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« Australia’s Uranium Policy is tough on India | Main | US Sub-Prime Problems Surface Down Under! »
Thursday
Jan172008

Uranium: Too Calm for Comfort!

Uranium chart 17Jan08

At a time when oil appears to be grabbing all the headlines in the energy sector as it flirts with the $100/barrel level, uranium lazes in the corner like a dog who's lost interest in going for a walk. Here we are in a commodities boom that some call a super cycle and the worlds future major player in energy adopts the roll of observer. True the price of uranium is still hovering around the $90/lb level which is more then enough for the quality uranium stocks to turn a decent profit. What surprises us is the lack of activity in the spot market for uranium.

“A few sellers continue to seek buyers” a quote from Tradetechs recent report. Down here in New Zealand we are having a heat wave but the weather patterns for the northern hemisphere appear to be fairly cold and wet thus the demand for heating and therefore electricity should be reasonably constant. So it raises the question of just where have all the buyers gone? Uranium was $138/lb at one point and then it fell to below $80/lb and has since drifted up to today's spot price of $90/lb. Over on the futures market the range is from $88/lb to $94/lb which is fairly steady. This is either an interesting game of bluff or the utility companies actually have enough uranium to keep them operational for some time to come, hence their reluctance to be aggressive in their pursuance of supplies. Either way the effect on uranium stocks is to leave them languishing on the sidelines. Performance is about comparison and compared to gold and silver who's associated stocks are generating terrific returns this sector lags behind. Its times like these that really test our resolve, why not cross the road and join their party? Its tempting isn't it? Well the fundamentals in our view, are still in place, we don't read about too many nuclear projects being cancelled do we!

We conclude that we are holding all of our uranium stocks and should a real bargain present itself we will buy again. This strategy is not for everyone and may not suit you, after all you are an individual and your circumstances are unique to you. Putting technical analysis and fundamental analysis to one side we are left with that old intangible 'gut feel' and it is said that fortune favours the brave so if you have balls of steel look to buy quality uranium stocks real soon.

Have a good one.

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Reader Comments (1)

Look at the average price that ERA got last year. All the old power companies have most purchases locked in for many years, and the conservative producers have those contracts to supply.
But new consumers and future producers ....?

January 17, 2008 | Unregistered CommenterBill McIntosh

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