NEW YORK (TheStreet) -- Those involved in the nuclear industry haven't had much to cheer about since the 2011 Fukushima disaster. However, spot uranium, used as a nuclear fuel, is quietly up a whopping 31% since May.
With an increasing number of investors concerned with the outlooks for crude oil and gold, an asset allocation swap into a uranium market with more bullish fundamentals could further fuel spot prices and create a much-needed lift for the miners of the material.
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Despite the recent rally in uranium spot prices, there is disconnect between the price of uranium and its miners. Fear of another disaster like Fukushima derailed this group for several years but excitement is building around supply and demand and that should attract investors.
Uranerz Energy (URZ) , higher by 13.18% and Energy Fuels (UUUU) , up 10.78%, have been bright spots in the space, helped by locking in much higher prices ($57.50 per pound) for their assets long-term. Other names like Uranium Resources (URRE) are down a whopping 35.75%, Denison Mines (DNN) is down 16.53%, while Uranium Energy (UEC) and Cameco (CCJ) are off 13.86% and 11.25% respectively.
The price for uranium looks to finally have bottomed at $28 per pound, still far off the mid $70s the material was fetching prior to Fukushima. Strength in spot uranium, which should help the Global X Uranium ETF (URA) , seems very credible driven by a growing population, rising electricity demand, higher demand for clean energy, new manufacturing facilities and louder calls to use nuclear power to fight climate change.
New reactors under construction in Europe, the Middle East and Asia are setting up a longer-term supply-demand imbalance of around 10 million pounds to a number far greater within 10 years. That's likely why speculators are getting into the nuclear fuels space and driving uranium prices higher.
Mining valuations don't yet reflect this. That should soon change since this is a market with a much clearer supply/demand outlook than many other commodities, including oil and gold.
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