This Yellow Dust Could Be A Bright Opportunity

This Yellow Dust Could Be A Bright Opportunity
Theodora Lee Joseph, CFA

2 months ago2 mins

Uranium prices have been on a hot streak. Now, they're not back to the $73-per-pound level they saw before the 2011 Fukushima disaster, but there’s reason to think they might soon be.

This yellow dust is what fuels almost all nuclear tech. And this price surge is happening for a simple reason: more folks want uranium, but there's less of it around. Governments are thinking about building new nuclear plants to reduce their reliance on fossil fuels and secure their energy independence – particularly after Russia's invasion of Ukraine. Plus, nuclear power is considered a clean energy source, which is a big deal right now, and explains why the World Nuclear Association recently upped its forecasts for nuclear power.

The problem is uranium supplies are tight: uranium mining tapered off over a decade ago because people got spooked after Fukushima. It meant there were fewer new mining projects and less of the stuff pulled from the ground overall. A coup in Niger, a major uranium producer, and mining production challenges in Canada have also squeezed supply.

As a result, uranium is one of the top-performing commodities this year, despite a slowdown in Chinese consumption, and it could retain that rank for some time. After all, there isn’t a quick supply fix here: uranium projects take a long time to start so the market will probably be tight for some time.

That kind of scarcity could be good for your portfolio. To gain exposure to uranium, you can invest in the commodity itself or in uranium miner stocks. The biggest listed producers are Kazatomprom in Kazakhstan and Cameco in Canada. But, a word of caution here: when you’re investing in miners, rather than the commodity itself, you take on the company’s operational and financial risks. To invest in uranium itself, consider the Sprott Physical Uranium Trust.



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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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