With uranium facing headwinds last week, some investors think the bull market might be petering out. However, John Huhn, founder and publisher of Uranium Insider, thinks otherwise.
“From a retail investor perspective, it’s easy to look at weekly charts of some of the uranium stocks and be like, ‘Oh my gosh, we’re up so much in the past three years, this rally has got to be close to over,’” Huhn said to Investing News, “and then you talk to somebody like John (Ciampaglia) at Sprott, and he’s telling you, ‘Yeah, the big money can’t even position yet because the market’s not large enough — and they will when it (is).”
Russia’s Impact
The ripples of Russia’s invasion of Ukraine have been felt everywhere, but they are particularly striking in the uranium space. Russia accounts for 43% of enrichment worldwide. Huhn noted, “Enrichment and conversion are seeing very large renewed demand from western utilities, and it’s looking unlikely that Russian conversion and enrichment is going to be sought after from western utilities any time soon.”
The war is impacting energy costs all over the world and centering the urgency of clean, emission-free power sources to make up energy shortfalls in Europe following sanctions against Russia.
Sometimes, It Is Easy Being Green
The fundamentals for uranium investing remain incredibly healthy. The need for clean energy has never been more dire. Solar and wind power are both promising, but neither is ready to meet the energy demands of society.
Nuclear power plants produce maximum power for more than 93% of the time during the year., which is about 1.5–2 times more reliable than natural gas, and 2.5–3.5 times more reliable than its clean emission cousins wind and solar. One tiny, gummy bear-sized uranium fuel pellet can create as much energy as one ton of coal, 149 gallons of oil, or 17,000 cubic feet of natural gas.
With nuclear energy being essential for the future, investors can get exposure to uranium mining through the Sprott Uranium Miners ETF (URNM) and to physical uranium through the Sprott Physical Uranium Trust (U.U).
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