URNM is the largest pure play uranium miner etf in the world. It has been on a good run for about 10 months, but is still lagging the underlying commodity itself. I expect the equities to outperform physical uranium in a similar fashion to what happened during 2021. Spot uranium is approximately $100/lb at the moment, I fully expect it to reach all time highs ($140) and beyond in 2024. Anyone that produces uranium or will be soon (and there aren't that many to choose from) will be huge winners.
The uranium bull thesis is that there is a running supply deficit which has finally used up all of the excess uranium supply left in the wake of Fukushima and Japan shutting down it's reactors. They plan to restart almost all of them. China is furiously building nuclear power plants and world demand is set to increase dramatically in coming years/decades. Utilities don't really pay much attention to uranium prices as they have been able to get it for cheap for years and it is a tiny fraction of their operating costs. Uranium demand is almost perfectly price inelastic; utilities would pay 10x current prices without blinking as it would be far more costly to shut down a plant because you ran out of fuel.
What we are expecting is that there will eventually be a rush for everyone to secure supplies, and the prices people will be willing to pay could get silly.
While demand is growing, the real issues are on the supply side. The spiking uranium price indicates a shortage and there will not be enough meaningful new supply available from mining for 3 years at a minimum (NexGen's Arrow Deposit). Currently, major producers Cameco and Kazatomprom produce more than half of world supply, and are reporting difficulties in meeting production quotas due to many factors.
Two very important events that are imminent and could get this party really going:
1. Feb 1st, Kazatomprom plans to announce it's production goals for 2024/2025, which they have already warned the market will be revised lower from previous targets. This could be anywhere from 2-10% of ENTIRE GLOBAL SUPPLY that was expected and will not be available. I cannot stress how important this is. The market will react violently.
2. Feb 9th, Cameco will have it's 2023 earnings call. They've already reported production shortfalls and are rumored to be badly overbooked. This means that not only is some expected supply not going to be available, they are buying uranium themselves to meet contract obligations. THE WESTERN WORLD'S LARGEST URANIUM PRODUCER IS BUYING URANIUM BECAUSE THEY DON'T HAVE ANY TO SELL. Absolutely bonkers.
Another likely catalyst is HR1042, the bill to ban russian uranium. It's already passed the house and Ted Cruz is the only holdout in the Senate. Not counting on this one, but it doesn't matter.
In conclusion: there is a supply crunch of one of the most important strategic minerals on earth and it will not be fixed for many years. If I am correct, uranium mining stocks will outperform every other asset class for 2024 and beyond. Best odds to make life changing returns you might ever get in a lifetime. I'm all in, will you be?
Thanks for reading my novel, I am very passionate about this subject. Please feel free to ask any questions!
Cheers
The uranium bull thesis is that there is a running supply deficit which has finally used up all of the excess uranium supply left in the wake of Fukushima and Japan shutting down it's reactors. They plan to restart almost all of them. China is furiously building nuclear power plants and world demand is set to increase dramatically in coming years/decades. Utilities don't really pay much attention to uranium prices as they have been able to get it for cheap for years and it is a tiny fraction of their operating costs. Uranium demand is almost perfectly price inelastic; utilities would pay 10x current prices without blinking as it would be far more costly to shut down a plant because you ran out of fuel.
What we are expecting is that there will eventually be a rush for everyone to secure supplies, and the prices people will be willing to pay could get silly.
While demand is growing, the real issues are on the supply side. The spiking uranium price indicates a shortage and there will not be enough meaningful new supply available from mining for 3 years at a minimum (NexGen's Arrow Deposit). Currently, major producers Cameco and Kazatomprom produce more than half of world supply, and are reporting difficulties in meeting production quotas due to many factors.
Two very important events that are imminent and could get this party really going:
1. Feb 1st, Kazatomprom plans to announce it's production goals for 2024/2025, which they have already warned the market will be revised lower from previous targets. This could be anywhere from 2-10% of ENTIRE GLOBAL SUPPLY that was expected and will not be available. I cannot stress how important this is. The market will react violently.
2. Feb 9th, Cameco will have it's 2023 earnings call. They've already reported production shortfalls and are rumored to be badly overbooked. This means that not only is some expected supply not going to be available, they are buying uranium themselves to meet contract obligations. THE WESTERN WORLD'S LARGEST URANIUM PRODUCER IS BUYING URANIUM BECAUSE THEY DON'T HAVE ANY TO SELL. Absolutely bonkers.
Another likely catalyst is HR1042, the bill to ban russian uranium. It's already passed the house and Ted Cruz is the only holdout in the Senate. Not counting on this one, but it doesn't matter.
In conclusion: there is a supply crunch of one of the most important strategic minerals on earth and it will not be fixed for many years. If I am correct, uranium mining stocks will outperform every other asset class for 2024 and beyond. Best odds to make life changing returns you might ever get in a lifetime. I'm all in, will you be?
Thanks for reading my novel, I am very passionate about this subject. Please feel free to ask any questions!
Cheers
Comment:
Kazatomprom announced significant reductions in production targets for 2024 today, as per the first event I had listed. Uranium sector up huge. I expect Cameco's earnings call next week to be just as significant. First domino down, looking good!
Comment:
Entire sector tanked yesterday on Cameco earnings call, but nothing has changed about the uranium bull thesis. On the contrary, they reported a production shortfall of 3+ million lbs from their original goals. It would be foolish to think the supply deficit will be solved anytime soon.
Expect volatility if you buy uranium stocks, it's not for the faint of heart. I am holding long and strong and am buying this dip aggressively.
Expect volatility if you buy uranium stocks, it's not for the faint of heart. I am holding long and strong and am buying this dip aggressively.