Tips for Investing in Uranium Futures

By Ted Rollins , last updated November 6, 2011

The uranium futures market takes place on the New York Mercantile Exchange, and the commodity is traded under the symbol UX. Uranium futures are deliverable every month of the year, and a single uranium futures contract represents 250 pounds of uranium compound. While the market for actually purchasing uranium is limited to those in the nuclear industry, the commodity is popular as a speculating tool among investors. In the following, you'll find out more about the uranium market.

The uranium market is extremely volatile, as its price moves are determined by a very small group of suppliers and those that demand uranium. The places that demand it are also those that tend to be political volatile, leading to geopolitical events that can cause huge uranium future price swings. Uranium's only use is in nuclear reactors as an electricity source, and the number of nuclear reactors in the world is growing but still limited, as fewer than 500 known reactors operate worldwide.

The process of creating uranium helps describe the volatility of the futures market. The uranium must first be mined and then milled into the now famous "yellowcake" that's caused so much political turmoil in recent years. That yellowcake then must go through an enrichment process and then can be fabricated into fuel that can power a reactor. While the uranium futures market has recently become regulated by the New York Mercantile Exchange, contracts between parties are still written up off the market and can vary in price greatly and in style of futures contract. The price of uranium in the last few years has spiked significantly, having gone from roughly $7 per pound to $137 per pound late in the 2000s, meaning that there's certainly money to be made in it if you know what you're doing, so make sure to invest wisely!

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