Uranium ETF Provides Nuclear Energy Play
Source: International Business Times, Palash Ghosh (12/2/10)
"Growing demand for nuclear energy across much of the globe will undoubtedly make uranium a prized commodity, as new power plants proliferate."
Investors seeking to capitalize on this evolving energy trend might consider a new exchange-traded fund, the Global X Uranium ETFone of the very few investment vehicles in the world that can be regarded as a "pure play" on uranium.
Launched in early November, this ETF has already amassed in excess of $90-million in net assets, suggesting tremendous optimism about the future of nuclear power.
The fund comprises uranium mining companies as well as firms that manufacture mining equipment catering to miners.
Uranium, a radioactive metal used to generate electricity and a key component of fuel for nuclear power plants, generally cannot be physically acquired and held, but --- perhaps surprisingly -- trades on the futures market of the New York Mercantile Exchange. Consequently, uranium carries a spot price, just like more familiar commodities like oil and gold.
However, in some cases, contracts for the metal are arrived at privately between suppliers and businesses (often at prices that differ from the prevailing market spot price).
Uranium reached an all-time high price of about $140 per pound in mid-2007, then dropped dramatically to $40 and has climbed to about $60 in the past few weeks.
Mining analysts at Salman Partners are forecasting an average price of $78 in 2011, $104 in 2012 and $95 in 2013.