March 21, 2007
In the beginning of 2006, we saw a huge run up in commodity prices around the world. With the housing boom in the US, demand for copper for pipes and wire increased by an amazing amount, which caused a huge run up in price. Gold and silver also saw large run ups in that time period. All of these have since cooled off because producers have been flooding the market with supply, and, as the housing market in the US has cooled, demand for metals like copper have greatly declined.
Uranium is the next big thing. It is a resource that is hard to find, and, as a result, it has an extremely limited supply. As populations expand and more energy is needed it is clear that a large efficient source of energy is necessary. That source is nuclear power. Coal and gas fired plants are coming under fire for the immense amounts of pollution that they generate. This too makes nuclear power an attractive alternative.
What does this mean? More competition for an extremely limited supply of nuclear fuel. One of the largest mines in the world, Cigar Lake, controlled by Cameco, is currently out of commission after suffering a major flood. Taking this mine off line is to the Uranium market as taking Saudi Arabia off line would be to the oil market. This will cause further upward pressure on prices. Additionally, by buying into Uranium companies now, you would be able to take advantage of hedge fund speculation that is currently going on in the market. Funds have been buying up uranium and having it put into storage for quite some time now.
Uranium is a great play, get in now before it is too late.
Posted by jkill at March 21, 2007 11:54 AM