Pity poor uranium -- there is perhaps no more unloved segment of the energy market right now.
Not only is it a commodity, but nuclear power has a stigma attached to it, thanks to the March 2011 Fukushima nuclear mishap in Japan.
Uranium has brought both joy and tears to investors over the past decade. After a 20-year bear market, the price of uranium (U308), bottomed in 2001 at $8 per pound. It then skyrocketed to over $100 a pound, only to fall back again.
Most recently, it peaked at $72 a pound in January 2011. The Fukushima earthquake and tsunami disaster a few months later put a pall over the industry and prices, resulting in the current price of $40.70 a pound.
Yet despite some countries slowing down their plans for nuclear power expansion and the negative mood hanging over the sector, uranium looks to be poised for a rebound in the not-too-distant future.
Why? Well, for one thing, the United Nations' nuclear agency - the International Atomic Energy Agency - said "The Fukushima Daiichi accident is expected to slow or delay the growth of nuclear power, but not reverse it."
The IAEA forecast impressive growth of somewhere between 23% and 100% in nuclear power capacity by 2030.
Why Uranium Prices Are at a Critical Tipping Point
Despite the Fukushima disaster in March 2011, the demand for nuclear power continues to rise.
For uranium investors, that means the commodity is at a critical tipping point towards much higher prices.
Thanks to considerably higher energy costs, even Japan is now shifting its stance on nuclear power. According to Japan Today, newly elected Prime Minister Shinzo Abe now says he is willing to build new nuclear reactors.
That's a dramatic shift from the previous government's pledge to phase out all of the country's 50 working reactors by 2040.
But the most significant impact in nuclear power is likely to come from the developing world-especially China.
China's commitment to nuclear power means they could be adding as many as 100 nuclear reactors over the next two decades. That's a monumental shift considering China currently operates only 15 reactors.
Other nations such as Russia, India, South Korea, and the UAE are contemplating new nuclear power plants as well that would add to the 435 nuclear reactors already providing base-load power worldwide.
In this year alone, 65 nuclear power plants are under construction, another 160 new reactors are currently in the planning stages and 340 more have been proposed.
Given this ongoing shift, the demand for uranium is clearly going to be getting stronger, which presents a problem since there is already a uranium supply deficit.
According to the World Nuclear Association, total consumption of uranium was 176.7 million pounds in 2011 and growing. Meanwhile, last year's total uranium output was 135 million pounds. That's an annual deficit of roughly 40 million pounds.
Of course, you know what happens when supply can't keep pace with demand--- uranium prices will begin to rise.
But that's only part of the story. Thanks to the end of a program called Megatons to Megawatts the supply deficit promises to get even worse.
Uranium Stocks to Benefit From Nuclear Resurgence (CCJ) (DNN)
Nuclear power is poised to make a comeback, and the spike in uranium demand it will bring over the next few years will send uranium stocks soaring.
While the Fukushima nuclear disaster in Japan in March 2011 stirred a lot of talk about abandoning nuclear power, nations have since come to realize their energy needs can't be met without nuclear being part of the equation.
The Japanese blowout scared the public so badly, in fact, that many governments vowed to severely cut back on nuclear power. Germany said it would quit using it altogether.
But then reality struck.
Major export economies in Europe and Asia have energy-intensive industries that can't just dump nuclear energy overnight.
The best proof that nuclear is not going away is right in Japan, which already has been forced to restart two reactors, and more will be restarted soon.
The Prime Minister of Japan called restarting the reactors a "matter of national survival," because the high cost of imported liquid natural gas was crippling the economy.
And nuclear energy has proven itself to be a safe alternative to the smog-belching coal plants in emerging countries like China and India.
Even oil-rich countries like Saudi Arabia are building new nuclear reactors now -- a clear sign nuclear energy is here to stay.
Simply put, the world not only needs low-cost nuclear power - it needs more, not less of it.
And uranium is the only fuel that can possibly give billions of new consumers in energy-starved countries like India and China the power they need.
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