from the nightstalker!You can read the reports pretty much every...

from the nightstalker!

You can read the reports pretty much every week on TradeTech, on what has happened on the spot market over the previous week.

The first thing to realize is that the spot market is TINY. There may be one, or three, or no transactions on the spot market in any given week.

There is the occasional utility (power company) buying on spot, to top up their stockpiles, or if they're just running a bit short.

Most of the activity on the spot market, now, is by "financial institutions" - i.e. hedge funds who specialize in commodities and uranium in particular. And of course, most of these (?none) is not allowed to buy or hold actual REAL uranium, so they use derivatives, like futures. The other "institution" that has a lot to do with the spot market is the uranium ETF in the USA.

So MOST of what happens on the spot market (and it's not a lot anyway) is trading in "paper" uranium, not real uranium.
As you correctly point out, most of the real uranium is bought and sold at contract prices.

Unfortunately, the spot price has assumed a position of importance that it really doesn't warrant. It affects the sentiment towards the commodity. And it is all since the brakes were taken off and financial institutions were allowed in to start their derivatives trading in uranium.

Some utilities are using the spot market to top up their stockpiles at low prices, but it is limited by the fact that there are not many suppliers who are desperate enough to sell at spot. Paladin has sold a fair bit at spot over the last year or so, to top up their coffers, but are reducing that activity. So it's a bit of a Mexican standoff on the spot market at the moment - buyers vs sellers - with the hedge funds and ETF basically determining what the spot price is.

You can check the activity on the spot market here:

http://www.uranium.info/

Hope that all helps

Regards, NightStalker

"The trend is your friend till the bend at the end"

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