Buy a Half Position in URA
There has been a growing number of market-moving headlines for uranium in the last few days, prompting us to give the energy metal a closer look.
It all started last week when Kazakhstan state-owned Kazatomprom, the world’s largest uranium miner, raised its production target 10% for 2024 based on increased global energy security worries and overall rising demand for nuclear fuel.
According to a major Wall Street institution, this represents the first supply restriction ease for uranium since 2017, which the market apparently sees as an improvement in uranium’s fundamental backdrop.
News has also surfaced that Canadian uranium producer Cameco (CCJ) is restarting operations at its McArthur River mine (the world’s largest high-grade operation), which closed in 2018. Cameco’s management told The Wall Street Journal that it plans to operate the mine at a “lower-than-full-capacity rate,” adding that the company is “still in supply discipline mode.”
More recently, Japan just announced it will restart idled nuclear plants, which represents a major policy reversal for the country following the infamous Fukushima nuclear disaster of 2011. Japan reportedly wants to reduce its reliance on coal and natural gas imports in response to soaring energy costs.
All told, factors including energy security concerns, government-sponsored green energy initiatives and rising uranium prices (prompting miners to seek more capital) have combined to make the uranium stocks more attractive than they’ve been in a while. Given the relatively attractive risk/reward scenario for the miners, I’m recommending that we get some exposure to our favorite uranium-tracking ETF.
What to Do Now
Participants can purchase a conservative position in the Global X Uranium ETF (URA) using a level slightly under 19.50 as the initial stop-loss on a closing basis. BUY A HALF