Uranium ETF Comes Back From The Dead

November 11, 2014

Back From The Dead

For a bit of perspective on the uranium market, URA lost 80 percent of its value from just before the Fukushima disaster to just before Japan announced last Friday it would revive some of its mothballed nukes. To be sure, other countries that followed Japan in shutting down nukes in 2011—notably Germany—haven’t followed Japan in turning back on nukes they’d shut down.

Still, Japan is the world’s third-biggest economy, and its 48 nuclear power plants generated about 17 percent of its electrical capacity on the eve of the disaster, according to information the U.S. Central Intelligence Agency posts online about Japan in its “World Factbook.”

Nearly two-thirds of its electricity generation came from fossil fuels before the disaster, meaning that in the aftermath of the disaster, more than four-fifths of Japan’s electrical power generation is derived from crude oil, virtually all of it imported, according to the CIA.

The point is this: Even though the radiological dangers related to the Fukushima disaster continue to this day, and are likely to continue well into the future, Japan is the world’s fifth-largest electricity consumer, meaning it pretty much has to diversify its energy sources for economic and national security reasons.

Rally With Staying Power?

That’s all the more pressing given that the weaker yen that Shinzo Abe desires and is working so hard to achieve through high-stakes quantitative easing measures means that commodities priced in dollars, such as crude oil and even uranium, become more expensive.

Even though there’s little chance Japan will fire up anywhere near the 48 nukes that it shut down—in part because many of the plants are terribly old, global uranium demand is likely to pick up, even as a consequence of a modest gesture of reopening just a few plants.

Moreover, China has embarked on an ambitious nuclear plant development program, meaning demand for uranium may likely remain perked up in the coming years.

 

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