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Uranium: A commodity that's set to rocket over the next five years

by , 27 June 2014

The way things are shaping up, uranium is poised to jump in value over the coming five years. It all comes down to the production costs associated with uranium. Commodities go through booms and busts all the time. When prices are low, more people start to use the commodity. This causes a boom to begin and increases supply. This leads to a price rise, which eventually results in a bust. And it looks like uranium is entering the initial phases of a boom. Read on to find out why…

Uranium is essential for running nuclear power stations

Rick Rule, the CEO of Sprott US Holdings, an investment company, believes the price of uranium is set to take off.

Uranium is a radioactive material, usually found with other commodity deposits like gold, which fuels nuclear power stations.

He says the current cost to produce a pound of uranium is $70, Sean Goldsmith in Daily Wealth explains. But the current selling price is less than $30 a pound. That means uranium producers are losing $40 a pound.

The price of uranium is heavily down following the disaster at the Fukushima nuclear plant in Japan. After this happened in March 2011, people were wary of nuclear power.

Uranium has shed nearly two-thirds of its value in three years

This resulted in the price of physical uranium and uranium shares to plummet. And over that period, the price of uranium has dropped from nearly $73 a pound to $28.25 a pound today.

Looking at 2014 alone, the price of uranium is down 20%!

But the fact of the matter is that 16% of the world’s electricity comes from nuclear power.

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The price of uranium is unlikely to fall more. As uranium producers struggle to make ends meet, they’ll stop producing it. This will lead to a dip in supplies. And when this happens the price will rise. It’s just a question of when.

So there you have it, why uranium is set to rocket over the next five years.

Uranium: A commodity that's set to rocket over the next five years
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