Total 4 Posts
The uranium industry is cyclical. When prices are rising and high, uranium is perceived as scarce, and a lot of contracting activity takes place. This drives investment in higher-cost sources of production. Once that production is in the market, it tends to stay in the market longer than is economic, creating the perception that uranium is abundant and prices decline. When prices are declining and low there is no perceived urgency to contract, and investment in new supply drops off.
Most of these are companies I would never buy in normal times. But I do know that over the years, the opportunistic snapping up of bargains and then thinning them as the market bounces - has consistently generated profits for me. Sometimes the market drops again and I get to do it all over again.
Finally the Uranium spot price has started to move in the right direction, which should set off a long term contracting phase for a profitable future.
Uranium today is like a game of chicken - which utility will blink first and enter into long term contracts commercially appealing to the miners before the inventories dry up? Which miners will hold out till they get the right price for their product.