the nuclear energy argument and uranium prices

The nuclear energy argument is still there. In fact, it’s even better than it was two years ago when the uranium market started to crack.

At the time there were plans for the construction of 222 new reactors. Today there are plans for 316 and 60 of them are expected to be on line by 2014. Although I think the world is starting to realize a lot of those will replace old reactors, but not all of them.

Also, the recent update on Cameco’s (CCJ) Cigar Lake project wasn’t very good news either. As most of us expected, it’s a long way from recovering from the flood. The doubts still loom if it will ever be fixed.

We also learned a bit more about the Megatons to Megawatts uranium deal with Russia. As it sits right now, Russia will be halting shipments of uranium in 2013.

As you can see, the uranium story has actually improved a good bit. But that doesn’t matter much now. There is a much larger storm cloud hanging over the uranium spot market and uranium stocks: hedge funds.

By now most of us are familiar with deleveraging. After years of success and taking big bets, hundreds of hedge funds are on the verge of collapse. The markets have taken a turn for the worse and investors are calling for their money back. Hedge funds have to pay up. Record redemption rates are forcing them to sell anything off at any price.

For many funds that trade actively in large-cap stocks, raising cash for redemptions is not much of an issue. It’s a much different story for the funds that were buying physical uranium a few years ago. If they have to sell, they’ll have to do so at any price. Any added selling pressure in a weak and illiquid uranium market could have a big impact on uranium prices. It looks like it’s already started to happen.

In the past few weeks uranium prices have fallen another 14%. Each week the price of uranium drops another few dollars per pound indicating a very weak market. It’s not just a one-time drop either. The fall has been consistent. That means the funds could be unwinding. If they are, there’s a lot more down weeks to come for uranium prices.

full story at:-

http://seekingalpha.com/article/99310-miners-face-uncertain-future-as-uranium-deleveraging-continues

By 2013 DYL should have proven up a world class uranium resource and would expect it to be well on its way to achieving production.

The longer term fundamentals appear to have improved making DYL an outstanding buying opportunity at current prices for longer term holders.