John Cash, a noted uranium analyst, recently published an interesting article on Godzillanewz.com entitled “Uranium Has Room to Run, But Expect Tremendous Volatility”.
As Cash explains, the recent market performance of the uranium sector has been nothing short of remarkable, with spot prices reaching levels not seen in over a decade. This surge follows a long period of depressed values, stemming in part from the sudden abandonment of nuclear energy sources by countries such as Germany and Japan.
Despite these promising trends, Cash cautions investors that the potential for volatility in the sector remains high. For one, the cyclical nature of the uranium business means that oversupply can cause a downward correction in prices without warning.
Furthermore, Cash argues there is a disconnect between the spot and physical markets, whereby certain players attempt to make money in the near-term from price discrepancies. Such behavior can inflame market volatility, making any investment in the sector risky.
The article goes on to provide investors with practical advice on how to manage the risk associated with a volatile sector. Cash suggests investors employ a “buy the dips” strategy to capitalize on short-term corrections, and wait for the fundamentals to drive prices back up.
Admittedly, investors interested in the uranium sector need to accept a certain amount of risk in exchange for the potential of large returns. With this in mind, Cash’s article provides an important roadmap for identifying and addressing market volatility in the sector.
Overall, Cash’s article serves as an important reminder that investors should always be wary of the risks posed by market volatility. Despite its promise, the uranium sector is not spared from this risk, something all investors should keep in mind.
