Uranium prices have pushed past the $100 per pound mark, making it one of the best performing commodities once again. Analysts are suspecting that uranium is en route to historical highs. This gives investors more reason to consider exposure to its expansive growth prospects.
Basic economic principles suggest that with higher demand, there needs to be increased supply to balance the market. Unfortunately, supply constraints in tandem with increased demand is helping to push uranium to new historical highs.
Given the latest price push, more companies are restarting uranium mining projects. As reported by Investing.com, Denison Mines (DNN) is looking to restart the McClean Lake mine in Canada, and other mining companies could follow suit given the profitability potential.
“As demand for nuclear fuel keeps growing, analysts are scrambling to set price predictions, speculating whether it can surpass 2007 highs,” the Investing.com report confirmed. Again, supply remains a prime concern. Even if more miners start new projects or restart previous ones, it will take time in order for supply to catch demand.
“Even though the price is broken out to $100, there’s a lot of opportunity here because you need to basically double production globally between now and 2040,” said John Ciampaglia, CEO of Sprott Asset Management.
Uranium Opportunities in Mining
If global receptiveness for nuclear power use continues to climb alongside prices, then miners will also be in demand in order to alleviate supply constraints. In that case, uranium miners offer an alternate method of exposure to rising prices. Sprott has two ETFs that cater to the stability of large-cap companies or the growth slant offered by small-caps.
For large-cap exposure, there’s the +Sprott Uranium Miners ETF+ (URNM ) that tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal as well as those firms that hold the physical metal or royalties from it.nd’s largest holding, comprising just below 15% of the fund as of January 16.
For even higher growth potential, investors can opt for small-cap companies in the uranium mining space or for a more all-inclusive option in the convenience of an ETF wrapper, the Sprott Junior Uranium Miners ETF (URNJ ). The fund seeks to provide investment results that, correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index, which tracks mid-, small- and micro-cap companies in the metal’s mining business.
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