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Saturday, 06/28/2008 4:23:46 AM

Saturday, June 28, 2008 4:23:46 AM

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Look Out... $500 Uranium Is On the Way
By Keith Kohl
Tuesday, April 10th, 2007

Baltimore, MD--Uranium's meteoric rise has only just begun. Today the other yellow metal not only breached the $100 per pound mark--it smashed it! The spot price for uranium soared to $113 per pound. But is it time to break out the champagne?

Let's take a quick look at just how uranium broke wide open before we delve into its bright future.

In 1985, uranium demand was being met by supply. The Cold War was winding down, and so uranium production was scaled back. Eight years later, the U.S. signed a deal with Russia to fuel U.S. nuclear reactors using old Soviet warheads. This decreased the demand for uranium production and caused prices to plunge.

When prices fell, mining companies halted nearly all uranium production. No sense in mining uranium if there's no profit, right? So drilling was halted and exploration stopped. Uranium bottomed out at $7.10 per pound on December 25, 2000.

But demand for the stuff has skyrocketed over the past seven years, and because miners practically stopped production, supply hasn't been able to catch up yet. You see, the problem with mining uranium is that it can take up to a decade to bring a new mine into production.

Then another blow to production occurred when Cameco's Cigar Lake mine flooded. The uranium price shot through the roof.

Don't expect a quick fix at Cigar Lake, either. This massive uranium mine was supposed to start production again next year, but Cameco has said it will take at least another two years before production can begin.

Let's look at what this raging uranium bull has done and exactly where it's going.

Uranium prices in 2007 started at $71 per pound and increased to $113 per pound today. That means the spot price has jumped 59% in just four months!

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