Tuesday, July 27, 2010

More Uranium

So the spot price rose even further yesterday as the bandwagon starts rolling. Here's that Scotia Daily thing with the breathless pumpo:

- UxC Uranium Spot Price climbs most in 14 months: +$4.25/lb to $46/lb U3O8! Following Friday’s $2/lb move higher for Tradetech’s spot price indicator, last night UxC announced that its spot price increased by $4.25 to $46/lb U3O8 as demand picked up considerably over the past week while sellers backed away. Last night’s move is the largest single week increase since a $5/lb move higher in May 2009. However, UxC notes that over the last three years, no price increase has lasted longer than six weeks as the sharp moves higher scare off potential buyers. The big question: “is it different this time?”. Scotia Mining Sales thinks so, given the increased demand from China (as noted by the recent off take agreement with Cameco) and supply issues (ERA’s Ranger and ConverDyn’s Metropolis conversion facility). See our Chart of the Day below for uranium spot price vs. the uranium miners share price performance over the past couple years. While DML and UUU offer better torque to higher prices, don’t forget Cameco is the “go to” name for uranium.

Meanwhile, by way of tipping the hat to the technical analysts that are never wrong and never crow about it either, this weekend The IKN Weekly will be taking a good hard look at Uranium Participation Corp (U.to), the Canadian vehicle to play the straight metal in the straightest way possible, and laying out the investment case from a fundamentals angle. After all, we boring supply'n'demanders are allowed to get all frothy and to-da-moon-alice, too, no?