Despite the tariff volatility, uranium has been a proverbial rock among the crashing waves. The metal has been exhibiting resilience amid renewed interest from investors backed by solid fundamentals.
“Uranium’s resilience has been particularly striking against the backdrop of extreme market volatility,” a Sprott Uranium Report noted. “As other asset classes faltered, uranium held its ground, supported by its structural supply-demand story, inelastic demand and insulation from tariff-related disruptions.”
As mentioned in the report, May saw a number of hedge funds covering their short positions as macroeconomic conditions could be forming in uranium’s favor. The recent push to increase America’s nuclear energy capacity could provide the perfect backdrop for bullish prices moving forward. “Bullish” indicates an expectation that prices are rising and will continue to rise in the future.
Using the World Uranium Index as a gauge for prices, the overall index is down 20%, But in the past month, it’s starting to rebound. The price of uranium is also up 8% within the past month. That potentially signals an uptrend if that price momentum maintains the current 30-day trajectory. The World Uranium Index tracks the price performance of uranium-related securities, reflecting market trends in the global uranium sector.
Mining for Uranium Options
The push for using alternative energy sources like nuclear power is getting federal backing. That should provide a future catalyst for prices. As mentioned, President Donald Trump signed an executive order to bolster the nuclear industry in the U.S., which will support domestic uranium mining operations. That should provide tremendous growth opportunities in uranium mining ETFs such as the Sprott Uranium Miners ETF (URNM).
Like other metals, uranium offers investors a chance to diversify their portfolios with commodities uncorrelated to equities or bonds. URNM tracks the North Shore Global Uranium Mining Index that follows the performance of companies involved in the uranium mining industry. The index includes companies engaged in the mining, exploration, development, and production of uranium. It also includes those that hold physical uranium or uranium royalties. The index also invests in global firms that mine, develop, and produce uranium. It also invests in firms that hold the physical metal, or that derive royalties from it.
Added Growth Component
Diving into the fund’s holdings, about 50% of URNM is in small- and micro-cap holdings, while the rest is spread among mid- and large-cap companies. This gives URNM an added growth component. That would allow it to capture future upside in small-cap companies while adding the stability of mid- and large-cap companies. The largest holding is Cameco Corp, which is one of the largest uranium mining/production companies with a market cap of over $20 billion.
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An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM and SGDJ
Physical Bullion Funds: PHYS, PSLV, CEF, and SPPP.
