Uranium Apes Strong!: Why Uranium May Have Been The Best Long Term WallStreetBets Trade
After a decade in the wilderness, uranium is important once again. This could be good news for the climate and better news for uranium investors.
Let's dive in:
We have wanted to return to the topic of uranium (one of our oldest 2021 themes) for a while and, helpfully, it also overlaps nicely with some of the topics raised by Putin's ongoing invasion of and war in Ukraine.
In the summer and autumn of 2021 we wrote a few times that the WallStreetBets/Reddit crowd had a lot of highly speculative and outright dangerous ideas but one of their most passionately held arguments actually made a lot of sense:
Uranium (the raw metal) was dirt cheap because of low demand and yet that could be on the cusp of changing very quickly.
(our old work can be found here and here on our blog)
In general, the thinking of the Reddit hivemind was pretty simple and aligned with a lot of our own analysis:
If Western governments and regulators and industry are not investing in enough new fossil fuel capacity and renewables can't keep up then eventually ice cold reality will bite developed country energy markets.
And when this happened then the natural reaction would be to try and invest in new energy generation and the obvious low carbon alternative (though with other downsides) would be nuclear power.
Exposing yourself to this theme was also surprisingly easy with a diverse array of options. You could buy uranium miners such as Cameco, nuclear energy companies such as or you could purchase a conveniently just-launched Sprott ETF of physical uranium.
So, pick your preferred path and pay close attention and wait for the Western energy approach to be found out for the sham it always was.
And guess what?
That is precisely what has occurred.
It didn't overly matter why our foolish, heavy-on-signaling, low-on-substance energy strategy would be found out, all that mattered was that it happened.
In the end, it was the unexpected collapse of wind in the North Sea in August and September that began to send European energy prices soaring.
We likely wouldn't have had that as a high probability likelihood but that is the beauty of the situation - the "why" didn't matter. All that mattered was that nuclear energy was one of the few the natural alternatives from the corner we (and it most certainly is a collective "we") have painted ourselves into and implicitly highlighted the attractiveness of a low carbon AND highly reliable source of steady energy.
(The other ready alternative, especially over the short term, was coal.....sigh.)
However, like clockwork, once Western Europe struggled to keep the lights on (or industry humming) then reality began to sink in and Uranium reacted - and reacted strongly!
From a spot price beneath $30/lb ($33+/lb long term price) at the end of August 2021 the yellow "cake" powder rose to over $45/lb by the end of November.
(the spot price refers to today's market price but most contracts are based on longer term - and steady - supply for utilities or state energy companies)
And then the Ukraine war happened.
This was both unexpected and hugely additive to the overall thesis. Uranium's price has risen another 30%+ since the invasion and is finally gaining traction not just in financial markets but also political policy circles.
Nuclear energy as a viable form of power could finally be returning to the levels it existed at when building nuclear reactors was a realistic policy proposition.
See the long term price chart here:
The war in Ukraine has clearly reinforced the fact that the West and particularly Europe was overly reliant on a frankly terrible mixture for power generation:
Not only was our energy strategy unbalanced with an overweight on sources that were structurally intermittent
But it was also heavily reliant on a cheap but strategically dangerous authoritarian third party.
Unwise in the extreme.
Well, we are now learning our lesson in spades and hopefully won't forget it any time soon. Please forgive us if we don't hold our breath......
While all the focus is - rightly to a large extent - on the problems in Europe and the broader issues with discouraging fossil fuel production (including natural gas) in Western markets, there is another angle to this story.
And one that gets even less press than the nuclear industry writ large.
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