Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Uranium Stocks
Uranium Price
Our RSS Feed

Uranium Updates

Enter your email address:

Follow Us on Twitter
« The BBC: A Debate on Nuclear Power Stations | Main | Greenpeace Questions On Nuclear Power Answered »
Tuesday
Jan292008

Uranium Price Slips on Micro Analysis

The day to day imbalance of uranium supply and demand continues to spook investors as near term supply increases and near term demand remains static. Any movement in the the spot price of uranium can trigger a mini stampede as investors rush to buy or sell uranium stocks depending on whether the news is positive or negative.

Uranium Price Slips on Micro Analysis

On the negative side of this see saw we have news reported by Bloomberg that Uranium oxide concentrate for immediate delivery was offered at $78 a pound today, checking other sources we have Tradetech with uranium at $82/lb and the UX Consulting Company have uranium at $86/lb. Some of these anomalies can accounted for with each organisation having different cut-off and reporting dates which generate slightly different results.

On the positive side of the see saw we could argue that the Futures market has uranium prices ranging from $85- $88/lb, but this is a fledgling market and it will take some time to build credibility as serious market indicator. The major factor in favour of uranium is the constant stream of announcements by various utilities and government departments to push ahead with a programme of nuclear power to meet the escalating demand of both industry and the domestic user. We struggle to find anywhere an announcement regarding a reduction in the requirement for nuclear power. However it does take time to navigate the planning process, raise the finance, design, procure, construct and commission such power plants.

This brings us to the near term imbalance between supply and demand whereby any increase in supply compared to what appears to be a static demand manifests itself in negative headlines for uranium stocks. Given the range of numbers laid out above it is interesting that the most negative figure hits the headlines. Newspaper people tell us that bad news sells newspapers, but fail to explain why their circulation has been dwindling for years. We also need to keep the spot price in perspective as it accounts for only a tiny portion of the trade in uranium where utilities and suppliers enter into long term contracts by mutual agreement, the detail of which is not always available to the public.

The decision to place your hard earned cash into various market sectors is entirely yours to make as its your money. Our decision is to stick with our holding in uranium stocks despite the short term battering we have been through. Why? Well this is a thinly traded market and as witnessed a few days ago some of these stocks jumped by as much as 30% in one day. The fundamentals, when we look a little further ahead, are still in place for future demand to sky rocket. Our financial system is still awash with cash with more being printed every day. Investors are waking up to the fact that paper assets are not as solid as first thought as evidenced by the gradual recognition of the precious metals sector as a place to actually make money. Both gold and silver are transparent in terms of what they are worth on a daily basis, a characteristic let to be bestowed on uranium. As the quality uranium stocks continue to make good progress and start to mature as companies, their value will be recognised and stock prices will move up rapidly. The question is one of patience!

Stay tuned to the uranium sector by subscribing to our FREE Uranium Stocks Newsletter, just click here and enter your email adress to subscribe.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (4)

the rise of U price was driven by speculators (yes the same ones that ballooned the price from 71 to 138 in a few months in 2007). since we know they have left the building for good this time, it was inevitable the spot price will fall. possible support from buyers around $70/lbs. Fundementals are still strong but now is not the time to shine until the nuclear reactors go online in a few years from now. Over-supply has become the problem in the short-term.

the institutions sure punished the stocks pretty hard as they intend to get back in a few years later perhaps.

January 29, 2008 | Unregistered Commenterpho

If you would have read that Bloomberg news item more closely you would have noticed that the $78 price is Ux Consulting's latest price,down $8 from last week. The Ux price you quote at $86 is last week's. TradeTech's price last week was $84 and $82 this week, down $2.

January 30, 2008 | Unregistered Commentercartach

Pho - the speculators will be back. So will the institutional buyers. If you wait for new reactors to go online... in more than a few years (think 10)... you will be too late to the party.

The spot price where it is still allows for plenty of money to be made by miners. And once the hedge funds decide it's time to chase the yellowcake horse, the spot price will jump again. And once the futures market gains some traction, it and the spot price will all normalize and be much easier to deal with.

Over-supply on the spot market is very different from over-supply in the industry.

Once the subprime crisis takes a back seat to US election news as we head toward November... expect the upswing here to resume.

One other possible stimulus - as noted by another blogger - many junior explorers are coming under pressure from their significant market cap reductions, and are having a hard time raising capital on their offerings to continue new drilling and exploration programs. This is leading to some staff cuts, and industry talent fleeing the smallest juniors, and moving over to the larger guys with more money. This will thin the crowd of companies, and possibly spur some buyouts and mergers. Just my opinion, but it would bring a lot of positive attention back to the market, as buyouts tend to grab headlines.

January 30, 2008 | Unregistered Commenterjgr

Pho - tend to agree with you in that the price of uranium is high enough for the quality uranium stocks to turn a profit.

January 30, 2008 | Unregistered CommenterUranium Stocks

PostPost a New Comment

Enter your information below to add a new comment.
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>