By: Kevin Kerr, Outstanding Investments
The Uranium market is one that is like a wild roller coaster, and many of the equities associated with it can make investors queasy from the ride.
These equities are no different from many mining stocks; they have to be looked at very closely. Uranium trading was starting to become more stable, or so it seemed. Then, just as fast as it calmed down - bam! - it went right back up. In two the uranium price surged $5 to $29 in just two weeks last year.
After the market woke up and new buying came in, the ultra-precious metal's price climbed another $4, which set the highest uranium price since the early 1980s. The new speculation was triggered by growing expectations that
According to a report by the IAEA, 130 new nuclear power plants may be built in the next 15 years. Who are the big players? The usual suspects, of course:
I couldn't believe some of the stats for other countries that I found in a great nuclear energy report called Uraniumletter International:
I'm not a historical scholar by any stretch, but I am a big history buff and the he history of atomic energy fascinates me. In the 1940s, the
I mean, a country didn't simply go down to Wal-Mart in those days and buy some. So, it was a major undertaking. Don't laugh, maybe someday we will all have little nuclear reactors in our backyards, and instead of going to get some more wood for the fireplace, you'll have to run to Wal-Mart to get a bag of uranium.
Nuclear power plants, as we know them, fired up in 1959. That was when the first privately funded nuclear energy plant came on-line, in
Fast-forward, and by the 1970s that number had exploded (pardon the pun) to 250 nuclear reactors that were planned across the United States - but the dream train of cheap, easy energy derailed a bit.
The disaster in
Public ignorance and fear of nuclear power changed the course of nuclear energy, as we've known, it for a very long time. Starting in the 1980s, utilities were canceling plants hand over fist. This resulted in the almost complete collapse of the uranium market.
And then, to beat down the market even further, uranium got hit square in the jaw. This second blow came when the
Enriched uranium that was removed from Russian bombs was blended down to reactor-grade fuel and put on the market. But, it gets worse.
The third punch came when the
American uranium production peaked in 1980 at 43.7 million pounds, according to the U.S. Energy Information Administration. That was the proverbial nail in the coffin for the exploration of uranium. New research and development ground to a halt, as mines could no longer afford to operate, and exploration was basically a waste of time, energy and money.
According to Uraniumletter International,
I could go through each state and many countries around the world and cite examples just like that from reports I have read. It seems clear that because of these widespread shutdowns, the once-overflowing uranium supply dwindled in just five to 10 years.
Things didn't seem so bad during the 1990s; the lack of new supply from functioning mines has been supported by other sources. There were excess inventories, for example, and there was also the dismantling and recycling of nuclear weapons, especially from
But many of those quick fixes are no longer available.
The president's State of the Union address was a rallying cry to uranium producers to get moving...finally, reality is setting in. The dwindling supply of oil and spiraling high prices of fossil fuels are driving interest in nuclear energy as the possible power source that will be used to meet current and future global demand.
Three Mile Island and
Bottom line: New supplies of uranium will come at a much higher cost, which in turn, will continue to put upward pressure on the future price of uranium.
Kevin Kerr for The Daily Reckoning
P.S. My co-editor at Outstanding Investments, Justice Litle, is looking at many of these uranium companies. After all, there's no use in building a reactor if you don't have the fuel to make it work.
Justice is in charge of the Outstanding Investments portfolio, and he is doing a fantastic job. He has already recommended great uranium stocks that he's had his eagle eye on, and I think there are more to come. For a sneak peek at these stocks, see our new special report:
The Four Horsemen of the Petrocalypse
Editor's Note: With 15 years of experience, Kevin Kerr is a true veteran of the commodities markets. A licensed commodities trader since 1989, he's worked the trading pits in
If you take a look at Kevin's track record with his commodities trading service, Resource Trader Alert, you'll see for yourself that he is no stranger to the natural resource markets:
Get Rich Trading Real Resources
-- Posted Wednesday, March 1 2006 | Digg This Article |
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