Uranium seems to be going nuts, but I’m not complaining. I have been holding a few uranium mining stocks, and lately they’ve gone vertical.
- Strathmore Minerals, purchased for $0.71, now at $1.32
- Denison Mines Corp, in at $1.18, now at $3.38
- Mesa Uranium, purchased at $0.13, now $0.67
Mesa Uranium in particular induces a serious case of hindsight-isis. I had bought 4,000 shares, and sold off 3,000 when the stock doubled at $0.26 (woo-hoo!). The shares then slept for a while, which was fine, I had realized profits, until recently when it went radioactive. Slight pause while I kick myself (**!!) for getting greedy and selling more than half. Bah!
Denison and Strathmore started taking off in August/September. Uranium (U308) itself has gone from about $40 to a recent $61 per pound. Uranium was trading on the spot market a couple years ago for around $130 a pound.
Jim Puplava on the Financial Sense Newshour recently aired a couple of excellent podcasts on the subject of uranium by. From the shows, we can glean some factors which are influencing this uptrend in the uranium price:
(1) China has been making heavy buys on the term market. Their future installed nuclear power capacity has been recently upgraded from 80 to 120 gigawatts (!) in 2020. And 80 was an upgrade from 40 gigs.
(2) The Megaton-to-Megawatt program will be coming to an end in 2013. The program turns former Soviet nuclear warheads into civilian use U308 to fuel US nuclear power plants. After the program is done, 20 million pounds of uranium per year supply will no longer be available. In advance of this, consuming countries are starting to stockpile.
(3) China, Russia and India are building nuclear power plants like no-one’s business. China alone has 50 in various stages of development. They also churn them out in 5 years from start to finish, versus upwards to 10 years in the U.S. China recently purchased more than 30 million pounds of uranium.
(4) Brand new nuclear power plants need three years supply at start-up, and so demand is front-loaded.
(5) Yearly world production is about 55,000 metric tons. According to industry sources, this is about 76% of world demand. The balance is satisfied by existing stockpiles. See item 2.
(5) In the last few years, Kazakhstan has been ramping up production. Some industry analysists believe that this production may be scaled back in the future, in order to make more with less (the Opec strategy).
Kevin at Invest It Wisely had a nice post recently about about making unconventional investments in 2011, including natural gas, the US dollar, and shorting precious metals in the form of the major GLD and SLV exchange traded funds. Uranium looks like is on its way to well be another of this type of unconventional move.
I think that uranium is still flying under the radar, for now. Looking to that barometer of conventional wisdom, let’s turn to The Street.com, and see what they’re up to. A simple search for “uranium” on the site yields the following results:
- 4 Uranium Penny Stocks to Buy
- Market Alert – Uranium Resources Tops MicroStockProfit.com Watch List.
- Fueling Oil and Gas Investment
As always, reading mainstream investment media is a little weird. The writer in the first article features companies that are not by my definition penny stocks, as they’re trading well above 2 and 3 dollars a share (Denison, Uranerz Energy, Uranium Resources, and Ur-Energy). Also, and seemingly common for these type of articles, the writer discloses that he does not own any shares of the featured companies.
The third article in the list, which actually came up first in the search results, does not actually talk about uranium. As I said, weird.
So what does this mean for the Centavos model portfolio? Right now, the 1000 shares of Mesa Uranium are in the 401K account. I may increase my position, but instead in the Scottrade account, and might also take another look at Canalaska Uranium, which I used to have and sold off for a nice return after the stock had a reverse split. Finally, there’s a couple more junior explorers that were featured in the Northern Miner that deserve a second or third look.
From my notes, I see that have more to write on uranium, which will be the subject of more posts. Stay tuned.
Related articles
- Cameco to supply uranium to China (financialpost.com)
- TradeTech Uranium Spot Price Breaks US$60 Barrier (prweb.com)
- Cameco boosts dividend (theglobeandmail.com)
Is there anyway to invest directly in Uranium as a commodity? I doubt it, but thought I’d pose the question.
The Biz of Life recently posted..The Power of Nazi Propaganda
Biz, there’s a brand new ETF that’s been launched by a company called Global X, that tracks the performance of the 25 larger uranium mines, like Cameco and Paladin. I don’t know enough about purchasing uranium as a commodity futures to speak intelligently about it.
Maybe I could buy an uranium bullion and keep it in the safe?
This is very interesting. I don’t know too much about the uranium market, but this just goes to show that it’s not just gold that has been rising… every commodity has been rising to a certain extent as demand for that commodity rises as well.
Invest It Wisely recently posted..Book Review- The Great Credit Contraction
Hello Kevin – that would be one hot safe!
Very nice post 101!
I carry about 300 stocks in my list with Uranium being a small sector. I noticed Uranium stocks taking off but didn’t make a move because I have not done any DD on the companies since I added them. Same thing happened with Lithium….Not enough money to buy em all and not enough time to DD multiple sectors!
I’ll be relying on you for more info
BeatingTheIndex recently posted..How Banks are Fleecing You with a Smile
BTI, that’s an impressive list, 300 stocks. I also skipped on the lithium/rare earth frenzy. The valuations of the mining companies seemed a little off.
I’ll be honest, this is one sector that I never thought of checking out! It’s good to hear that this sector has done so well for you!
Money Reasons recently posted..Long-Term Value-Investors Can Always Benefit from a Trader Mentality
Wow, nice score on the mining stocks. I don’t know much about the commodity market in general, I guess it’s time to ramp up.
retirebyforty recently posted..retirebyforty’s biggest obstacles 1 – baby on board
@ MR and RB40 – I’ve done well so far, but past performance is no guarantee of future returns…
Having said that, I think uranium has some room to run. In the meantime, I’ll try to make the best objective choices.
[...] 101 Centavos: Investing in Uranium [...]
[...] Investing in Uranium posted at 101 centavos [...]
I’m not too familiar with this sector but it seems that this is really working pretty well for you. It’s nice a read especially for someone like me to get a little bit of understanding on some of the potential investments.
Ken @Spruce Up Your Finances recently posted..Tapping Your 401k Plan- The Pros and Cons of Taking Out A Loan
Hello Ken, thanks for the comment, and for linking the post.
[...] Centavos invested in Uranium and made a [...]
Wow, I had no idea. This niche is certainly not on my radar, but maybe it should be. Unconventional holding in the short-term, absolutely. Longer-term, along with water, it might be the “new gold”.
Thanks for the insightful read.
Cheers,
Mark from My Own Advisor
Financial Cents recently posted..November 2010 Dividend Income Update
Hello Mark – thanks for the comment – the more I read about uranium, the more niche it seems. Geothermal energy is one I’ve also taken an interest in recently. I think I’ll do a post on it soon.
[...] Centavos recently blogged about investing in uranium. I’m not sure if this is unconventional in the sense of going against an investor tide, but [...]
Kevin, let’s say unconventional in the sense that the sector is small and not well-publicized.
Lost lots of money with Uranium.
Hello CI, thanks for commenting.
It’s not a loss unless you sell….
So far, I’ve made a little. I’ve got an open order to sell Mesa, which hopefully will be filled soon.