at the "long-term price," which is higher than the spot price. A few weeks back, the dragon agreed to lock in uranium purchases of "more than 10,000 tons over 10 years" from blue chip miner Cameco (CCJ:NYSE).

"China's demand is insatiable," says analyst Dave Dai in Hong Kong. "They will have to take almost whatever is available."

India is hungry too. Jagdeep Ghai, the finance director for Nuclear Power Corp., reports that India's uranium needs could grow tenfold in the coming years.

The name of the game now is locking in supply. In a world where the flow of oil is uncertain - and emerging market energy demand is certain to surge - nuclear power is a critical fallback. And that means more nuclear reactors in the works.

According to the World Nuclear Association (WNA) , China alone has 24 reactors under construction - and may have 200 reactors in play by the year 2030. Russia is building another 10... South Korea six... and India four. There are also new reactors under construction in places like Finland, France, Japan, Argentina, and even the United States.

(If you would like to read more of my investment commentary on other topics, sign up for Taipan Daily.)

A Unique Market

Uranium is not like most other commodities. As one might expect, the "nuclear" tie-in makes it a highly regulated market. Not anyone can just buy it or sell it. (Although there is a uranium "ETF" of sorts - Uranium Participation Corp (U:TSE) - trading on the Toronto Stock Exchange.)

The supply profile for uranium is also unique. In the short run, there appears to be plenty of uranium to go around. The long run, though, is another question entirely. With all the new reactors slated for construction - and the price of oil a wildcard - forward-thinking players like China are thus happy to start stockpiling uranium more aggressively here and now, "just in case" demand gets out of hand later. Nor is China the only country to be thinking this way.

Another factor unique to the uranium market is what one might call the "Cold War effect." The reason uranium became absurdly cheap a decade or so ago was because of massive Cold War era stockpiles. For a time the world had uranium coming out of its ears as Soviet-era warheads were scrapped. Even today there is still Cold War supply to work through - but that supply will not always be there.

In fact, were all the Cold War uranium to be used up tomorrow, prices would head into the stratosphere. Current uranium demand outstrips new production by a huge margin - something on the order of 100 million pounds per year - and it's only the dwindling stockpiles (those old warheads again) that make up the shortfall.

In addition to finite Cold War supply, uranium has its own version of the "peak oil" profile. Virtually all the cheap and easy uranium deposits have been tapped. As with crude, what's left are the hard and dangerous deposits located in politically unstable parts of the world, like Kazakhstan and Niger. This is another factor that could push uranium prices higher.

The Large-Scale Alternative

When disaster unfolded in the Gulf, we wrote that the BP oil spill would be a game changer for alternative energy. That assessment still holds true. But it may prove out that the biggest "alternative" winner of all, in respect to deepwater drilling fallout, is nuclear energy.

The main trouble with wind power, solar power and the like, is the challenge of large-scale deployment. With each passing day the underlying technology improves - which moves us closer to getting the economics right - but there is still a long way to go.

Nuclear power, in contrast, is already tested and proven. It has already been deployed on a massive scale. Take modern-day France, for example, a country known for (among other things) bucolic landscapes and old-world farming techniques. Roughly 79% of France's electricity is produced by nuclear power, the highest percentage in the world.

Nuclear energy has more or less been embraced as a vital, large-scale alternative to fossil fuels. Even aggressive green advocates, who have grumbled over safety and waste disposal issues with nuclear in the past, now grudgingly admit that nuclear power has clear advantages in reducing air pollution and C02 emissions (both serious problems in China).

Combine this reality with good prospects for oil back above $100 per barrel before too long, and you have political "safe passage" for the upcoming nuclear renaissance. Put it all together, and it's not hard to accept the assessment of RBC Capital Markets that uranium could rise another 32% in price next year. That makes a number of companies in the mining and reactor space worth exploring.

Don't forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

Source : http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-073010.html

By Justice Litle
http://www.taipanpublishinggroup.com/

Justice Litle is the Editorial Director of Taipan Publishing Group, Editor of Justice Litle’s Macro Trader and Managing Editor to the free investing and trading e-letter Taipan Daily. Justice began his career by pursuing a Ph.D. in literature and philosophy at Oxford University in England, and continued his education at Pulacki University in Olomouc, Czech Republic, and Macquarie University in Sydney, Australia.

Aside from his career in the financial industry, Justice enjoys playing chess and poker; he enjoys scuba diving, snowboarding, hiking and traveling. The Cliffs of Moher in Ireland and Fox Glacier in New Zealand are two of his favorite places in the world, especially for hiking. What he loves most about traveling is the scenery and the friendly locals.

Copyright © 2010, Taipan Publishing Group

Justice_Litle 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