Uranium ETF: Demand Grows Unabated

Feb.18.11 | About: Global X (URA)

The uranium ETF (NYSEARCA:URA) has been a major beneficiary of the rapidly growing interest in nuclear energy.

Rising oil prices and concerns about climate change have made the issue of finding sources for clean energy more pressing than ever. Although the first thing that may come to mind when you hear the word “nuclear” is “World War III,” it’s making a comeback and uranium is in demand.

  • According to the Council on Foreign Relations, there are nearly 5 million tons of recoverable naturally occurring uranium in the world.
  • Australia has 25% of the world’s known supply; Canada has 10%; and the United States has 7%.
  • At the current rate of usage, there’s enough uranium to last about 70 years.
  • Demand is expected to grow by 33% over the next decade, while nuclear reactor capacity is forecast to grow 27%.
  • There are nearly 1,000 reactors worldwide right now. Fifty are under construction and another 130 are being planned.

It seems as though whether you agree with the implementation of nuclear power or not, uranium is going through a period of steadily increasing demand. From the looks of it, it doesn’t seem like it’s going to abate anytime soon.

In the last three months, URA has gained nearly 30%. Its country allocation corresponds pretty well to the world’s uranium leaders: Australia is 22.6%, Canada accounts for another 22% and the United States comes in with a 37.6% weighting.