With the growth of the world population, the impact on the global environment increases as well. As more goods are being made, this in turn means more energy use. With sources like coal having a negative effect on the environment, uranium investing through mining stocks still appears to be a solid idea for the next decade.
China and India, among other emerging markets, are continuing to ramp up energy demand. 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. While they do use traditional fossil fuels like coal, the amount of pollution in some parts of these countries is extremely large. Not to mention that nuclear is more efficient than coal. Emerging markets have extensive plans to grow their nuclear facilities, from which uranium investing and mining stocks should benefit.
The Japanese disaster hurt mining stocks for investors interested in uranium investing. 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. I previously wrote another article on this topic called, Rising Demand to Power Uranium Industry. One thing to note: with the sell-off in commodity prices, one market that hasn’t sold off much at all is uranium. While it’s not a highly traded commodity, it is still quite bullish for those interested in uranium investing to see prices remain stable.
Cameco Corporation (NYSE/CCJ) is a huge firm involved in uranium investing. This chart is a three-year weekly view of the stock. First note that the stock had a large decline since last year. The latest attempts to move up have failed and the stock continues to be weak. While the long-term fundamentals appear strong for uranium investing, mining stocks can move to their own beat. The current support line needs to hold; otherwise, the stock will most likely re-test the lows of last year. If the stock can move above the resistance line, which is also near the 50-period moving average, there are still significant headwinds above. Normally, the 200-period moving average is an area to watch for sellers distributing their shares. I would also watch for the $32.50 as resistance. Since that level goes back to 2009, I think it highly likely that area will be troublesome for the stock.
Chart courtesy of www.StockCharts.com
The question you have to ask yourself is: will there be more energy demand or less over the next decade? I think it’s obvious that there will be more. Then the next question is: will there be more energy supply or less? Looking at the data, it appears that there might be either the same amount of supply or less; if that’s the case, we’re looking at an imbalance. In this situation, uranium investing appears to be a solid thesis, with mining stocks as the main beneficiary. Having said that, you need to be careful when you buy mining stocks. Patience is a virtue when you are involved in uranium investing.