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How UK investors can play the element
Thursday 21 Oct 2021 Author: Tom Sieber

There appears to be no let-up in the volatility in uranium prices and associated investments as the global energy crisis rumbles on.

In the wake of the disaster at the Fukushima nuclear plant in Japan in 2011 there has been a steady reduction in demand for uranium as countries turned away from nuclear power on safety concerns.

However, this could now be reversing as countries look to keep the lights on amid surging oil and gas prices and a planned shift away from fossil fuels.

The decline in uranium prices in the wake of Fukushima led many producers to cut output and shelve development plans, impacting supply.

The relative inelasticity of supply has seen the uranium market heat up rapidly in the past – between 2005 and 2007, for example, prices jumped from $20 per pound to a record $136 per pound.

Prices have moderated somewhat recently but are still within striking distance of the nine-year high of $50 per pound attained in September.

Speculative interest from traders is playing a part, with a newly listed vehicle in Canada run by Sprott Asset Management buying up uranium in material quantities in recent months.

UK investors can play uranium prices through Yellow Cake (YCA:AIM), although the shares are already up more than 50% in the last six months and 13% in the last month.

The company invests directly in physical uranium rather than taking on the risks of exploring for and processing the element itself.

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