Uranium Market Primed For Another Big Bull Run

Photo: Uranium Market Primed For Another Big Bull Run

Rick Rule doesn't mind calling the potential for price appreciation in the uranium market “explosive”.

And he has every reason to do so.

The last bull market in uranium produced some fantastic gains in share prices, but when the dust settled, there was no real difference in the world's capacity to produce one of the most useful elements on the periodic table.

Usually when we talk about emotion in the marketplace,we are describing the behavior that so many investors display when they get sucked into a market top, or wash out of a bear market near its bottom. But when it comes to the uranium market, there is a whole other range of emotions in play.

Fukushima rattled many people who believed in nuclear power as a reliable solution for creating baseload capacity going forward, but luckily the people who plan the world's infrastructure projects are less susceptible to fear. When it comes right down to it, nuclear power offers unique solutions for generating low carbon electricity, and there aren't any other options like it.

The Costs Are Low

It isn't fair to compare nuclear power to wind and solar. Of course the risks attached to a nuclear power plant are far higher than a solar field, or a wind farm. But if we want to use wind and solar in the same way that coal, natural gas or nuclear is used, there have to be massive battery packs built.

What many people don't know is that coal power is very dangerous.

Not only does the mining act as a blight on public health, but the byproducts of burning coal are radioactive. Unlike a nuclear power plant where the radioactive fuel is handled as dangerous material, fly ash from coal power facilities is routinely dumped into the environment. This is bad for everyone, but whenever nuclear power comes up, few people are willing to look at the reality of our power needs.

Unlike coal or natural gas, uranium is used sparingly in the production of power. The big costs in the production on nuclear power center on the construction of infrastructure, not the fuel source. It is estimated the at present prices the uranium used to produce electrical power comprises no more than a single digit percentage of the overall cost per megawatt, and it certainly doesn't require that fossil fuels are transported over large distances.

The Turnaround

The IAEA estimates that a pound of fuel grade uranium costs around $60US Dollars to produce, but at present a pound of U3O8 sells for around $20 US Dollars. This is a result of both a very opaque marketplace, and a hangover of radioactive material in the market.

But all across Eurasia there are reactors under construction, and more than half of them are in China. The Chinese need to make a move away from coal, and apparently nuclear power is going to be a big part of that shift. At some point there is going to be a need for more uranium, and when that demand hits, the price could explode upwards. There are some companies that can take advantage of this dynamic, and make a lot of money in the process.

If you are interested in the future of energy, or the precious metals market, the upcoming Silver and Gold Summit is the place to be. Not only will investing heavyweights like Doug Casey and Rick Rule be presenting their ideas, but CEO's of uranium companies like Amir Adnani and Jordan Trimble will also be speaking. The whole thing takes place over two days, and will begin on November 20th. It is all happening in downtown San Francisco, and we hope to see you there!