Help On The Way For Uranium ETFs?
Times have been tough to say the least for uranium ETFs such as the Market Vectors Uranium + Nuclear Energy ETF (NYSE: NLR) and the Global X Uranium ETF (NYSE: URA). The natural disasters that struck Japan in March led to a nuclear fallout that rekindled memories of Chernobyl and Three Mile Island, sending investors running out of uranium equities.
Still, there have been a brazen few that have remained bullish on uranium and with an ETF like URA currently trading back near its post-earthquake lows, there might be an opportunity here for those that can stomach the risk and a longer-term holding period.
An executive from Toronto-listed Uranium One said uranium prices will range from $55-$65 per pound this year, according to Bloomberg News. The $65 area is well above the $56.50 per pound uranium was recently fetching.
Better yet for URA and NLR, Uranium One Vice President Fletcher Newton said prices could jump to $70-$75 per pound next year.
As far as another fundamental factor that may aide URA and NLR going forward, here it is: At current prices, uranium isn't expensive enough for miners to want to absorb the costs of new mines. Since uranium is a commodity, supply and demand is worth noting here. No new mines could mean crimped supplies if emerging markets pick up the slack for lost Japanese demand. That would trigger higher uranium prices.
Obviously, we're talking “ifs” here, not definitive situations, but if URA can bounce off its 52-week just over $13 and if NLR can find support between $19.50 and $20, a buying opportunity may be on hand.
