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Of all the commodities to ride the volatile global roller coaster in 2007, uranium had the wildest ride. Overall, it gained 28% for the year. But that seemingly simple statistic masks a much-more-complex story.

At one point in June, uranium had gained 84% on the year. But then a mass sell-off - including up to 200 tons auctioned off out of the inventory of the U.S. Department of Energy - drove prices from $138 a pound down to $75 a pound in just three months.

Even though the U.S. auction was said to flood an already glutted market for uranium, the price roared back to $93 a pound, a price move fueled by a continued demand. Investors can take that incident as a sign of things to come.

At a time when global energy demands are soaring - outstripping the long-term supply of such crucial commodities as crude oil - the long-term outlook for uranium is exceedingly bright. Nuclear power is slowly making a comeback as an electricity source of choice in the U.S. market, and will be a key to the ongoing emergence of such economies as China and India.

Market fundamentals point to demand-driven price increases for uranium. And history shows that when uranium prices move higher, uranium stocks almost always tag along for the ride.

The situation in uranium is reminiscent of the world’s skyrocketing demand for oil. In a classic supply-and-demand imbalance, eventually someone is going to pay the price. With uranium - as with oil - there plain and simple just isn’t enough to go around.

"We are at the beginning stages of a massive bidding war in uranium," said Sol Palha, a noted uranium investor and analyst.

Nuclear energy is rapidly gaining acceptance as a clean, reliable alternative to burning coal. In a bid to combat global warming and keep up with soaring demand for electricity, countries are rushing to build nuclear power plants. Currently, there are 440 nuclear reactors in operation that generate about 16% of the world’s electricity.

Another 25 are under construction, 38 are on order and 115 are proposed. Also, there are 284 research reactors and 220 nuclear-powered ships and submarines patrolling the oceans - key facts that nevertheless often slip by most industry analysts.

Refined uranium [known in the industry as U308] is what makes nuclear fuel. And the proliferation of new commercial nuclear power plants has the price of the radioactive metal soaring.

Now here’s the thing: All told, those reactors soak up about 77,000 tons of refined uranium every year. Yet, in 2006, only about 50,000 tons of uranium were mined. That has forced some countries to run reactors at only 50% to 60% capacity, while others - such as India - have actually been forced to periodically take reactors off line because they lack the fuel to keep running them. . reports seeking alpha ..