Trust's Accumulation of Uranium Highlights Price Attractiveness

Global acceptance of nuclear power as an alternate energy source is continuing to grow, providing bullish momentum for the price of uranium. The recent accumulation of uranium by the Sprott Physical Uranium Trust (U.U) could mean prices are still attractive, even at the current levels.

Varying sentiments on nuclear power from country to country isn’t stifling the metal’s rally. It is maintaining its bullish momentum even if its use as a viable energy source still brings polarizing views.

“Despite the challenges faced by nuclear power in the US and Europe, such as France’s power outages and the wavering future of projects like NuScale Power’s small modular reactor, the price of uranium has leaped from $30 per pound in 2021 to over $80 today,” reported Yahoo Finance. The report also noted that nuclear energy output did decrease the previous year. But new projects and China’s aggressive nuclear development plans are encouraging signs for prices moving forward.

As mentioned, the Sprott Trust has added more to its stockpile. Per the report, “Sprott has bought another million pounds of uranium since October, with a total near 63 million currently held by trust,” which could be a sign that even at the current $80 price range, the metal could still present a value option given its potential for explosive growth. This, in effect, could also present an opportunity for miners to benefit.

“We need to essentially double our primary production over the next 20-odd years in order to meet expected demand,” said John Ciampaglia, CEO of Sprott Asset Management.

2 Uranium Mining ETF Options

Investors looking for a backdoor play on the metal’s miners have a couple of options from Sprott. One is the Sprott Uranium Miners ETF (URNM), which tracks the North Shore Global Uranium Mining Index and invests in global firms that mine, develop, and produce the metal as well as those firms that hold the physical metal or royalties from it. The fund has a more large-cap focus with exposure to large players in the metal’s mining space, like Cameco.

For even higher growth potential, investors can opt for small-cap companies or for a more all-inclusive option, the Sprott Junior Uranium Miners ETF (URNJ). The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index, which tracks mid-, small- and micro-cap companies in the metal’s mining business.

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