By design or by luck, the brand new Global X Uranium ETF (NYSE:URA) hit the market at a supercharged time. The ETF’s inception date is listed as Nov. 4, and investors hardly seemed to notice it in Friday’s trading. Then, Monday morning after a dramatic spike in the uranium spot prices, shares in URA rocketed up 11 percent, before tapering off 3.2 percent today.
The world wants green energy. Political changes in Washington seem sympathetic to nuclear power, the Fed’s quantitative easing program appears poised to push up commodities (including uranium) quickly and, perhaps most importantly, miners can’t produce enough uranium to keep up with market demands. Timing, then, could not be better for the launch of a uranium ETF, and URA is the first pure play for the metal. Designed to track the Solactive Global Uranium Index, URA is invested primarily in uranium mining and support companies around the world.
The ETF itself has pointed the spotlight on some small, speculative uranium mining plays that the funds count among its holding. They include Denison Mines Corp. (AMEX:DNN) and Uranium Energy Corp. (AMEX:UEC), two companies that are yet to report profits.
According to Investors.com: “The uranium spot price has averaged $45.50 a pound this year, about 25% lower than the 2008 average price of $62. Salman Partners mining analysts forecast an average price of $78 a pound in 2011, $104 in 2012 and $95 in 2013.”
Disclosure: I currently own shares of Uranium Energy Corp.