Why uranium energy, energy fuels and uranium energy stocks continue to decline

What happened

Uranium mining company shares Uranium energy (CUE -8.49% ) fell 9.9% as of 2:10 p.m. ET on Friday. Uranium miners Energy fuels (UUUU -8.15% ) and Ur-Energy (URG -8.45% ) also fell, down 9.3% and 8.5%, respectively.

It’s not hard to see why.

Image source: Getty Images.

So what

Since reestablishing a recent price spike of $ 48 a pound a week ago, the value of yellowcake uranium has steadily declined, falling below $ 47 and heading towards $ 46. (Uranium futures are currently valued at $ 46.35, according to data from Trading Economics.)

Discouraging for investors, the market price of uranium continued to decline despite mining Uranium royalty yesterday announcing a major sale of uranium to China General Nuclear Power Group at prices significantly above market – $ 47.71 per pound. Apparently, investors don’t expect this price to hold.

Now what

You can’t blame them for their pessimism either. Since Sprott Physical Uranium Trust Fund sparked a uranium rally in September, when he formed a fund to buy and hold physical metal, uranium price spikes were followed by repeated price declines in a series of ‘highs’ lower and lower.

On the positive side, the nadir of each decline in recent months has also been higher than the previous low. But if you look at where prices have ended up, while they’re still swinging pretty wildly, they seem to be heading towards a median price of around $ 46 a pound. By the way, this is very close to the current level of uranium prices, which may mean that the dramatic rises and falls in the price of uranium stocks will also stabilize once the price of the metal does. they extract will have found its happy medium.

On the other hand, if $ 46 is the magic number of what uranium will end up costing, that won’t necessarily be good news for uranium stock investors, who still need uranium to sell for around $ 60 a pound to make their businesses profitable.

Come to think of it, this could just be another good reason to sell uranium stocks today.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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