Wow it's been a while

I suck at this continual post things. But lets try again. The idea of the day is, drumroll, uranium. To pick a particular stock, lets say we go with Cameco.

Background on the market. Nuclear energy currently accounts for 20% of all electricity consumed globally and it's produced by 439 reactors, with a high concentration in the U.S. (~100) and France. The actual growth in the number of reactors has been virtually nonexistent recently, however there are plans out there for significant capacity additions globally - 9 applications have been approved in the U.S. recently, while China has planned/proposed 80+ projects. The actual forecasts for growth in nuclear electricity generation vary widely, but 2-3% growth is in mid-range of most estimates. Now to uranium which you need to carry out a nuclear reaction. Current demand for uranium is ~167M lbs a year, with consumption far outstripping production primarily due to the drawn-down of HEU (highly enriched uranium) - weapons grade uranium small quantities of which can be converted to lots of pounds of mined equivalent. This balance has existed for a while - since 1985, but has to reverse in the next, hm, 20 years?

Quick primer on nuclear fission. There are two key isotopes (atoms with same # of protons but different of neutrons) of uranium - U235 and U238. Both are used in fission: process in which atom is struck by a particle, it then disintegrates into two lighter atoms sum of the mass of which is smaller than that of the original, and the lost mass is converted into energy. During the reaction another neutron is produced, which in turn strikes another U235 atom and so on...

What should the price of uranium be? Costs of production are 10-$20, long-term price by analysts ranges from $25 to 70, companies are saying it should be $90, who really knows?
The only reasonable analysis I can point is a cost curve by World nuclear Association saying that if the production climbs to levels of current consumption, marginal costs will be ~$40. Drop in another $20 required to incentivize exploration and you get closer proxy for long-term price. I personally believe it can climb much higher because of production/consumption imbalance, as the delays at Uranium One and Cameco have shown it's really hard to increase production.