Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Uranium getting close to $100 a pound …

Commodities / Uranium Mar 28, 2007 - 12:18 PM GMT

By: Money_and_Markets


Sean Broderick - The price of uranium is jumping again! This week, the white-hot metal went from $91 to $95 a pound, according to TradeTech's Nuclear Market Review . Remember, th s metal was trading at just $75 per pound in January … $55 in October … and $45 last July. That's a ferocious uptrend!

We're in undiscovered country now. Heck, my 2007 target was $100 per pound and now it looks like we might hit that by April! Where do things level off?

Sprott Asset Management analyst Kevin Bambrough has said that a sustained supply deficit could cause uranium prices to spike north of $500 per pound by 2015. To be sure, Bambrough doesn't believe $500 uranium would be sustainable.

I agree it's hard to come to grips with $500-a-pound uranium, but my analysis shows that such a price might very well be sustainable. Here's why …

Pound for Pound, Uranium Packs More Power Than Fossils

The cost of uranium makes up a very small portion of the cost of electricity from a nuclear power plant. The cost of coal or natural gas, in contrast, makes up a far larger share of the cost of producing electricity.

For example, if the price of natural gas doubles, the cost of electricity from a gas-powered plant would increase by about 40%. But if the price of uranium doubles, electricity from a nuclear power plant would only go up about 5%.

Let me show you why that is …

The uranium used in nuclear power plants comes in pellets. Typically, a pellet of uranium weighs around seven grams or 0.24 ounces. This pellet is capable of generating as much energy as three and a half barrels of oil.

At $60 a barrel, you'd need to spend $210 for oil. On the other hand, it costs around $1.43 to buy 0.24 ounces of uranium at the current price of $95 per pound.

See, the price of uranium has doubled in the last year and it's still dirt cheap when you look at how much energy it produces.

Even if uranium goes to $500 per pound, that would only raise the cost of a uranium pellet to about $7.50 — not even close to the cost of an energy-equivalent amount of oil today .

Bottom line: In the context of rising fossil fuel prices, $500 per pound for uranium actually might be sustainable.

But let's be a little more conservative and look at it another way …

What If We Treated Uranium Like a Precious Metal?

One thing we might do is start pricing uranium in ounces, rather than pounds. Measured in troy ounces (like precious metals), uranium now trades at $6.51 per ounce. Meanwhile, silver, another metal with a lot of industrial uses but without the energy component, trades at $13.40 per ounce.

Now, nobody's going to walk around wearing uranium jewelry (I hope!), but here's my point: The price of uranium would have to double just to trade on par with silver. I think that would be fair since uranium is at least as inherently valuable as silver.

Moreover, I think the price of silver is going to $20 per troy ounce. If uranium kept pace, that would spell a price of $284 per pound!

None of this is going to happen overnight, and nothing travels in a straight line, so expect ups and downs along the way. But all signs point to higher uranium prices down the road.

Just based on historical prices, uranium is a long way from its inflation-adjusted high of $140 per pound. And the supply/demand squeeze has the potential to easily push the price of the white-hot metal beyond that target, too.

Demand Increasing Exponentially, Even Though Supplies Are Lagging

There are huge forces ramping up demand for uranium. And new supply just isn't there. Heck, despite the 99% increase in uranium prices last year, production from mines actually fell 5% from a year earlier.

More than 100 nuclear reactors are under construction or in the planning stages, a huge 25% increase over the number of existing reactors. Japan's planning 11 … China's working on 30 … and India and Russia are each going to build 20.

So far, the U.S. is planning a handful of new nuke plants. However, in my opinion, U.S. utilities are totally blowing it when it comes to securing their future uranium supplies, especially in the face of soaring prices.

Once they decide to build a nuclear facility, utilities have to secure their fuel supply for up to six years out. But people in the industry tell me that U.S. utilities have done practically nothing in this department!

I believe that by the time they decide to follow the path already well-trod by the world's other major uranium consumers, they are going to pay a lot more than $100 per pound.

The U.S. Energy Information Administration (EIA) reports that U.S. civilian nuclear reactors have unfilled uranium requirements of 365 million pounds for 2005 through 2014. For the same time frame, they've only locked-in purchase contracts for 181 million pounds.

In short, even if they don't build another plant, U.S. utilities are going to have to scramble to fill as much as 67% of their uranium oxide requirements. That means they'll have to buy more than 36 million pounds per year over the next decade. Current global production is only 100 million pounds per year!

Add in demand from new plants and the rest of the world, and it's not a pretty picture. Higher uranium prices look more and more certain.

My Favorite Ways to Get a Stake in Uranium

If you want a pure way to play rising uranium prices, check out the Uranium Participation Corp ., a Canadian fund that tracks uranium. The symbol on the Toronto Stock Exchange is U . In the U.S., the symbol is URPTF on the Pink Sheets. (On Yahoo, that would be URPTF.PK.)

Another way to go about it: Buying individual stocks. The advantage is that you can get a lot more leverage by investing in miners. Just make sure you understand your appetite for risk before you go this route. The profit potential is great, but it won't always be a smooth ride.

And perform a lot of research before you jump in. Mark Twain's description of a gold mine as “a hole in the ground with a liar on top” also applies to some uranium explorers. For that reason, it's critical that you pick companies with strong management teams.

Yours for trading profits,

By Sean Brodrick

P.S. If you're looking for a few good companies to start with, check out my Small Uranium Wonders report, which highlights six great miners. I'll also send you four updates throughout the year, telling you when to sell. Just call us at 800-400-6916 and say you want “The Small Uranium Wonders” report or order online at my secure website.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in