Jun 15, 2011

Posted by in Commodities | 0 Comments

Uranium Mining Stocks

Uranium Mining Stocks May Be A Sound Investment Despite Its Discounted Price

uranium-mining-stocksUranium mining stocks have faced recent devastating sell-offs due to negative publicity, with the slew of environmental disasters that have wrecked havoc on nuclear reactors having in turn inspired a fear of nuclear power as a whole. However, many investors may see this sell-off as an investment opportunity, as the prime time to buy is when a stock is out of favor. Uranium mining stocks can be particularly opportunistic, as despite the negative media coverage of nuclear power, it is still the most prevalent energy source for many emerging economies. (see more commodity penny stocks)

Uranium is a heavy, radioactive metal that was initially discovered by a German chemist in 1789, and it received its name from the planet Uranus, which was discovered only eight years earlier. However, it is the density of the metal that has gained it its fame, as the high density means that the burning of just a small amount of material will produce a large amount of heat. In nuclear reactors, this heat is used to create the steam needed to drive the generators and turbines, with uranium burning cleaner and more efficiently than either coal or gas. Nevertheless, there are health risks that can affect those exposed to uranium, including tissue damage and the increased chance of cancer, and these dangers are inevitably brought to the forefront when nuclear reactor fails through accident or disaster. It is the fear of these dangers that generally result in the massive stock sell-offs, although this can conversely make it the optimum time to buy some uranium mining stocks.

Uranium Mining Stocks on the Rebound

The fear that uranium mining stocks will not rebound in the future is actually a small one, as the demand for nuclear energy is much more far reaching than most people realize. In the United States, for example, nuclear energy is responsible for the electricity in nearly one in five homes, while the United Kingdom relies on nuclear power for nearly 20% of its energy. In addition to this, emerging economies, such as Russia, India, and China, are continuing to expand their nuclear reactor construction, with India in particular forecasting that nuclear reactors will provide nearly 25% of their electricity by the year 2050. The continued investing of these and other countries in nuclear power makes it likely that the fear that has led to the recent stock sell-off is only a temporary one, and the worldwide demand for nuclear power can make for a strong prediction that uranium mining stocks will in fact rebound. This makes the discounted price of uranium mining stocks more of an opportunity, and less of a financial risk.

Uranium mining stocks can face devastating sell-offs when nuclear accidents occur, as the dangers that come from the exposure to uranium inspires a fear of nuclear power as a whole. However, both established and emerging economies have become largely dependent on nuclear power, meaning that the investments into the commodity are likely to continue. This can make the discounted price while the stocks are unfavorable more of an opportunity for investors, rather than posing a financial risk in the purchasing the stocks. Nuclear development is not likely to be reduced or discontinued despite the dangers that can occur through accidents or natural disasters, which means that uranium mining stocks may very well be a sound investment.

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