Physical Uranium Contract for London Metals Exchange!
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Topic: Uranium — March 22nd, 2008
Another sign of the growing interest in this tiny market sector is the slow, but sure growth of the interest in various vehicles for trading uranium. We have witnessed the birth of the futures market for uranium over at NYMEX and now we another possibility on the cards.
According to David Stellfox, of platts.com who wrote: ‘According to industry sources, global mining giant BHP Billiton is one of the companies that have approached the LME about setting up a contract. One major issue yet to be addressed is where the product would be stored.’ An interesting point given that the possibility of storing uranium anywhere in the UK will become the target of the various environmental groups who are still opposed to nuclear power. The article goes on to say that;
“They believe an LME contract would help jump-start the moribund uranium spot market, but add that if a uranium market is to develop as have other commodity markets, there will need to be a level playing field for all participants.”
A jump start for the spot market! Well, every little bit helps, and why not? But as we have said many times before it is the long term contract price that is important and not so much the spot price. However, we do tend to watch the spot price more avidly.
It also offers an alternative to having to use the conversion facilities for storage, who by their strategic position in this process do have an advantage in terms of knowledgeof the market.
Lets hope that they go for it.
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Are you still long SKF. Thanks for letter. It’s always informative…gary
Comment by Gary Hudson — March 22, 2008 @ 2:45 pm
Are you still Long the SKF. I am, and im loosing a bit of sleep over it. The Market feels like it may be in for a continued rally. Any thoughts…Gary
Comment by Gary Hudson — March 22, 2008 @ 2:47 pm
How can this be a good thing?
This is why I ask. When Nixon closed the gold window and allowed a spot market in gold it was used to suppress the price of gold. This is still going on today with naked short positions and although supply/demand forces will out eventually, the spot market can be manipulated just as we see with gold and especially silver. Any responses would be welcome. Dave
Comment by Dave Benzo — March 22, 2008 @ 6:40 pm
Gary,
We are still long on SKF and we think any rally in the financials will be short lived, in fact, we are of the opinion that Bear Stearns is probably just the tip of the iceberg. SKF is a volatile stock so you have to be prepared for big upswings and down swings in the price. However we intend to increase out position very soon to take advantage of this pullback.
Dave,
When Nixon allowed a spot market for gold in 1971 it marked the beginning of the biggest gold bull market in history. Perhaps this uranium spot market will eventually be used to suppress uranium prices, but in the next few years it should really help the boost uranium prices.
If you have any questions or comments please post them and we will do our very best to response.
Comment by Uranium Stocks — March 22, 2008 @ 7:30 pm
The proposed new tool worries me greatly re stock prices. Most seem to agree that ETFs helped gold and silver prices–but have drained away much of the capital that, otherwise, would have been invested in precious metals companies, especially at the expense of the juniors. Share values, especially of the juniors, have gravely lagged the progress in PM prices (and I’m hoping that the PM prices will quickly recover from last week’s massacre). My uranium stock portfolio has declined in value by 2/3 to 3/4 since a year ago: the proposed investment tool would further reduce the amount of capital available for investment in uranium companies. Times are tough for us share-holders in U stocks!!! Help! Et U, U3O8? (Julius Caesar)
Comment by Neil Bishop — March 23, 2008 @ 10:55 am