There’s nothing like a good old fashioned nuclear meltdown to get everyone dumping their uranium stocks!
Industry staple Cameco has been pummeled since the hysterics began in Japan:
Source: StockCharts.com
And new uranium miner ETF URA found itself without any buyers…until it plummeted below $16:
Source: StockCharts.com
Does this blood in the streets constitute a buying opportunity? Energy expert Matt Badiali thinks so:
Here’s the thing: Japan’s 56 nuclear reactors consume nearly 8,000 tons of uranium per year. If 11 are offline, 1,570 tons will go unused this year. That’s about 2% of the world’s consumption. Hardly enough to flood the market.
Existing power plants all over the world still need uranium. Soon-to-be-built power plants in China and India will need uranium, too.
I don’t see this as a reversal of the big energy trend.
But what should you do now if you already own uranium stocks? Above all, mind your trailing stops. While I think we’re close to the lows in uranium stocks, and most of the selling is driven by panic instead of the long-term fundamentals, we can’t know the future. Don’t “hold and hope.”
Instead, be ready to get back in once the market bottoms and a little clarity emerges regarding exactly what Japan is facing… This could become the single best opportunity to buy uranium stocks. When the dust clears, we’ll still need energy… And we’ll still need uranium.
If you were looking for an entry point into uranium miners, this might be a fantastic opportunity.
Further reading: A Breakdown of Uranium Supply/Demand Fundamentals (including how to invest in this bullish trend)
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