Geopolitical factors are playing out for uranium prices as Russia restricts exports to the United States. The move countervails a similar move by the U.S. to restrict imports of uranium from Russia, which could be bullish for prices.
Uranium prices moved higher on the news, but markets are still assessing the overall impact this could have moving forward. This is because Russia constitutes a sizable portion of uranium’s global production, making it the sixth-largest producer, according to Reuters.
Increased Demand
As the U.S. seeks alternative energy sources, nuclear energy has surfaced as a viable source in recent years, thereby increasing the demand for uranium. Phasing out Russia from its list of suppliers will mean the U.S. would seek to fill the void from other sources.
“Russia accounted for 27% of the enriched uranium supplied to U.S. commercial nuclear reactors last year,” Reuters noted. “Imports to the U.S. from Russia through July this year stood at 313,050 kilograms (690,160 lb), down 30% from last year.”
Uranium’s spot price reached as high as $90 in May before coming down to under $80 in November. Still, with the demand for uranium still strong and more countries exploring nuclear power as a clean energy source, it could be a simple market correction ahead of higher prices to come.
“$100 per pound is very achievable intermediately on the spot market … it’s inelastic demand,” said John Ciampaglia, CEO of Sprott Asset Management, which manages a large physical uranium fund.
Investors looking to add a growth component to their portfolio may want to consider uranium. More specifically, they can attain exposure via miners in the +Sprott Junior Uranium Miners ETF+ (URNJ ) or the Sprott Uranium Miners ETF (URNM ). Both funds offer pathways to get exposure to rising uranium prices, while also providing portfolio diversification without actually having to invest in the commodity itself.
Small-Cap or Diversified Exposure to Uranium
Small-cap companies can offer amplified moves when markets trend toward the upside. For investors who don’t mind the added risk of small cap equities, URNJ is ideal. The fund seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index. That index tracks mid-, small-, and micro-cap companies in the metal’s mining business.
The more risk-averse who want simple, diversified uranium mining exposure can opt for URNM. The fund tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal. It also invests in firms that hold the physical metal, or royalties from it.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Past performance is no guarantee of future results. One cannot invest directly in an index. For the latest standardized performance and important risk disclosures regarding Sprott investment products, including each fund’s prospectus, which should be read carefully before investing, please review each product’s webpage by clicking on the corresponding ticker:
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
Physical Bullion: PHYS, PSLV, CEF and SPPP
