Commodity ETFs: Uranium ETF
In my search of commodity ETFs (exchange traded funds) I am finding that a straight uranium ETF in the United States is almost non-existent. There is one option, however, a nuclear ETF that launched in August, 2007 (ASE: NLR) by Market Vector. This exchange traded fund is quite exciting to some analysts.
The Market Vector nuclear exchange traded fund is based on the DAXglobal Nuclear Energy Index. This index is made up of 38 global companies, including one United States corporation. The companies are involved in uranium mining, storage, enrichment, nuclear plants, fuel transport, and nuclear energy equipment provisions.
With the environmental state of the world, we are opening our eyes to cleaner energy options, including nuclear energy. Nuclear got a bad rap a while ago with the China Syndrome and Chernobyl meltdown. But now the bad guy seems to be coal. China is building a new coal power plant every few weeks in order to supply their overabundance of people and industry with power. Coal power plants use uranium, and therefore uranium is in high demand in China, as well as in many other parts of the world.
There are uranium ETFs available in other world markets. Analysts predict that it won’t be long before the United States follows suit. There is just too much money to be made in uranium not to. Straight stocks in uranium mining are a hot ticket, but the price is quite high; too high for me, and likely too high for many investors. At around $90 per pound on average, uranium stocks must be purchased in increments of 25 pounds. Uranium exchange traded funds are needed and anticipated by smaller investors like myself.
Earlier in 2007 NYMEX offered uranium futures contracts to cash in on the huge demand for uranium. Unfortunately, like the stocks, these contracts were not an option for smaller individual investors. At that time uranium was the big boy’s playground.
Market Vector’s nuclear ETF will have to do for now. And this is not a bad fund to be had, either. Experts are predicting the fall of coal as a source of energy in the near future, which would boost the need for nuclear energy quickly. In November, 2007, Kansas was denied a coal plant on the grounds of environmental hazard. This is the first time in the history of the United States that a coal plant has been denied for this reason, but it is not likely to be the last. This denial sets an important precedence for future coal and other industrial plants that create greenhouse gasses and other pollutants.
Other clean energy sources, like solar power and more recent wind power are already on the market as commodity ETFs, and are doing fairly well. But the sun and wind aren’t quite able to meet all of our energy needs. Nuclear energy has that capability and America is fast becoming ready for cleaner energy. I think nuclear and uranium ETFs are the commodity ETFs to look for right now.
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