Uranium Energy Corp UEC

👨‍🏫For the newbies👶... there are a few #Uranium trading ❓

[mangoe]

John Quakes

@quakes99 -

For the newbies... there are a few #Uranium trading companies that have long-term supply contracts with producers who receive regular monthly deliveries that they pay for at the time of delivery based on TradeTech's posted month-end Spot #U3O8 price for the prior month. They will then sell those lbs received into the Spot market to try to realize a profit.

For example, say a trader will receive a delivery of 300,000 lbs in June priced at May's closing Spot price. If they can push TradeTech's May month-end closing price down by $2 today then they will potentially save $2x300,000 = $600K on the cost of that upcoming delivery.

However, that trader will normally sell those 300,000 lbs directly into the Spot market in June to generate cash flow for their business. Thus there is huge incentive for them to push UP the Spot price next week so that they can sell those 300,000 lbs at a substantial profit. If they can push Spot back up say $3/lb then they can realize a $900K profit on their Spot sales.

The thing is... the Spot market is so small that all the market participants know that these traders will be playing these month-end games. Nuclear fuel buyers, like all buyers, want to buy at the lowest possible price. They play along with the traders, pulling their bids or dropping their bid prices as low as possible to try to get rock bottom pricing on their own Spot purchases before the traders jack up their Asking prices next month.

This short-term price dip - the 'month-end smash' - is a common monthly occurrence when there are few buyers and sellers active in the Spot market. Doesn't always happen, especially when the Spot market is seeing heightened purchasing activity.

History shows that these are simply temporary events along the upwards trending Uranium price chart especially these days with daily news flow driving reactor fuel demand higher like never before. Resumption of the upward Spot price trend is inevitable over the coming weeks, months and years. Use these short-term Spot price dips to your advantage if they provide dip-buying opportunities for U mining stocks.

Hope that helps! Good luck with your research and investments!