For Investors, This Is a Once-in-a-Generation Moment
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| By Sean Brodrick |
“This is a once-in-a-generation moment for nuclear energy!”
That statement was made by Maria Korsnick, president and CEO of the Nuclear Energy Institute. She was speaking at the American Nuclear Society’s annual meeting.
“The future is within our grasp,” she added, pointing out that nations around the world are demanding climate solutions and energy security. “All of that points to one place: nuclear energy.”
I believe Korsnick is correct, but my primary perspective is as an investor.
Uranium stocks were beaten down for so long, but there is plenty of low-hanging, contrarian fruit just waiting for fast-moving investors to grab. It’s a once-in-a-generation moment, indeed!
Here are some facts:
- Nuclear power provides about 20% of America’s electricity. What’s more, in 2022, atomic power was responsible for 47% of America’s carbon-free electricity. That makes it the largest domestic source of clean energy.
- Nuclear power is more reliable than any other power source, with power plants running at full capacity more than 92% of the time.
- “More power!” Around the world, global electricity demand is surging — up a whopping 6% last year alone. The forecast is for global electricity demand to rise 2.7% per year. Solar and wind will only get you so far. And that means we either build nuclear, or we build more coal-powered plants.
- Russia’s invasion of Ukraine has also thrown a shadow over uranium. Russia accounts for 13% of the global supply of uranium and 40% of the global supply of enriched uranium, and now the civilized world doesn’t want to buy from Russia anymore. Neighboring Kazakhstan’s uranium supply (45% of the global total) is under Russian domination. For security reasons, the world needs alternate sources of uranium.
Buying Up Supply
In fact, 2022 saw European utilities buy more uranium than they loaded into reactors — the first time that happened in more than 10 years, according to World Nuclear News.
The Europeans are obviously worried about Russia choking off their uranium supply. So, they’re building up inventories.
And that’s why we are seeing volumes pick up in the uranium spot market. And that extra buying means prices are going up, too.
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The spot price of uranium pushed up to $55.75 on Monday. That’s a new 52-week high.
Now, most uranium is not sold in the spot market. Most of it is sold under long-term contracts, usually at prices higher than spot. And that means, for many miners, the price of uranium is finally getting back to the point where they can make a profit.
It also means North American miners that weren’t worth the cost of buying them are now walking around with their heads held high.
Lack of U.S. Mining
And that brings us to the next important thing. U.S. uranium production is bouncing off a multi-decade low.
Just take a look at the following chart:
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If you consider uranium important for both national security and combatting climate change, that is not a good chart at all.
And it turns out the government is very interested in nuclear power. Recently, the U.S. Senate Environment and Public Works Committee voted to approve a sweeping bill that would fast-track the deployment of a new fleet of advanced nuclear reactors.
This bill isn’t law yet, but it has bipartisan support. And if passed, it would direct the U.S. Nuclear Regulatory Commission to speed up approval of advanced nuclear reactors.
And the first new nuclear reactor in 30 years, Vogtle Unit 3 located in Georgia, reached a critical power generation stage. Industry watchers warn that unless the permitting process speeds up, new nuke power plants will be few and far between. So, this new bill aims to change that.
What’s more, last year, the U.S. Department of Energy's National Nuclear Security Administration took steps to encourage domestic production of uranium. It offered contracts to three companies to provide domestically produced uranium for a strategic uranium reserve.
This should help kick-start U.S. uranium mining!
And it’s not just the U.S. In fact, Canadian Prime Minister Justin Trudeau and U.S. President Joe Biden attended a dinner not long ago where they talked about the critical role of nuclear energy and the importance of nuclear collaboration between Canada and the U.S.
I’ve long been a proponent of the view, “When the government starts throwing money at something, grab a bucket.” Well, it’s certainly bucket time in select uranium stocks.
How You Can Play This
You can buy individual uranium miners. That’s what we’re doing in my premium Resource Trader publication. But you don’t even have to buy individual stocks. You can avoid single-stock risk with the Sprott Uranium Miners ETF (URNM).
It holds a basket of leading uranium miners and charges an expense ratio of 0.85%. It even has a dividend yield of 1.76%. And as you can see on its weekly chart, URNM is breaking out of a long downtrend:
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With that kind of breakout, my initial target on URNM is $50 a share.
Are there risks in mining uranium? Of course. In 2011, the Fukushima Nuclear Reactor in Japan melted down, putting the kibosh on new nuclear power plants in that country for over a decade. Only recently have the Japanese started to reopen some of the nuclear power plants that they closed down back then because they now desperately need the clean, cheap energy.
And the Russians seized control of the Zaporizhzhia nuclear power plant in southern Ukraine. If some war-related mishap badly damages that reactor, that could be terrible for uranium markets.
But with risk comes the chance for reward. As I said, uranium stocks are very cheap right now. The opportunity is right there. This could be YOUR once-in-a-generation moment.
That’s all for today. I’ll be back with more soon.
All the best,
Sean
P.S. The biggest government cash grab in history is coming. So, what should you do? The U.S. federal government is fundamentally bankrupt, and the only place it can get the money it desperately needs is from the American people. That’s why Dr. Martin Weiss is sounding the alarm on a new Fed program launching this July — just a few weeks from now. A powerful new program that gives unelected officials the ability to spy on and even seize your bank account. If you want to escape this massive new threat and others on the horizon, don’t miss Dr. Weiss’ Emergency Summit to protect your money from imminent government attacks.
