SOURCE: Energy and Capital

November 07, 2006 15:53 ET

Uranium to Top $110 a Pound by 2010: Analyst

BALTIMORE, MD -- (MARKET WIRE) -- November 7, 2006 -- Uranium prices have recently gone ballistic, tacking on 7.1% last week. This climb represents the biggest weekly gain in over two decades. But according to one analyst, the party is far from over.

Uranium is now trading at a 26-year high of $60/lb and hasn't had a down month in nearly five years. But that hasn't stopped Luke Burgess, managing editor of and contributor to, from claiming, "the radioactive metal still has a lot of steam behind it."

Burgess believes uranium prices could nearly double from current levels in just a few short years. In his latest report, "Sound Investing: Uranium," Burgess says, "If prices keep increasing like they have over the past 12 months, I expect uranium to top $110 a pound by 2010."

Such a jump in such a short period may sound a bit exaggerated. But Burgess argues the logic behind this estimate is simple. He says, "Right now there are 28 [nuclear] reactors under construction around the world and another 62 being planned. Japan alone intends to add 11 more by the year 2010 and China hopes to add 24 to 30 by 2020." So it is inevitable demand will rise.

It sounds like an easy enough problem to solve. Just ramp up uranium production from existing mines, right? Well, according to Burgess, it's not that easy.

"Production from the world's uranium mines now supplies only about 60% of the requirements of the world's nuclear power utilities, leaving a wide gap between production and demand," he says. "The world's 440 reactors have a combined capacity of some 360,000 megawatts that require about 77,000 tons of uranium per year. Yet in 2005, mines supplied only about 41,000 tons of uranium."

This 31,000-ton-per-year shortfall has been made up using government stockpiles and recycled nuclear weapons. But according to Burgess, "These supplies are currently running thin and certainly can't last much longer."

So what does that mean to investors?

Well, unlike many other commodities, you can't buy uranium futures. However, you can invest in the companies that explore for and produce the uranium.

In his latest report, Burgess gives investors interested in uranium investing some general advice and explains in more detail why he believes uranium will be over $110/lb by 2010.

You can access this report totally free by clicking

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