This hated product could generate huge profits in 2018

The forecast showed an additional 20 million pounds of uranium production for 2018… with no buyers. As you can imagine, the price of uranium plummeted.

It reached its lowest price in October 2016 at $18.75 per pound. That hit a 13-year low.

The downward trend started in 2011. The uranium price peaked at $72.50 per pound in January 2011. It has fallen steadily since then, to a total of 74%.

This is a shocking result for a power source that was embraced by many as a “green” salvage from hydrocarbons just a few years ago. Nuclear power creates safe, carbon-free energy.

The problem is that it can cause big disasters. That’s what we found out when the Fukushima disaster hit Japan.

The demise of nuclear power

An earthquake and tsunami damaged the Fukushima Daiichi nuclear power plant in March 2011. The earthquake damaged a reactor. The tsunami then inundated the area, destroying vital backup generators.

Without backup power, cooling water would not be able to enter the plant. That caused a runaway reaction, a meltdown: the biggest fear for all nuclear power plant operators.

A series of human errors compounded the damage. The operator, Tokyo Electric Power Company, was not prepared for the situation.

The result wiped out the nuclear power industry.

Fukushima turned the world against nuclear power. Germany shut down all of its reactors in response. The demand for uranium fell and the price of uranium collapsed.

This eventually led major uranium producer Cameco Corp. to cut production in early November 2017. The company’s profits fell and fell. It struggled to maintain profitability. It finally announced that it would suspend operations at its flagship McArthur River mine for 10 months.

Cameco’s decision reduced the surplus to just £5m…and then the unthinkable happened: the world’s largest uranium producer did the same. Kazakhstan’s state-owned uranium miner, Kazatomprom, cut production by 20% over the next three years.

The result could be a massive bull market for uranium.

The price of uranium and a windfall for uranium producers

Shares of Uranium Participation Corp., which holds physical uranium for investment, soared in response. The shares are up 30% in just a month and a half.

Shares of uranium companies also rose. However, this is only the beginning. Analysts covering the uranium sector believe these cuts could add $30 per pound to the uranium price. That’s more than double the current spot price.

For uranium producers, this will be a windfall. Companies like Cameco and Ur-Energy Inc. will see their revenue and profits increase.

This seems to be great news for the uranium sector. It’s a story we’ll continue to see in 2018.