Chen reported in mid-October, 2021 that uranium sector-related exchange traded funds climbed as bullish day traders jumped on the market for nuclear fuel. Over the past month, the North Shore Global Uranium Mining ETF (NYSE: URNM) increased 15.3% and Global X Uranium ETF (URA) advanced 17.3%. URA rose 121.3% so far this year while URA gained 86.8%.
After the Fukushima disaster [Fact Check: This was not a disaster, but an incident ...no one died, no one was irradiated] that led Japan and Germany to close nuclear reactors [unwisely]; investors are now beginning to give more attention to the nuclear market with spot uranium prices surging to $47 per pound from $32 at the start of August, the Wall Street Journal reports. However, prices remain below their 2007 peak of $137, according to price-tracker UxC LLC. [This is based on the perception that nuclear power plant construction (mostly SMRs) is increasing and will eventually, over this decade, supplant and replace the current rush into unstable wind and solar energy projects with nuclear power (more) and soon replace coal and natural gas with hydrogen via the current gas-line infrastructure (more).]
Market observers attribute the rally to a run-up in uranium prices driven by individual traders who turned to a new trust that provides a cheap and easy way access the nuclear fuel market. The Canadian-run Sprott Asset Management LP Trust has twice raised new cash from shareholders and hoarded uranium since the summer to maintain its exposure as the increased attention from investors forced the trust to bolster holdings.
Sprott’s purchases have helped diminish the global uranium glut that slowly accumulated after the 2011 Fukushima disaster in Japan. Traders also pointed out that these sudden buying spurts from the trust have contributed to wild price swings with little or no fundamental support from basic supply or demand dynamics. “These periods of intense volatility are going to become the norm,” said Hyder Ramatala, vice president for trading at UG USA, a unit of French nuclear fuel company Orano SA, told the WSJ.
Uranium stocks also rallied this week after the world’s biggest producer, the Kazakh state-backed miner Kazatomprom, listed its own uranium fund in partnership with Kazakhstan’s central bank and Genchi Global Ltd.
“We’ve never seen this before in the uranium market,” Amir Adnani, chief executive of Uranium Energy, told the WSJ of the Kazakh and Sprott fundraisings. “Long-term, this has to be bullish.”
[For additional information, see (here) and (here).]
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