A Readers View On Uranium: Where To Next?
Friday, November 16, 2007 at 1:04PM
Uranium Stocks in Other
Uranium is a great investment! Its fundamentals are second to none with supply demand imbalances likely to extend well into next decade. New users continue to roll up with latecomers the US announcing their first application for a nuclear reactor since 1973. The government is expecting 29 more applications for reactors at 20 different sites. The Indian Express ran an article on October 23rd addressing supply issues right now! “Faced with an acute shortage of uranium to run existing power stations, the Nuclear Power Corporation of India Ltd has advanced its maintenance schedule and started shutting down individual power units. Usually, these units are shut down in a staggered manner but this time they have been bunched together so that authorities get time to arrange for uranium supplies.” So why have uranium stocks been punished lately?
The first interesting aspect is that these stocks are currently at the whim of the general market. This was painfully evident last August. I wonder if this is more marked because of hedge funds that have bought into the sector. When the market drops they become forced sellers to cover margins. At some point in this bull, uraniums will diverge from general market behavior and march to their own drum.

The second significant event that took place earlier this year was the US department of energy announcing it may sell some of its stockpile. In the end they were only talking about 520 000lbs but it was probably enough to serve as a reminder that our trusty governments can and do meddle in the markets. Uranium spot price saw its first downside in many years however the important long term price remained fixed at $95.

The current market conditions remain dicey with U.S. and European governments flooding the homeland with paper money. It will be interesting to see if they can avoid a crash in stocks. If they can’t there may be another buying opportunity similar to August but when the dust settles people will realise that hard assets like uranium, golds and silvers will be king.

The last commodities bull market during the seventies into early 1980 had two phases. During the second phase gold went from $101 to $873 on January 21st 1980 for a gain of 764%. Silver rose from $3.80 to $50.36 for a whopping gain of 1225%!!! Recent market events make me suspicious that the first stage of our commodity bull market is either over or very close to it. If stage two is upon us it may be wise to stock up on uranium, gold and silver shares, be patient and hold on to your hats!

The above article was written by a reader of The Uranium Stocks Newsletter, Paul Trevethan. If you have an article that you would like published on the website then please email it to bob@uranium-stocks.net
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