After reaching over $100 per pound to start 2024, uranium prices have tempered since. But more tailwinds could keep pushing prices higher. This includes certain countries building out their nuclear energy infrastructure.
“The spot price of uranium oxide has already exceeded US$106 per pound, returning to a level last seen in 2007 and prior to the tsunami-prompted accident at Japan’s Fukushima Daiichi nuclear power plant which curtailed much of the optimism nuclear had enjoyed at that time and when many countries, including in Europe, announced ambitious plans to build new nuclear power plants,” noted Nuclear Engineering International (NEI).
Additionally, myriad other factors are pushing the growth potential of nuclear energy.
“These include the evident and growing interest in nuclear energy, the increase in investment fund activity, and geopolitical fears over production and access,” NEI added.
Capture Growth With Uranium Miners
The aforementioned factors adding to nuclear energy demand over the coming years should also spur demand for miners. Production of the metal is set to expand exponentially in the next six years, fueled by demand from China.
“Global uranium production is projected to reach over 75,000 tonnes by 2030, up from around 65,000 tonnes last year,” The Economist noted. “Uranium prices have multiplied five-fold since 2016, heavily driven by China’s ballooning demand (though they have cooled a bit recently).”
On that note, Sprott has a pair of funds worth considering in the Sprott Uranium Miners ETF (URNM) and the Sprott Junior Uranium Miners ETF (URNJ).
URNM tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal. It also invests in firms that hold the physical metal, or royalties from it. The fund is an ideal pathway for investors to get exposure to rising prices of the element. It also provides a portfolio diversification tool that allows for uranium exposure without actually investing in the commodity itself.
For discerning investors who want even greater growth potential, small-cap companies can offer amplified moves when markets trend toward the upside. Investors could create a small-cap uranium mining portfolio of individual stocks, but an easier way is via URNJ. The fund seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index. That index tracks mid-, small-, and micro-cap companies in the metal’s mining business.
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