The Uranium Bull Market that got underway in the early part of this decade and saw the prices of spot uranium rise almost twenty-fold now seems to have hit a roadblock, even as the prices have dropped a steep 30%. This has removed underlying support for many uranium mining companies, especially juniors which are still prospecting for uranium and have no production to show. With the large number of mining projects underway and governments willing to sell from their stockpile - is the great uranium bull market finally over?

Even as the price of uranium was racing to $130+ range, a mild and contained nuclear accident in Japan seemed to give a reason to pause. The news was however seen as a positive in that the accident did not prove disastrous. This is typical bullish behavior. However, mass psychology shifts in a moment and without warning. The government of US declared its intent to sell uranium from its stockpile, and this began the downward shift in sentiment as the signal from the government was taken as an indication that at least the short-term needs of the market would be met. As soon as prices began their downslide, buyers of the yellow cake withheld their purchases to see how low the prices might go. Long term contracts were not being inked, and speculators were quickly dumping their holdings to lock in their profits.

The question in the mind of long term investors in uranium is - will the price of uranium rise again? The question that ideally should be on the mind of investors is - what is the long term sustainable price of uranium, and whether the mining firms they are invested in be able to discover and bring to market additional uranium at significant profits at that price?

Once a mining firm comes to production, its valuation will change based on either the price of the underlying metal or based on new discoveries. Junior mining firms that are close to production tend to have the most upside, followed by firms that are in production but have made significant new discoveries. Thus, without an updraft in uranium prices, at least one engine for growth in valuation is shutdown.

It is not entirely clear whether uranium prices have reached their sustainable price level yet, or is another upleg still left in this bull market. While there is more short-term uranium available to the market, it is not nearly enough for the rising demand of this fuel. Moreover, with many more reactors beginning to come online, the long term demand of this metal is also on the rise. Compensating for this is the rapid increase in uranium prospecting companies, and a smaller rise in actual uranium producing companies.

It is highly likely that uranium prices catch a bid and make a move to another high before settling into a sustainable price range. Investors however, would be better served by not relying on this engine of growth - but to instead focus on individual companies with ownership of land in the most promising regions. Use investment newsletters to help guide you in this difficult market, and use their experience to guide your way to profits.