Outlook 2023
'This time is different' for uranium, which could reach $80 in 2023 - Lobo Tiggre
(Kitco News) - The uranium spot price, which reached beyond $60 per lb in April, rose over the year by 14 percent. The yellow metal's limited supply and increasing demand will cause its price to rise even higher, said Lobo Tiggre, Editor at The Independent Speculator.
"This time is different… my forecast is that we'll probably see uranium head higher over the next year, easily," he said. "$60 is very easy as a floor. $70, I think, is doable, and maybe up to $80."
He pointed to supply remaining limited with "voluntary supply constraints," meaning that miners are hesitant to dump uranium on the market, which would bring down prices and hurt profits.
"I think it's a legitimate concern to say there have been voluntary supply constraints," he said. "You know, Cameco has issued very vague guidance about how much production they're going to be seeing from McArthur River, their number two [uranium] project… their care and maintenance costs were so high, and it makes sense for them to bring it back online [with higher prices], but not to flood the market and hurt themselves."
He added that demand for nuclear energy is ramping up.
"[Fundamentals] have never looked better, in my career, for uranium," he said. "The about-face in Europe, the number of plants the BRICS countries are building, and the new advanced nuclear [plants] built in Canada, China, and the U.S. are pushing in that direction."
Tiggre spoke with David Lin, Anchor and Producer at Kitco News.
National Uranium Stockpile
In addition to other demand factors, Tiggre mentioned that the U.S. government is setting up a strategic uranium reserve for national security reasons. The Department of Energy intends to purchase 1 million pounds of domestically produced U3O8, a uranium compound.
"Several [producers] have announced new sales contracts with the United States government," he explained. "The prices are [around] $60… This is real data about incentive prices."
Tiggre defines the "incentive price" as the price at which a producer can cover his costs of production.
"The incentive price is basically everything, kitchen sink in there too, that you need to be able to make money," he said. "That means that uranium is unlike almost any other metal or commodity you can think of. It is still below the cost that's required to incentivize its supply to the marketplace."
The current spot price of uranium is around $41.
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A precious metals ten-bagger?
In addition to uranium, Tiggre said that he is "very bullish" on gold and silver.
"I think it's fair enough to say that we saw stagflation in 2022," he said. "But gold didn't go through the roof… what's been missing here is inflation expectations."
He suggested that as inflation causes "pain" for consumers, inflation expectations will adjust upwards, benefitting precious metals.
To find out Tiggre's view of how Fed policy will affect gold, watch the video above.
Follow David Lin on Twitter: @davidlin_TV
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