Optimists, naturally, claim that uranium is on its way back as one of the world’s preferred energy sources.

Pessimists point to the crashing price of oil and coal as evidence of a global energy glut, which will hamper the return of uranium.

Realists reckon that the price must continue rising before last week’s gain of $US5.75 a pound in the short-term price can be regarded as meaningful, though they also understand that a 16% rise in the price of any commodity in the space of a few days is pretty significant.

If that sounds like a spot of hedging from Dryblower then you’re on the way to a greater understanding of the uranium market, which looks a bit like the Russia of Winston Churchill’s description; “a riddle, wrapped in a mystery, inside an enigma”

The starting point in trying to understand the uranium market is that the metal itself is much more than just another commodity because of its status as an energy source, and its use in the ultimate weapon of mass destruction: nuclear warheads.

That unique standing means that any company wanting to mine uranium ceases to be governed by the normal rules of mining and starts to be governed by the much stricter rules that control all forms of radioactive material.

Or, as one uranium company executive once said, “if you start producing uranium you’ve left the mining industry and joined the nuclear power industry”

Tighter rules regarding mining and processing, and severe government scrutiny when it comes to transport and marketing, mean that uranium is a difficult business for big companies and an almost impossible business for small companies.

Layered on top of the problems associated with production, processing, selling and delivering uranium is a market split into three layers of short, medium and long-term sales, each with a different price structure and each lacking any transparency.

All this adds up to a business which is difficult to enter, hard for an outsider to follow, and impossible to value.

Because uranium is really not part of the pure mining industry but an arm of the nuclear industry it’s easy to understand why most investors prefer simpler metals where there is a chance that a discovery can be brought into production without incurring multiple layers of complexity.

So, the critical questions from last week’s spike in the uranium price are: what caused it? Can it be sustained? And, why wasn’t there a bigger reaction in the share prices of uranium-exposed companies?

Answering the price-sustainability question requires a much better understanding of what drove last week’s 16% jump in the short-term spot price.

Positive factors mentioned include: the planned re-start of a Japanese nuclear power station next year; concern about increased sanctions on Russia which is a major source of high-grade processed uranium as required by power stations; continued expansion of the Chinese nuclear power industry; and wider recognition that nuclear power is a relatively clean source of electricity.

The biggest negative is that the price of power is falling, and falling rapidly, thanks to a glut of oil, gas and coal in the market, coupled with the steady rise of renewable energy from wind and solar.

In terms of cost per kilowatt over the full life-cycle of a power station nuclear is an expensive option.

On the Australian stock market there were a number of handy share price rises, including Paladin’s 27% increase from 33c to 42c, Bannerman Resources’ 33% rise to 7.2c, and Berkeley Resources’ 23% rise to 29c.

But, those upward moves need to be seen against no movement by junior explorers Havilah Resources and Manhattan Corporation, and a small fall by Greenland Minerals And Energy.

The complexity of the uranium business, the lack of transparency around the price of stuff, and the falling price of alternative energy sources means that investors will need more than one week’s excitement to entice them back into industry.

In particular, they will need to see the short-term price flow into longer-term prices before there is a new wholesale uplift for the sector.

At the very least the long-term price must rise to at least $60 per pound, and perhaps as high as $70/lb before banks or equity investors will consider funding a uranium project.

Last week’s uranium price rise was a welcome move but it will take a lot more than one week’s trading to convince everyone that uranium is back on the agenda.