Uranium prices continue to show strength in the early going of October. That is giving short-term traders and long-term investors an opportunity to capitalize on the metal. This is because the world continues to view it as an alternative energy source.
More public/private funding is occurring, combined with additional worldwide acceptance. As such, more of the metal’s mining projects will be able to continue or new ones can begin.
“Uranium is set to be a key commodity in the worldwide transition towards clean energy solutions,” Barchart noted. “Several countries are moving away from fossil fuels, and nuclear energy powered by [the metal] is one alternative to generate power.”
As Barchart noted, the metal’s prices broke out during a September month where equities typically pull back. Futures, in particular, gave bullish metal traders a September to remember, while the metal’s stocks also prospered as well.
“Uranium related stocks hit new highs of their own in late September, despite widespread weakness in broader markets, but in more recent sessions, these stocks have been pulling back from recent highs,” Barchart added, noting that a recent pullback can provide an area of value for investors to get in. “With price forecasts still bullish for the underlying commodity, the sudden pullback in uranium exploration and mining stocks could present an opportunity for investors to buy the dip.”
Uranium Mining Exposure in One ETF
Single-stock opportunities can be derived from the metal’s uptrend, but there’s an easier way — focusing on the metal’s miners; in particular, the Sprott Uranium Miners ETF (URNM ).
With its 0.83% expense ratio, URNM tracks the North Shore Global Uranium Mining Index. This index follows the performance of companies that devote at least 50% of their assets to the industry, which may include mining, exploration, development, and production of uranium, or holding physical uranium, owning royalties. It could also include engaging in other, nonmining activities that support the mining industry, which also adds additional diversification to the fund.
Furthermore, URNM offers exposure to various countries with companies involved in the metal’s mining. Canadian companies comprise over 50% of the fund, but the ETF also includes holdings in countries such as Hong Kong, the United Kingdom, Kazakhstan, and Australia.
“The Sprott Uranium Miners ETF URNM was up about 47% during the (third) quarter,” wrote Neena Mishra, ETF research director for Zacks Investment Research. “The demand for uranium has been rising thanks to renewed interest in alternative sources of energy, while supply has become constrained.”
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