Uranium’s Moment May Have Come

Date: 8/25/2022
Author: Mr. X

Negotiations continue in Iran for a potential renewal of the nuclear accord. President Donald Trump pulled the United States out of the agreement in one of the defining foreign policy moves of his presidency. Ever since, the striped pants squad at the State Department and the diplomats in Europe have been trying to put Humpty Dumpty back together. The situation isn’t being helped by the fact that Iran and the United States are currently in a low-level shooting war, with American forces hitting Iranian-backed groups in Syria just a few days ago.

However, the peaceful use of nuclear energy is becoming far more important as the Continent struggles to disconnect from Russia’s natural gas and the West shifts to supposedly more environmentally friendly power. Norway is already stepping up to replace Russia when it comes to fossil fuels, but that won’t be nearly enough. Solar and wind power sound nice, but they just can’t deliver the goods. A key problem that many people don’t talk about is battery storage, which complicates all matter of “clean energy” programs. Power isn’t much good if there’s no way to store it until needed, or if it’s so expensive that it is not worth the trouble.

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The solution is nuclear. Pop culture and bad-faith political arguments have given nuclear energy a bad break – though when there’s a war breaking out right over Europe’s biggest nuclear power plant, it’s understandable that people get a little nervous. It was also just over a decade ago when a typhoon hit Japan and caused the Fukushima nuclear disaster, which led to at least one immediate death, probably many more in the years to come, and over 150,000 people being evacuated.

It was thus a very big deal when Japan signaled its willingness to start building more nuclear reactors. Prime Minister Fumio Kishida cited both the war in Ukraine and the need for cleaner energy to justify a study into more nuclear power plants. This was the signal for a major bull run in uranium.

Energy Fuels Inc (UUUU), a major uranium miner, was up 20.46% during the trading day. It kept the gains going in after-hours.

Uranium Energy Corp (UEC), one of the positions in the retiring Sigma Trader portfolio, also gained heavily. It was up over 16% during the trading day and it too kept going in after-hours.

Sprott Physical Uranium Trust Fund (SRUUF) is another position in Sigma Trader. It has been underwater for some time. That may be changing. It gained 12.8% yesterday and it was increasing as the day ended.

Other uranium and nuclear stocks that gained on the day included:

Denison Mines (DNN), up 16.36%

Uranium Royalty Corp (UROY), up 13.93% (including a 3.6% gain after-hours)

NexGen Energy (NXE), up 14.91%

Ur-Energy (URG), up 18.35%

Cameco (CCJ), up 14.74%

There’s also the world’s largest producer and seller of uranium, Kazatomprom, which trades as Joint Stock Company National GDR (0ZQ) on the Frankfurt Stock Exchange. It was up 8.44%.

Uranium ETFs include

Sprott Uranium Miners ETF (URNM), up 14.43%

The Global X Uranium ETF (URA), up 11.66%

VanEck Uranium + Nuclear Energy ETF (NLR), up 2.13%

There is one major obstacle to uranium truly taking off. That is Germany. Germany has been phasing out nuclear energy since Fukushima. Obviously, some people are urging that this policy be revisited in light of the current energy crisis. The government is not responding. The best it has done is say that maybe it would leave a plant open in Bavaria. On Sunday, Economy Minister Robert Habeck said keeping the country’s current nuclear plants operational is the “wrong decision given how little we would save.”

France is more willing to use nuclear power, but its current plants are struggling given the current heatwave and poor maintenance. The government has been forced to extend waivers just to keep them operational right now.

Europe is where investors need to pay the most attention. If Japan has cracked, that will intensify the pressure on Germany. The German government is currently telling its people that it can get through the winter with sacrifices, but voters in an ostensibly advanced country might grow weary of being told they need to tolerate cold showers and no heat because their government thinks its icky to use a clean energy source.

Political stability on the Continent is overrated, especially with the current situation in Italy threatening to shake up the whole scene. If we start seeing rumbles in the EU, this uranium bull market could just be getting started.

Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing.

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