Antinuclear

A sceptical look at uranium industry’s future

There will continue to be a persistent chorus of uranium investors who also have an audience in the media proclaiming uranium to be the ‘contrarian trade of the decade’. But smart investors, before getting caught up in such rhetoric need to ask themselves, “How much does the person who is the source of the information have invested in uranium shares?”

Uranium Stocks Under Siege as Fukushima Continues Spewing Radiation By James West, MidasLetter.com, May 30, 2011 As shares in uranium exploration companies continued to shed value, Japan’s nuclear nightmare is still getting worse. News this weekend that the hope of ‘stabilizing’ the leakage of radiation by steam into the atmospohere and by water into the ocean is unlikely underscores just how bad the situation is. Within a 20 kilometre radius around the stricken plant, a Chernobyl-style dead zone is developing, with levels of 1.48 million becquerels a square meter measured within that area. (The average human naturally experiences 4400 becquerels from decaying potassium-40 within the body.) Dangerous levels of radiation have now been confirmed as far as 600 kilometres away from Fukushima.

Germany announced that it would discontinue all nuclear power generation by 2022. Switzerland, Italy, Thailand and Malaysia have all also announced the freezing of nuclear development until further notice. In the United Kingdom, anti-nuclear activists have seized on the decision of Germany to ratchet up pressure against the government there to abandon nuclear development plans.

Shares in Cameco Corp. (TSX:CCO, NYSE:CCJ), which have lost 24% of their value since the earthquake struck Japan on March 11, continues to sink under immense selling pressure that has redoubled since Germany’s announcment.

Uranium One, (TSX:UUU) has also seen its value deteriorate by 37% since the March 11, and Canaccord Genuity, a Canadian investment bank, cut its price outlook for the company by $0.20 to 4.65. It closed Friday at $3.76.

So the question is, where and when is the entry level to capitalize on the share prices of these stocks that are beaten up thanks to Japan’s problems?

The answer to that question might be similar to that for the same questions applied to the U.S. residential real estate market: not anytime soon…..

There will continue to be a persistent chorus of uranium investors who also have an audience in the media proclaiming uranium to be the ‘contrarian trade of the decade’. But smart investors, before getting caught up in such rhetoric need to ask themselves, “How much does the person who is the source of the information have invested in uranium shares?”

May 31, 2011 - Posted by Christina Macpherson | Uncategorized