The Global X Uranium ETF (NYSEArca: URA), the original ETF dedicated to uranium equities, jumped more than 24% in the second quarter as uranium extended its run as one of this year’s steadier commodities.
URA targets the Solactive Global Uranium & Nuclear Components Total Return Index. The ETF’s components include companies engaged “in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries,” according to Global X.
“A key benchmark for commodities performance has lost about 20% halfway through the year, with the energy sector leading the decline as the pandemic ravaged demand for petroleum. Uranium, though, stands out as a resilient performer that’s likely to continue to do well in the second half of 2020,” reports Myra Saefong for Barron’s.
The uranium market has been supported by significant production cuts, reductions in producer inventories and an increase in demand. Investors may be looking at the battered uranium miner space as a value play, given the improved strength in the sector.
“Still, the biggest gainer among major commodities may come as a surprise as it is also related to the energy sector. Uranium, which is used as fuel for nuclear reactors, has seen futures prices climb about 30% this year,” according to Barron’s.
While alternative energy contains grabbing market share from fossil fuels, nuclear energy isn’t falling by the wayside and that’s a plus for URA.
“Demand for nuclear power hasn’t dropped dramatically due to COVID-19 as most reactors operate as baseload power suppliers and are usually the last to be taken off the grid,” says Jonathan Hinze, president of nuclear-fuel consultancy UxC,” in an interview with Barron’s.
As the world’s thirst for clean, 24×7, emissions-free sources of alternative energy continue to grow, nuclear power is emerging as a potential means to meet this demand. According to the World Nuclear Association’s most recent Nuclear Fuel Report there are 444 operating nuclear reactors, with 54 under construction, 111 planned, and 349 proposed.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.