Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Uranium Investing- Analysts Forgot Yellow Cake

Commodities / Uranium Dec 24, 2008 - 01:18 PM GMT

By: Oxbury_Research

Commodities

Best Financial Markets Analysis ArticleNicholas Jones writes: The financial analytical business is one of comic and irony. During prospering economic times, the aggregate success of financial analysts' ability to make their clients money is very high on a percentage basis.

When the economic worm turns, the field of financial analysis turns into this sort of absurd puppet show. It's really a simple notion. It's just easier to make money in bull markets.


But, during period of economic decline, the demand for financial knowledge in order to navigate these volatile rapids increases dramatically. In turn, the quality and competency of these analysts simply evaporates.

If I were to put a number to it, I would guess that maybe 1 in every couple hundred analysts understand what's really going on, where were going from here, and how to position his/her clients to make money off it. So how do these financial boobs still have jobs? Well, maybe 1/2 of 1% of analysts have a clue, but probably 1 in 10,000 Americans understand current economic circumstances. The reason that these analysts still have jobs is because America buys into the main stream media, and the main stream media cradles these analysts.

The reason for the lack of success is probably due in part to a number of reasons: conflicts of interest, desire for fame, lack of bear market experience, the inability to price in black swan events, etc. These reasons, and many others, result in this extreme ratio of poor analysts. Fortunately for us, they are the ones who allow us as contrarian investor, to make money.

I am going to discuss a particular market that not too long ago, before the main stream analysts dismissed this market as worth covering anymore, carried sex appeal that had it making regular headlines.

Uranium Market Yearns for Attention

Do you remember that radioactive metal that went from a single digit price to over $130 /pound in one of the greatest commodity bull markets in our history? Uranium was the hot ticket for a lot of time and those who played the game made a lot of money.

When this market was hot, Canadian analysts were pushing the uranium miners and explorers as the key to riches. In true bubble form, any company that had the word 'uranium' in it, in true bubble form, went to the moon regardless of actual prospects and/or production. Like all bubbles, the uranium bubble burst.

The same hedge funds and speculators that helped blow the price out to the upside, assisted in doing just the opposite when they blew the price out to the down side. Spot uranium fell all the way to $45 /pound. Since then, uranium has been forming a consolidated base that it could, and probably will rally off of.

During all of this price volatility, analysts' coverage of the uranium market ceased to exist, and not just main stream coverage either. Data via the internet and other independent sources has also dried up significantly. But that's to be expected. Your standard analyst just isn't contrarian. He follows the crowd. The problem is that contrarian play is the ONLY way to make the big plays that can make a difference in your financial circumstances. I digress.

In the mean time, the fundamentals of the uranium market haven't changed.

Markets Eying up Higher Uranium Prices

Currently, there are 439 reactors in 30 different countries. The reactors consume 167 million pounds of uranium on an annual basis. The problem is that current mine production is only 108 million pounds per year.

In addition to that, there are 36 reactors currently being built, with China, India, and Russia leading the way. There are 99 reactors in the 'planned' stage and 232 reactors in the 'proposed" stage. The majority of these planned and proposed reactors are in BRIC countries. This makes intuitive sense given that the BRIC countries need to grow their electrical infrastructure in order to fuel the growth.

At $54 /pound, uranium is very economical to mine. At this point of the commodity supercycle, we would expect some new mine supply to be coming on board. Unfortunately that is not the case, due mainly impart to several mine disruptions.

Cameco has had nothing but problems with their super mine at Cigar Lake. They have had costly setbacks for the past couple of years due mainly to mine flooding. Cigar Lake was expected to bring on board 17 million pounds of annual supply. Uranium One was forced to shut down their Dominion operations in S. Africa, and Denison just shut down their recently opened U.S. mine.

The discrepancy between mine supply and reactor demand has been fulfilled by blending down materials from dismantled nuclear weapons and old stock piles, but these supplies are finite.

The uranium market is a perfect example of the financial analysts' incompetency. Those who listened to their advisers who joined the band wagon at $100+ uranium lost their clients a lot of money. Opportunity is presenting itself again. Many of those analysts who once covered these markets have moved on and aren't even aware of the recent price turn around. That's why we at Oxbury Research separate ourselves from the rest. Stay tuned as I will be sharing some of the particular investments in the uranium sector that I expect to outperform.

Disclosure: no positions

Nicholas Jones
Analyst, Oxbury Research

Nick currently works in the wheat futures pit at the Minneapolis Grain Exchange and brings his up close and personal experience with commodities markets exclusively to you. "I think that instead of getting our panties in a bunch over the atrocities currently being undertaken by our Federal Reserve, we should identify the investment opportunity formed by the Federal Reserve's ongoing creation of financial imbalances."

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2008 Copyright Nicholas Jones / Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - 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

6 Critical Money Making Rules