Is the End of the Uranium Rush in Sight?

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After an uninterrupted four-year rise, uranium prices have finally met some resistance, and investors are weighing the probability of the uranium rush coming to an end, with the metal's prospects as a long-term source of alternative energy.

After an uninterrupted four-year rise, uranium prices have finally met some resistance, and investors are weighing the probability of the uranium rush coming to an end, with the metal's prospects as a long-term source of alternative energy.

Late last week, TradeTech reported a US$3 per pound decrease for spot uranium prices to US$135. The end-of-June figure still represents a US$2 gain from a month earlier.

"After 23 straight months of tight supply, rising spot prices, and intense bidding for material, buying interest has waned considerably and the market now sees increasing interest on the part of sellers to move material," the industry monitor said in its Nuclear Market Review...

While continuing to view the uranium market as "fundamentally sound," RBC Dominion Securities analyst Adam Schatzker thinks the supply-demand balance is in a precarious state and any supply shocks should have a major impact on the market. He thinks prices could continue to fall in coming weeks, pointing out than any spot price above US$100 per pound is strong on a historical basis. RBC forecasts spot prices will average US$120 per pound in 2007 and peak at US$145 in 2008, before declining over the long term.

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