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A recovery could be on the cards for uranium… Here's how to play it

by , 02 June 2015

After the Fukushima nuclear disaster, the price of uranium plunged. The price picked up slightly last year, but it's still well off previous highs.

With the number of nuclear reactors set to rise drastically, the price of uranium should follow suit.

Let's take a closer look and how you could potentially profit from a recovery in the uranium price…


The uranium price slide


After an earthquake caused the Fukushima nuclear disaster in 2011, the price of uranium fell by two-thirds between then and the middle of last year.

But Wirtschaftswoche, a German news magazine, believes the bounce witnessed last year could be the start of a recovery in the price of uranium.

Have a look at the chart below…


Chart of uranium price


It all comes down to the increased demand for the reactive substance.


The growing demand for uranium


The World Nuclear Association expects nuclear energy demand to rise by a third over the next 15 years. This as countries build more nuclear reactors to try to meet the needs of electricity demand.

Currently, there are 438 reactors around the globe, 69 are under construction and there are plans for another 184.

In the early 2000s, uranium was in a bull market. This boosted production, but not by enough to close the gap with demand from power stations.

This gap looks like it’s widening as the bear market over the past few years has negatively impacted exploration. This has led to a supply squeeze.


How to invest in a recovery in the price of uranium


As uranium tends to be found with gold, there are some South African plays such as Oakbay Resources and Energy [JSE:ORL]. Oakbay is a uranium and gold producer.

To invest in a pure uranium producer, you need to look further afield, the experts at Money Week explain. One consideration is New York listed Canadian-based miner Cameco Corporation [NYSE:CCJ].

So there you have it. How to play a recovery in the price of uranium.

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A recovery could be on the cards for uranium… Here's how to play it
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