Tuesday, June 26, 2007

Uranium Demand Showing Price Weakness

James Finch and Julie Ickes at Stockinterview.com do a bang up job looking at the uranium market:

Is the Blended Fuel Value
Pointing to a Uranium Price Decline?
In an eye-opening interview with Joe McCourt on May 21st, we learned about his company’s proprietary Blended Fuel Value (BFV). McCourt told us, “The BFV calculates the weighted average price of uranium held by all publicly traded funds as a function of the fund share price. The upward and downward price movement of the BFV reflects North American and European investors’ sentiments on the current spot price of physical uranium.”

Until this past April, the BFV has traded well above the weekly spot uranium price indicators, published by either TradeTech or Ux Consulting. For the week, the BFV has traded a whopping $19/pound BELOW the price indicators.

According to Joe McCourt, who writes in this week’s FreshFUEL, “The value of the BFV should be about $6 higher than spot U3O8 to account for the cost of underwriting and distributing the shares of the fund. Currently, the BFV is about triple that amount lower than the spot price.”

McCourt refers to his BFV as “a measure of plebian wisdom.” He concluded, “Currently, that wisdom is indicating that the legacy prices have moved too high, too quickly.”