The uranium price rally has been mystifying the commodities market given the push and pull of geopolitical as well as economic forces. As of now, the commodity could continue to see upside heading into 2024. That’s especially so if more widespread acceptance of nuclear power takes place.
Demand from China will continue to help push such prices higher, especially after the country’s recent partnership with uranium producer Cameco. The company signed a supply agreement with China as the country looks to build out its nuclear power infrastructure in an effort to meet its aggressive goal to reduce emissions.
“China is counting on nuclear energy to play a major role in its commitment to achieve net-zero emissions. CNNC is a large and growing part of that effort,” said Cameco president and CEO Tim Gitzel. “Cameco is very pleased to continue increasing our contribution toward the attainment of China’s important climate goals.”
Cameco has been experiencing firsthand the upside of this year’s uranium rally. The company’s stock is up 100% this year. And given the growth potential of nuclear power, more upside could be ahead.
Germany Shutdowns Not Stifling Uranium Rally
However, not all countries are completely on board with the prospect of nuclear power. Germany, for example, is experiencing nuclear powerplant shutdowns. But that alone hasn’t stifled uranium’s incredible rally. And that’s confounding market experts in certain instances.
“The metal at the heart of zero-carbon reactors and zero-civilization warheads has so far this year beat every member of the Bloomberg Commodity Index, except orange juice, rising 68%,” wrote Liam Denning in Bloomberg. “That jars with the sinking prospects of a US nuclear renaissance, just dealt another blow by the collapse of the leading small modular reactor project that was being developed by NuScale Power Corp. Along with the setbacks nuclear power has suffered in Europe, notably Germany’s mass shutdown, it seems puzzling that uranium prices have jumped from about $30 a pound in the summer of 2021 to more than $80 today, the highest since 2008.”
Investors who are on board with uranium’s growth potential should consider the +Sprott Uranium Miners ETF+ (URNM ). The fund offers a convenient way to get uranium exposure. And that’s not just in the metal itself, but through miners as a backdoor play. For uranium mining exposure, consider URNM. The ETF tracks the North Shore Global Uranium Mining Index and invests in global firms that mine, develop, and produce uranium as well as those firms that hold physical uranium or uranium royalties. Selected firms devote at least 50% of assets to business operations tied to uranium.
Additionally, various holdings in different countries further support the diversification of the fund. The majority of the fund is allocated into Canada, but it includes other countries, such as Kazakhstan, Australia, and the United States.
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