RE:RE:Dreaminthedream on UraniumMalcolm,
Never forget that uranium is priced at the margin, just like every commodity. The Chinese will put their marginal African deposits into production and do it at a loss to keep the market price of uranium at depressed levels.
Malcolm2001 wrote: Interesting comparison with oil but it does not have much validity. Thee are many suppliers of oil and it is traded openly on exchanges so its price is simply reflective of supply and demand. Shale oil means that OPEC has lost control of the commodity (we have known this for years but now it is self evident). There are also substitutes for oil. The plastics industry can quite readily use natural gas to replace oil and electric cars are just starting out doing that.....admitedly that is quite a long way away from making a meaningful dent in demand ....but it IS coming.
Uranium on the other hand has only a handful of suppliers. It is not traded openly on exchanges (for obvious reasons) and once built nuclear reactors cannot operate on anything else....it is a totally locked up market. The current Uranium market has been subject to huge but short term distortions and it appears as though there is a surplus. BUT those calculations are fraught with uncertainties. I can tell you there is not a single person that posts here that can tell me how much above ground Uranium there is. If they do the KGB and the FBI may want to talk to you as those are highly classified military secrets.
Furthermore...the estimates (and I question them) indicate that the amount of above ground supply is less now than when the price hit about $140/pound. So the amount of already mined material has very little to do with the price of the material.
So very different commodities with very very different price drivers. Security of supply is the number one attribute on the fuel managers list. THAT is why the spot market will never take over the term market. The traded volumes are tiny by comparison to the long term pounds that are traded on term. Reactor operators THINK they have their suppliers over a barrel but that will soon back fire big time when the spot market dries up and there are no new mines to supply this massive increase in demand that is coming down the tracks like a freight train at full throttle.
Like I said and I will say yet again. This is just a matter of time. Those that get in now while everyone THINKS nuclear is finished will make a fortune. Uranium will not (can not) stay at this level for much longer. If it does we will lose Denison and Cameco and a few others and there will only be the Kazakhs to buy from. Mr Putin will control what happens there.
Still I hear ya...many people think that way and so far the market seeems to agree. But Mr.Market is totally irrational in this case and that means it is time to buy.