Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Uranium Stocks -- Ignore unavailable to you. Want to Upgrade?

To: smh who wrote (3776)	11/4/2006 11:14:02 PM
From: smh	Respond to of 30198

November 3, 2006 New Debate about Uranium Price Rigging By James Finch (AXcess News) Miami - This past February, we asked if the current uranium bull market was 'real' in an article originally published on StockInterview. We wrote about "former Westinghouse Chairman Robert Kirby's litigious international outcry and prolonged battle over secretive and illegal price manipulation by a global uranium cartel." In the 1970s, Westinghouse attempted to control the global market for building nuclear reactors and offered low-priced uranium as part of its incentive to get sales from utility companies. It nearly destroyed Westinghouse. According to a special report in the Pittsburgh Post-Gazette, Kirby's "suspicions heightened when, in late 1976, he received copies of documents suggesting Gulf and 28 other suppliers had conspired to form a cartel to keep Westinghouse out of the uranium business." News reports of the era suggested a number of uranium-heavy countries held an initial meeting in Paris in February 1972 to establish a uranium-producer's alliance, in essence a de facto uranium cartel. Hidden quotas were established by representatives from Canada, France, Australia, South Africa and Rio Tinto Zinc." Namibia and Niger were also included in the alliance, as was Gulf Oil, at least according to Robert Kirby of Westinghouse. Now that uranium price has crossed the $60/pound threshold, speculation is again being fueled over uranium price manipulation. FNArena editor Rudi Filapek-Vandyck wrote in his weekly column, "The first rumours have started to spread about uranium producers rigging the price of their key commodity." The Australian-based financial reporter wrote, "Cameco management has now expressed the intention the company will seek to sell more uranium than it actually produces. Of course, this extra supply will be purchased at spot price. And here's probably where part of the market rumours find their origin." The editor asked, "Is it in Cameco's interest that the price of uranium climbs further?" He complained uranium is a small market. TradeTech Chief executive Gene Clark, whose consultancy firm helps establish the weekly spot uranium price, told us, "As for the number of participants in the spot uranium market in a given month, if you wanted to, you could put them all in a Starbucks." Greater transparency in the spot uranium price might have a settling effect on speculative fever, especially among many of the junior uranium companies. Charles Peterson, a law partner of DC-based Pillsbury Winthrop Shaw Pittman, argued for more transparency in the spot price, pointing in the direction of the commodity futures market where other metals are freely traded. Scotiabank's Patricia Mohr warned against it. In a sense, many of the junior mining exploration issues trading on Canada's TSX Venture exchange collectively behave as a proxy for the spot uranium. It is something which has not been ignored by the actual uranium producers. Gene Clark wrote in an email, "I do believe Cameco is getting nervous about all the 'juniors' coming into play. If too many of them actually start producing, that could have a dampening effect on prices." By contrast, Paladin Resource CEO John Borshoff recently told an Australian newspaper, "A lot of juniors are saying they are going to do this, that and the other, but they haven't got the expertise." Borshoff believes many are just "mining the stock market," not for uranium. Where does Cameco stand in all this? "We look to purchase uranium in the spot market when we are confident that we can re-sell this material at a profit," said the company in Wednesday's earnings conference. Statements like that are certain to fuel further speculation of price manipulation.