Uranium Comes Back into the Investment Spotlight

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While gold, copper, molybdenum, and other commodities have dominated the headlines, uranium has been sitting quietly in the background. No more, says Mr. Grant Campbell, writing in Investor’s Digest of Canada. It is now time to buy and hold the best uranium stocks, he says.

...Uranium is a big player in the quest for clean power, and investors should look at Canada’s best firms...

While gold, copper, molybdenum, and other commodities (do we need to mention oil again?) have dominated the headlines, uranium has been sitting quietly in the background.

No more, says Mr. Grant Campbell, writing in Investor’s Digest of Canada. It is now time to buy and hold the best uranium stocks, he says.

First, we will see what pulled uranium out of the investment spotlight over the past year, then we’ll learn why it should be on investor’s radar screens today.

Spot price vs. contract price

Uranium prices have been misleading people, says Mr. Campbell.

“Interest in the uranium sector became a little overdone last year as the uranium price surged to over US$125 a pound,” he says. “The speculative interest reached a point that was unsustainable, and the inevitable correction took place, pushing the price down to the current level of US$60 a pound.”

But that’s the spot, or open market, price. The long-term contract price did not suffer the same fate, says the analyst.

“It seems that many investors have been preoccupied with short-term pricing in the market and have not fully valued uranium producers who have been operating in a relatively stable market trading at all-time historic highs,” says the analyst.

So it’s time to give producers their due.

Supply and demand calls for a rise in the price of uranium. No great surge, perhaps, but a steady upswing.

Nuclear power facilities are expanding around the world. The World Nuclear Association counts 439 nuclear reactors operating around the globe. 36 more are under construction with another 93 expected to be built over the next eight years. If all of these reactors come on line as planned, uranium demand will rise 25% over current levels...

Canada is one of the world’s largest producers of uranium, and one Canadian company is the single largest producer in the world.

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