Uranium Investing Offers Great Long-term Potential
The growth of the world’s population will have an impact in several areas, including great energy demands. As more goods are being made, this in turn means more energy use. There are only so many ways to generate energy. Over the next several decades, the most effective method still remains nuclear power and through this uranium investing will still be relevant. The best way for the retail investor to profit from uranium investing is through mining stocks.
Energy demand continues to grow for emerging nations like China and India. This is where uranium investing comes into play. These nations need the energy and only through uranium investing can they keep up with their growing needs. Emerging markets are planning a very large build-out of nuclear plants over the next decade, from which uranium investing and mining stocks should benefit.
The Fukushima Daiichi nuclear disaster in Japan did temporarily hurt mining stocks for investors interested in uranium investing. Some short-term moves can hurt total portfolio returns if they are only temporary. For those with a bullish view on uranium investing, starting to research and having a watch list of mining stocks for future accumulation might be a good idea in this environment. One positive is that, over the past year, uranium prices have remained stable. This is quite bullish for those interested in uranium investing and mining stocks. If mining stocks can estimate a stable price for the commodity, they can better plan and allocate their capital.
Chart courtesy of www.StockCharts.com
Cameco Corporation (NYSE/CCJ) is a huge company involved in uranium investing. This chart is a one-year view of the stock. Following the significant move from late 2011 until February 2012, the stock was due for consolidation. The stock has since fallen through its Fibonacci support levels and has finally found support. This support has enabled the stock to move up to the 50% retracement level, which I believe will cause the share price to stall out. There is still some overhead resistance and the downward sloping resistance line needs to be broken before a new uptrend is in place.
We all know that there will be more energy demand over the next decade. The question is: how will it be generated? I think that nuclear power and uranium investing will still be important components. It appears from the data that there might actually be a deficit in the uranium market over the next couple of years. If that’s the case, we’re looking at an imbalance, with higher prices the net result. In this situation, uranium investing appears to be a solid thesis, with mining stocks as the main beneficiary. Having said that, you still need to be careful when buying mining stocks. Look for opportune entry points.