Why one should own nuclear related stocks. Especially the miners that provide the uranium.

My friend emailed me, "I've been reading some stuff about uranium prices today and I'm confused as to how people are now saying supply is outstripping demand. Check out this article regarding the Department of Energy's sale of uranium and low demand for it. http://www.uxc.com/ And also the "In the Market" comment on this website http://www.uranium.info/ Uranium prices could be heading father downward...speculators (ed: hedge funds) dumping huge amounts of uranium into the market. Everything I have read the past few years says demand will hugely outstrip supply for years to come...now consensus seems to be building that current supply is outstripping current demand???"

My response would be:
First, we are not speculating on the price of uranium. But investing our money in a growing industry. Remember that nuclear power has only been with us for 50yrs. Solar power has always been a dream to harness the sun, but it has never come to fruition. Nuclear is a practical solution to large energy demands and provides countries with a practical political solution in dealing with unstable energy regimes and more control over their own energy independence.

2)Natural gas and coal stocks are weak as well compared to the oil market. So the energy sector that uranium is related to is not doing well either.

3)What is not being factored in is all the new plant construction. Since they are all subject to change. But look at companies that build nuclear plants (GE, SGR, Areva) In addition, current plants are adding additional reactors. They haven't factored in the less public governents of China, India, and Russia which want to build up their industry in a BIG way!

4) As to the government selling, when a commodity goes up 1000% someone is going to sell.

That is what the government is doing. And is supplying temporary relief to the market. Notice the DEMAND! The uranium hexafluoride is going on the market, but not at a 20% discount,but at current market prices. People are willing to pay up for this commodity. To show how jumpy investors are, look at Uranium One which will be selling uranium at $100/lb

As I said before, long term hold. It's only a matter of time before people realize the significance of these factors.

CCJ is acting crappily for other reasons. But the one thing it should do if uranium prices go down, is up! Remember they sold production at 18/lb. Are well diversified. And now can buy these miners they missed when they were trading at pennies to the dollar, at a lower cost. They have very little debt. Ploughing their cash flow into their monster mine which will eventually be operational. So they can assume debt or issue more shares to purchase a Paladin or Uranium One.