In early July, I completed a Special Report for our subscribers explaining the fundamentals of the Uranium market and the rapidly emerging imbalance between supply and demand. We wanted to draw attention to the likelihood of significantly higher prices in the near future. As if right on cue, the spot price of Uranium awoke from its year long slumber in July. It has increased roughly 10% to US$45.25 in the last couple of weeks, the most since last October when it settled into a bottoming pattern around US$41.
This is a sharp increase, that gets even sharper when we look at the stock prices of major Uranium producers. It is even more dramatic for promising junior uranium explorers. As uranium investors are well aware, the shares are highly leveraged to the price of the underlying commodity. Of course this is true with other commodities as well but it is particularly true of the relatively small Uranium market.
To underscore this point, not only has the Uranium spot price begun to move, the stock price of Cameco (the world’s largest Uranium producer) has risen from C$22 to C$26.45 since early July. This is a one month increase of 20% for a major producer with a US$10B market cap. That’s a head turning leverage of 2x to the underlying spot price in 30 days. But it gets better. A promising advanced stage junior explorer we recommended in our July issue of the Frontier Research Report is up 40% from our recommended buy price since that time.
In summary, the underlying commodity price has moved 10%, a major producer has moved 20% and an advanced stage junior explorer has moved 40%. This is a beautiful picture of leverage in action. Of course this works in reverse as well, but as indicated above, we believe the Uranium market is poised to make a dramatic move upward in the coming months. There are several significant emerging factors to explain this and we cover them in detail in our report. However, we’ll share one of these factors with you here.
Despite concerns over the safety of nuclear energy, the world is quickly coming to the realization that only nuclear power has the ability to meet rapidly growing demand coming primarily from Asia. Asian economies are steadily urbanizing and industrializing, leading to relentless economic growth, infrastructure expansion, and rising standards of living. This transformation is driving up demand for a multitude of natural resources including electricity. The only clean and viable solution is the ability of nuclear power plants to provide electricity on a scale that can keep up with growing demand. This in turn has prompted many countries to aggressively step up the development of nuclear power plants.
Nowhere is this more true than in China, where 24 plants are under construction, 33 are planned and another 120 are proposed. India is also on an aggressive development path, with 4 under construction, 20 planned and an additional 40 are proposed. All told, there are 63 reactors under construction, 169 in advanced planning, and 384 proposed in a world that has 439 reactors currently operating. This is a gigantic surge in development and the Uranium will have to come from somewhere. Uranium miners will have a hard time increasing production to meet this burgeoning demand.
For a much fuller analysis of the supply and demand imbalance unfolding in the Uranium markets, I would like to extend an invitation for you to read our recently published Uranium Special Report for free, with no obligation.
To obtain immediate access to the report, please click the following link. Uranium Special Report This link will also give you access to additional special reports written by Global Speculations authors. Feel free to download and read those at your leisure.
I think you will find the Uranium Special Report very informative and useful as an investment tool.
Frontier Research Report