Hedge-fund managers, commodities fetishists, and dirty-bomb fanboys, take note: at 6 PM tomorrow, the New York Mercantile Exchange is set to offer, for the first time ever, a market for uranium futures. Forget diversification, what your portfolio needs is fission! From UPI:
Uranium futures products traded on and off the exchange will be introduced on the CME Globex and NYMEX ClearPort platforms, ready for trade Monday. Utilities [now] buy fuel for their plants in contracts that guarantee supply but not a fixed price.... The NYMEX/UXC project is intended to change that, said Jeff Combs, president of Ux Consulting. He said it will add transparency to the global uranium contract market and "development of a forward price curve."Transparency (or at least translucency) is needed, you see, because uranium is one of the most white-hot commodities out there, currently trading at $113 a pound, or 10 times the 1990s average. Go Team Capitalism!But before you fetch Fat Man and Little Boy out of storage, there are some unfortunate externalities to deal with:
Uranium data that market consultant TradeTech provided to StockInterview.com [which 'specializes in detailed uranium market news'] show spot transactions are at the lowest year-to-date level in a decade, dropping 65 percent in April.Hmm, so setting aside the possibility of "real sentiment" (obvi), Trader Monthly readers are betting that uranium will keep on exploding? I don't know, this might just be too much volatility for me.
Plus, Finch notes, there's a $28 spread between long-term and spot prices. And industry insiders tell him they're looking for "real sentiment" on prices, not the NYMEX price.
And one big factor remains: The uranium sector isn't at a point to link the NYMEX futures contract to the physical material. This highlights the difference between trading a material used to make both electricity and bombs and, say, corn or soybeans, since a federal agency — the U.S. Nuclear Regulatory Commission — has to license a facility merely to store uranium.
"One thing everybody agrees is there will be volatility," Finch said.
When's the NYMEX finally going to cover the whole periodic table? Call me a wimp, but I'm a t-bill and argon man, myself.