Red-Hot Resources

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Wednesday, May 09, 2007

Uranium Hits $120 Per Pound, How High Will It Go? has a good rundown on the latest uranium auction, where the spot price of uranium hit $120 per pound. Now remember, this is different from the new uranium futures, which settled at $143 per pound yesterday. The front-month uranium future is the June contract. So, whoever is trading it thinks uranium will be worth $143 per pound in June (less the risk premium).

Anyway, StockInterview has a report from Nuclear Market Review, revealing: "Bids were made through a variety of channels ... Sellers were unresponsive and buyers were unable to conclude purchases by week’s end."

No sales were actually made, and they raised the price to $120 per pound anyway. I'm not sure exactly how that works, maybe that's the "best-guess" price (what you would have to pay if you wanted it right now). However, if sellers aren't willing to sell, that tells me that prices are going to go higher. And $143 per pound in June may not be far-fetched at all.

We saw uranium stocks sell off hard yesterday, then most of them recovered to close slightly down for the day or even higher. I don't know what's going on in the stocks besides hot money rotation. I do know that in the longer term, the price of the mining shares should follow the price of the underlying metal.
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