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Uranium price at multi-year highs; bull market is just getting started

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(Kitco News) - According to some analysts, the uranium market is a freight train that is just leaving the station as growing demand in a relatively tight market sparks a surge in prices.

Uranium pricing is fairly opaque; however, uranium futures on Nymex show the price trading at $44.15 a pound, a nine-year high. Weekly spot prices show uranium trading at $39 a pound, its highest level since March 2015.

According to some analysts, Sprott Inc's new venture in the energy metal market is driving demand. In July, the precious metal company launched the Sprott Physical Uranium Trust (TSX: U.U US$, U.UN C$), which gives investors direct access to the physical metal.

Since mid-August, the Trust has bought 24 million pounds of uranium, representing about 14% of global reactor consumption.

The new demand in the marketplace has attracted new momentum players to the market, including retail investors from Reddit's WallStreetBets, a popular financial discussion forum.

In particular, investors are jumping into uranium miners, with Cameco Corp one of Wall Street Bet’s most discussed companies on Monday. Cameco (NYSE: CCJ) last traded at $24.44 an ounce, up nearly 83% since the start of the year.

In an interview with Kitco News, Warren Irwin, found of Rosseau Asset Management, said that he is not surprised that investors are starting to pay attention to the uranium market.

"The supply and demand outlook for uranium looked fantastic before Sprott came into the market, said Warren Irwin, found of Rosseau Asset Management. "The trust has come in and moved the inevitable rally forward a year or two."

Irwin is a long-term uranium bull has the market faces growing demand and a lack of supply due to a decade of dismal prices. He noted that it is difficult for new mine supply to come online with prices trading so low.

At the market's peak in 2008, uranium spot prices were trading at $136 a pound. Some analysts are looking for uranium to push as high as $60 a pound by the end of the year.

Irwin said that while it's good to see new momentum in uranium, he isn't paying much attention to what retail investors are saying on social media. He explained that the market's fundamentals support a long-term bull market.

He added that uranium demand will continue to grow as the global shift to green energy evolves.

"We don't have a green energy future without uranium," he said. "I think some investors are starting to realize that fact."

Sprott Inc. also expects the green energy transition to be a game-changer for the uranium market.

"We think uranium is entering a new bull market as the world looks for a mix of clean energy in the new green energy revolution," Peter Grosskopf, CEO of Sprott Inc, in an interview with Kitco News talking about the fund's new Trust. "If you want a low carbon grid, you can achieve it by spending an enormous amount of money and having a highly inefficient grid, which is inherently unstable, or you include nuclear as a core part of the power base. We think uranium has been underplayed for the last 15 years."  

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.