With interest in nuclear power as a viable alternative to conventional power generation methods growing in recent years, many potential investors are looking into the possibility of putting their money into the uranium market in the hope of cashing in big time should nations include nuclear solutions among their roster of green energy options.
However, experts at the Vancouver Resource Investment Conference (VRIC) held in January advise these would-be investors to bide their time – at least for now.
A Potential Bull Run
Currently, the sentiment against uranium – essentially looking at it as a chemical pariah due to its use in nuclear weapons of mass destruction – has begun to turn for the better across the globe.
Experts like Rule Investment Media founder Rick Rule and Digest Publishing co-founder Nick Hodge remarked that the biggest catalyst they see for uranium, as well as nuclear stocks, is more widespread acceptance as an instrument for progress: specifically, a way to generate clean and sustainable power for all sectors of industry and society.
However, while this may pique the curiosity of investors and drive their enthusiasm, Rule declared that anyone interested in uranium needs to practice caution. This is because, at present, the price of uranium equities remains at a fairly steep $50 per pound.
Rule explained that the total cost of producing a single pound of processed uranium is well above the current cost of production. This means that the price of the mineral could rise to astronomical levels due to its scarcity or it could remain unavailable for an extended period of time. He went on to say that a production deficit in uranium will need to be quite significant in order to create opportunities in the market.
For now, though, the global uranium market is entering a phase wherein the total demand is expected to be much higher than it was when the meltdown at Japan’s Fukushima power plant occurred back in 2011 – an event that adversely colored public perception against uranium.
Look Before You Leap
Rosseau Asset Management president Warren Irwin, another participant at the VRIC panels, was quick to admonish enthusiasts to be wary when it came to looking into uranium stocks.
In his opinion, Irwin feels that the uranium market is being fueled by hype and excessive optimism. He reminded the audience that it takes a substantial amount of time before nuclear reactors are activated and become operational; in which case, those thinking of investing in uranium will have to wait a while before seeing any returns on their investment.
Indeed, any promises of making a quick buck in the uranium market are to be seen as all hype and no substance.