Uranium Stocks: Leading Energy


". . .listed uranium names. . .third among mining subsectors only to specialist miners of nickel and zinc."

Global portfolio flows indicate that among mining stocks, listed uranium names have been in strong demand over the past few months, third among mining subsectors only to specialist miners of nickel and zinc. One catalyst has come by way of spot uranium prices, moving up over the past month or so, reversing a longer-term downward trend, and more recent one in place since December.

The outlook for spot uranium prices remains on balance for the meantime. Uranium prices moved up from around $10/lb some 10 years ago, to a peak of $136/lb in late June 2007, and then fell and fell, to recent multi-year lows around $40/lb, but have since picked up to around $44/lb. For the meantime, the price behavior of listed uranium stocks is leaving energy peer coal stocks behind; this is even more the case with listed oil stocks.

In some circles, at least, it is broadly accepted that the 2007 spike in uranium prices was a bubble, driven by a mania based on three shaky substrates. First, the presence of basically bullish fundamentals with the end of Russian dumping, and strong demand growth, particularly from China. Second, plentiful liquidity courtesy of hedge funds and participation certificates and third, the difficulty of valuing uranium companies.

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