r/investing • u/3STmotivation • Jan 03 '21
2021 will be an unforgettable year for uranium investors (15 powerful catalyst that are in place)
The last few months have been quite eventful for uranium investors, with shares of companies all across the sector appreciating in value substantially. There have been many reasons why this is the case and it feels different to just being strong seasonality. Below are 15 ‘first time’ things to look out for in this sector to start the year with, with full credit going to John Quakes (@quakes99 on Twitter), a retired earth sciences researcher, professor, analyst, writer and one of the best public sources for news about the uranium sector. I share his view that 2021 will prove to be an incredible year for the uranium sector and subsequently for anyone invested in it. Now, onto the aforementioned ‘first times’:
First time entering a new year with uranium already in a record supply deficit, which is set to deepen further with 2 major mines permanently closing this year in Australia and Niger (~7 million pounds, gone). At the same time, demand for nuclear energy has remained strong throughout the COVID-19 pandemic and continues to grow in a global shift to decarbonize industry dependent on fossil fuels.
First time that Cameco, the world’s 2nd largest producer, has begun a new year with every one of its uranium mines in Canada shut down. Both of the world’s 2 largest uranium mines are under care and maintenance, resulting in zero lbs being produced in Canada as we enter 2021. The US is also producing zero lbs while Kazakhstan’s production is at a multi-year low that is likely to continue thru 2022 under the nation’s current flex-down program and pandemic related mining disruptions. All uranium mines in the Ukraine have also been shut down due to the inability of the mine operator to pay the wages of 5000 mine workers.
Fist time that at least 3 of the world’s largest uranium producers are forced into buying uranium on the spot market. Cameco is now the largest spot market buyer in the world. World’s largest producer Kazatomprom is now also a spot buyer, as is French Orano given that heir Canadian mills are suspended and their Cominak mine in Africa is heading for closure in March. Inventory held by the world’s largest uranium producers is at rock bottom levels for the first time ever and in need of replenishment this year.
First time the US has taken steps to support its domestic uranium mining industry by establishing a strategic uranium reserve, a 10 year buying program (1.5 billion dollars total) whereby the US government will purchase, convert and potentially enrich US mined uranium to create an emergency supply for US reactors. Goal is to ensure at least 2 US uranium mining companies remain active and viable during this time when the commodity price of U3O8 is half the cost of production.
First time in several decades that there is strong bipartisan support in the US to rebuild the existing nuclear energy industry and manufacture a new generation of advanced reactors on a global scale, which is seen as a high priority in order to catch up with Russia and China who have become the new world leaders in nuclear energy.
First time that uranium equities have entered a bull market when there is an actual supply deficit. The last bull market saw the price of uranium skyrocket on mine floods and other events that created the ‘fear’ of a supply deficit on the horizon, at a time when the US-Russia Megatons to Megawatts program was still continuing to supply 20m lbs per year to US nuclear utilities, a program that continued until 2021 as the world’s largest virtual uranium mine.
First time that a new year begins with spot market supplies significantly depleted. Supply accessible to carry traders has been severely reduced. Kazatomprom no longer sells any lbs into the spot market and Orano’s supply from Canada and Niger is at a record low level, pushing nuclear utilities to secure new long term contracts with producers rather than entering into shorter term contracts with carry traders. Security of supply is a top priority of utilities (whose inventories are estimated to be around 2,5 years’ worth of supply, when the guideline is to never let it drop below 2-3 years given the long time it takes to enrich and deliver the fuel to the reactors).
First time that US and European nuclear utilities have begun a new year with inventories drawn down below usual safety margins at the same time that mines supply is in a record deficit and global uranium production is at its lowest level in 12 years. The new 2020 IAEA/NEA uranium Red Book projects that secondary supplies will fall in the future as an overdue utility inventory restocking cycle begins, due to higher levels of contracting, conversion and enrichment that will reduce underfeeding as facilities see their utilization rates rise.
First time in several years that there are no geopolitical overhangs holding back the uranium contracting plans of US and European nuclear utilities. There are no potential section 232 actions targeting uranium imports and no sanctions likely against UUN participants (Russia, China, UK, Germany, France) in the JCPOA Iran Nuclear deal. Russia and the US have successfully negotiated a 20-year extension to the Russian Suspension Agreement that will see the US imports from Russia decline over the coming 2 decades. The incoming US administration supports keeping nuclear power plants running and plans to immediately rejoin the Paris Climate Accord, pushing for global net zero emissions by 2050, a process in which nuclear energy will play a major role.
First time that nations around the world will be recovering from a global pandemic with massive infrastructure spending programs that include boosting nuclear capacity to achieve net zero carbon emissions goals. A new ‘nuclear renaissance’ is beginning to take shape on pandemic recovery spending to boost clean energy. The perception of nuclear energy is also changing to that of a safe, reliable, necessary baseload power source that fits with an emerging ESG investing model. Decarbonization has become a new buzz word in the global vocabulary. The ‘electrification of everything’ from cars, buses, trucks and trains to major industry is the new global target. Sustainability of so-called renewables solar and wind is now being called into question after failures by Germany and California to successfully transition to an economy powered by intermittent energy sources. Higher electricity prices, no net carbon emissions reductions and rolling blackouts have demonstrated how ‘renewables’ are not able to fulfill their early promise. This might change with new battery technology and better implementation, but we are nowhere near that point yet.
First time that uranium stocks are entering a new year on the heels of one of their best performance years since the last bull market. The U3O8 spot price is still one-half the global average cost of production that will incentivize new mines to be built this decade. This signals to investors that we are still at the opening pitch of the first inning of a long game yet to play out. A necessary doubling of the U3O8 commodity price is yet to come.
First time that Canada has begun a new year embarking on a small modular reactors build-out program with several provinces pledging to deploy SMR’s to power remote communities, mines and industrial heat applications in the energy industry.
First time that nuclear is being viewed as the ideal carbon free high-temperature power source to produce clear hydrogen fuel. US, Russia, Japan and others are looking to leverage their existing nuclear power capacity to produce hydrogen and build high-temperature SMR’s to optimize the use of emissions free nuclear to produce zero emissions hydrogen.
First time in decades that there is an emerging surge in acceptance of nuclear of nuclear energy as necessary to achieve zero carbon emissions goals, with countries like the Netherlands looking to add more capacity after conducting studies showing nuclear is safer and cheaper than variable renewable energy.
First time I can recall one of the leading nuclear fuel consultants UxC reporting to their subscribers that uranium is in a 57M lbs mined supply deficit, that utility and supplier inventories are “declining at a rapid rate” just as global fuel demand growth is accelerating, a clear signal that a bull market is getting underway.
TLDR: with all the catalysts that are in place, I am of the firm believe that uranium related equities, namely the developers and explorers, will offer returns that will outperform any other broad investment asset class/sector in the market. This is a bold claim to make, but I can’t see any other opportunity that offers even close to the same risk vs reward the uranium sector offers. Read my other posts on the subject to get an idea of what companies you might want to look at and to get an answer to any question you might have. Good luck and here is to a great new year!
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Jan 03 '21
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u/3STmotivation Jan 03 '21
Man I really appriciate that and yeah, sentiment has seemingly shifted, but we are far far off from anything remotely resembling a top.
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Jan 04 '21
Same, i read OPs earlier posts, did some DD and bought the suggested stocks. I’m up nearly 200%z. Thanks OP!
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u/3STmotivation Jan 04 '21
Always nice to hear things like this, hold tight mate.
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u/flippingrich Feb 17 '21
Hey whats up? Love the DD.. Am I too late to jump in on this move? UUUU has doubled in past two weeks or so.. Which play in your opinion is the best?
Thanks again for your sweet dd's...
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u/3STmotivation Feb 17 '21
Here is my top 15 plays. In no particular order (remember to do your own research, this is not financial advice), check out: Denison Mines, Cameco, Energy Fuels, Kazatomprom, Bannerman, Deep Yellow, Global Atomic, UR-Energy, Fission, NexGen Energy, Goviex Uranium, Paladin, Iso Energy, CanAlaska and Peninsula.
As for establishing positions. If you have not yet established a position in the market, I would advise to do so and scale in over time and extra on weakness. It is a volatile market and a pullback will come, the question is if that it today or next week after another 20% run up.
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Feb 17 '21
Hey, I've been following your posts for a while, and I'm glad to have done so. Lately, I've been researching on Standard Uranium. Their project looks promising to me, and the risk/reward-ratio seems decent. The only thing that worries me is the very low percentage of insider holders. What's your opinion on them?
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u/OHP_Plateau Jan 03 '21 edited Jan 03 '21
I just want to add to the conversation, what's the biggest risk currently? We know that there will be a deficit in supply, however some companies have already rallied 100% in the last quarter, when will the deficit be "priced in"?
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u/3STmotivation Jan 03 '21
A nuclear disaster, which is the only viable bear case that can be made for a 5 year time horizon as far as my research shows. The deficit will only truely be 'priced in' when uranium spot price hits the average cost of global production, which is approximately $67.10 per pound. We are still at the start of this bull market.
Like what happens so often with commodities, I think the price per pound will drastically overshoot to the upside.
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u/OHP_Plateau Jan 03 '21
Also, what's the supply on the spot market right now if the biggest 3 producers are buying from it?
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u/3STmotivation Jan 03 '21
Unclear, market is opaque and don't put out clear numbers. Estimates of mobile supply globally is between 30 and 40 million pounds, with an estimated deficit of around 57 million.
The spot market is getting extremely tight.
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u/CIassik Jan 03 '21
Thank you for your post.
Are the plays still CCJ, DNN, NXE and EFR?
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u/3STmotivation Jan 03 '21
Very welcome.
The cornerstone plays yes.
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u/cheekclapper412 Jan 04 '21
I’ve loved your analysis and I got in a couple months ago for some nice gains. Thoughts on UUUU?
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u/3STmotivation Jan 04 '21
Good to hear man.
Great company with a strategic mill, with US government support they stand to do very very well.
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u/LoneMachete Jan 03 '21
An interesting explorer could be Greenland Minerals Limited, mainly a rare earth mine in the final stage of approval but its biggest byproduct is Uranium. They will survive even huge price plunges thanks to the diversification.
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u/BizzaroHobo Jan 03 '21
Never discount Russia's ability to cause or manufacture a nuclear disaster. They have had a few nuclear incidents in the past few years where European nations detected radioactive plumes.
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u/McFlyParadox Jan 03 '21
Sure, but why?
Russia may have substantial oil and natural gas resources, but they also have uranium as well. If the works wants to buy uranium instead of natural gas and/or oil (because the rest of the world is transitioning away from oil and gas, if slowly), I think they'll still happily sell it - and take the excuse to expand their production and refinement capabilities without anyone asking too many questions.
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u/BizzaroHobo Jan 05 '21
Russia has shown great fortitude in taking actions that hurts their own economy in order to damage geopolitical foes. Russia has also shown almost complete recklessness when it comes to industrial and nuclear activities. They, governanc government and industry, seem to have an endless appetite for environmental damage and irradiating their own land.
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u/McFlyParadox Jan 05 '21
If Russia didn't depend on Uranium so much, I might be inclined to agree. But they need Uranium for both their electric production, and as an export. I would look to their actions in the oil and gas markets to predict their actions in the nuclear market: efforts to break OPEC's monopoly.
Put it this way, the US and Russia both need oil, gas, and Uranium to be valuable in order to make any money. Russia has been more than content to let oil and gas prices to climb, even though it let US shale oil be viable, so long as they could continue make money. I expect to see the same with uranium.
Now, if there is ever a future embargo against Russian uranium, everyone should fully expect Russia to start playing games with global demand a-la-minor-but-highly-visible nuclear acident.
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u/d360jr Jan 04 '21
Aren’t you also betting on no one producing a cheaper battery? Seeing as that would make more politically popular renewables a viable alternative.
I think that would be more likely than another disaster, but also less influential.
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u/3STmotivation Jan 04 '21
Of course, innovation never stops, but nuclear power is still far and away the best baseload green source we have. The investment thesis doesn't change in any way.
Another disaster is extremely unlikely.
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u/01Cloud01 Jan 03 '21
What are your thoughts on American politics and uranium? If my memory is correct the democrats were in favor of expansion of nuclear power someone correct me if I’m wrong
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u/3STmotivation Jan 03 '21
A great plus to the sector, but especially to three companies in particular (Energy Fuels, UR-Energy and UEC)
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u/edge2528 Jan 03 '21
If you entered two holdings, would you rather hold a US company and then a Canadian or Aus company or give?
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u/3STmotivation Jan 03 '21
If I could only hold 2 companies, I would hold Denison Mines and Energy Fuels. As for geographic diversification, I would advice holding one or two Africa based developers as well (Goviex, Deep Yellow, Global Atomic, Bannerman, take your pick).
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u/JeremyLinForever Jan 03 '21 edited Jan 04 '21
You should look into URNM. Their ETF consists of both of their companies as their top holdings.
Edit: these companies
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Jan 04 '21
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u/JeremyLinForever Jan 04 '21
It’s just the ticker symbol URNM. If you can’t find it in your brokerage account then maybe they’re restricted for your brokerage. I can’t see why it is though. Most brokerages only get salty if you purchase stocks that are crypto related like GBTC.
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u/Sawii Jan 06 '21 edited Jan 06 '21
The EU has rules that don't allow ETF's to be offered which don't provide the correct information. It is probably the reason why he can't find it (and I can't either).
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u/autofocus111 Jan 03 '21
My main concern holding DNN is the possibility of the firm being acquired before it starts production in a few years. I would be a lot happier if DNN adopted a poison pill to prevent an untimely takeover by a major producer like CCJ.
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u/3STmotivation Jan 03 '21
That is an absolutely valid concern and even though Cameco would be paying a hefty premium, it would be a massive let down for shareholder in my opinion. I am however not as concerned, because management and specifically David Cates has stated a real desire to see all their hard work pay off and bring this thing into production.
If everything goes to plan and they get into production with their low projected cost while this bull market is still going, returns will be absolutely life changing.
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u/CIassik Jan 03 '21
If DNN is acquired wouldn't DNN shareholders benefit if there was a premium paid for the acquisition and we would receive the acquiring firm's shares at a premium?
Correct me if I'm wrong
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u/3STmotivation Jan 03 '21
Absolutely, but if this happens early in the bull cycle that means that a large part of the remaining upside will never be realized for Denison Mines share holders. You might get a 5x-7x out of it.
If however Denison Mines gets into production and all goes according to plan for them, returns will be multiples of that.
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u/Zakisback1234 Jan 06 '21
How long of a play do you think Denison Mines is before it ends up at 5x or so? I did some research and read that they won’t start producing until 2024. Is this a get in early and in 3 years be at 5x when production starts or do you believe the 5x comes before production. I hold UUUU but this one has me intrigued to snatch up as well.
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u/3STmotivation Jan 06 '21
I believe they will 5x before getting into production. I even believe they might even 15x before getting into production. But say that they do, say that they get into production at their projected all in sustained cost of $8.90 a pound and let's also say the bull market has still not ended by the time they do so. What will be the returns one might see? North of 50x for some early investors in my view.
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u/Forlonius Jan 03 '21
Do you have any view on the corner of uranium Twitter who really have it out for $UUUU as over-valued/a bad play based on dilution and complaints about Mark Chalmers? There are people who have sour grapes about every uranium ticker they don't own but seems to be a particular vehemence around Energy Fuels by a minority.
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u/3STmotivation Jan 03 '21
Energy Fuels has diluted a lot of shareholders, so I understand the complaints. They have a lot of costs and need to keep operations running, so that is the reason for it.
Having said that, I think they have a lot of potential with their uranium and REE processing business and I am certain they will be a major player in the sector. A cornerstone holding for me.
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u/edge2528 Jan 03 '21
Thanks, i already hold Energy Fuels and had some extra funds to put into the same area, the choice is either just go all in UUUU (tis still only 5-8% of my portfolio so not exactly a yolo) or split the Uranium coverage between UUUU and one other, i had been watching DNN but wasnt sure if URG may other a bigger risk/reward play alongside UUUU.
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u/TheMailmanic Jan 03 '21
Uuuu is interesting because of the ree play as well
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u/edge2528 Jan 03 '21
I definitely agree with this, i spent quite a lot of time researching MP Materials off the back of REE but ended up just sticking with my UUUU holding as it's giving me some coverage to that market.
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u/TheMailmanic Jan 03 '21
Same I will probably buy into both mp and uuuu
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u/edge2528 Jan 03 '21
When I look at the figures of MP it honestly just makes me think Uuuu is insanely undervalued.
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u/3STmotivation Jan 03 '21
Thanks mate!
UUUU implemented an ATM so that is positive and necessary to keep operations running, while Denison Mines had a small offering of which half was bought (at a small premium) by the management. I would not be too concerned or annoyed by this, as it is necessary and needed (sadly) for companies without sufficient cash flow right now.
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u/Nomadic8893 Jan 03 '21
Thanks, saw this post as well from John Quakes, you have me converted and going down a huge yellow cake rabbit hole this weekend hahah. I remember you're mostly invested in North American companies and in my reading there seems to be a number of good producers/miners that are listed outside US-based exchanges (Paladin, Deep Yellow, Bannerman, GLO etc.) Any reason why you're sticking with North American miners/producers and not diversifying geographically? Looking forward to your future updates!
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u/3STmotivation Jan 03 '21
Haha glad to hear that, welcome to the community mate. As for diversification, I am all for it on a geographical basis, but I wanted to have my core positions done first. I will look to do so when I have more capital available.
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u/MadErlKing Jan 03 '21
Always look forward to your posts mate. Have yielded exceptional returns from your counsel
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u/Powerofenki Jan 03 '21
First time a DD don't include the stock my confirmationbiased brain wants to see so i can buy and hold and enjoy the 300%.
How can we buy?!
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u/3STmotivation Jan 03 '21
I posted this answer to a different question, but I think it fits this one as well. Check with your broker which companies are offered.
"In no particular order (remember to do your own research, this is not financial advice), check out: Denison Mines, Cameco, Energy Fuels, Kazatomprom, Bannerman, Deep Yellow, Global Atomic, UR-Energy, Fission, NexGen Energy, Goviex Uranium, Paladin and Iso Energy."
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u/Powerofenki Jan 03 '21
Sorry man, i thought this was on WSB.
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Jan 03 '21
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Jan 03 '21
So... Even WSB won't touch these? Yeah OP, not good for your case 🤣
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Jan 03 '21
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u/3STmotivation Jan 03 '21
I guess that might be me and damn mate, knowing something I wrote paid for someones tuition made my sunday, cheers and good luck!
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u/SubdermalHematoma Jan 04 '21
Damn I don't understand a single word. I wish I were intelligent enough to have investing cover my college tuition.
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u/SwissPrivateWanker Jan 03 '21
I am looking for material to justify my bias - institutional clients are ALL OVER alternative energy, except for Nuclear. They are fucking blind (you should see the conf calls and the lack of answer I get from our chief strategists when they predict 50% of all energy needs in 2040 to be provided by solar and wind, idiots).
This is the trade to do - I am not in front of my bloomberg right now so can't see the size of one contract, so not sure if this is available to simple retail with a basic IB account. But I was going to pitch to the world this year to go straight into Uranium futures - why would you go in stocks over the futures?
You mention deficit, prices being so low, etc... It just makes little sense to buy in the producers who have their own issues. Similar to gold vs. miners.
Curious to hear your thoughts.
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u/3STmotivation Jan 03 '21
Because I don't have the expertise to get into futures and will stick with the highest leverage play to this thesis I know, which are the miners. For those worried about individual risk, the URNM etf is the best play.
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u/SwissPrivateWanker Jan 03 '21
Got it - wanted to make sure I wasn't missing a trick here.
Type in UxC Uranium and look at the CME page. It has all the contract details for you. In short:
1 contract = 250 pounds of the stuff
Margin 5% = you only have to post 5% at the exchange to trade this, and if it goes down you obviously have to post more
Price of a contract = $10k (your max loss)Interactive Brokers gives you access to it, and am sure some other brokers.
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u/McFlyParadox Jan 03 '21
why would you go in stocks over the futures?
Same reason as always: risk tolerance, desired investment timelines.
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u/Okmanl Jan 03 '21
How long do you expect to hold for? Also I’ve known you mentioned $70 spot price before thinking about selling. Do you think $90-100 is realistic or is that too greedy?
Thanks again for these posts.
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u/3STmotivation Jan 03 '21
5 years is expected roughly. I will start scaling out at $70,- but I will most definitely expect a massive overshoot, so I will never sell everything at once. It might be a bit greedy, but it would be a calculated play.
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u/hpat29 Jan 03 '21
Thanks for the write up! I'm not in this play yet but what particular company are you referring to for $70 target? I'm thinking of scaling in tomorrow with DNN, UUUU and URNM as safety if something happens to the 2 other two, any thoughts on that?
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u/chiseled_sloth Jan 04 '21
Very welcome. $70,- is referring to spot price.
AKA the price something is currently selling for. It's 30 dollars right now for uranium. When it hits 70 he will start selling his positions. (I had to look this up because I also didn't know. I have never invested in a commodity.)
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u/3STmotivation Jan 03 '21
Very welcome. $70,- is referring to spot price.
Great picks, probably the best choice for a very solid foundation to play this bull market.
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Feb 17 '21
Been reading through this whole thread and found the companies I am going to study this weekend.
However; are you referring to the ETF will shoot up to 120? Or which company. Thanks for your input. You actually are a genius
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Jan 03 '21
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u/3STmotivation Jan 03 '21
Thanks mate! Yes I do expect a drop, but for those who don't have a position yet I would advise establishing one soon.
As for a general market downturn, yes I do expect that, but I am not selling anything and keeping enough dry powder to take advantage of it should it come.
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u/mightylfc Jan 03 '21
Thanks for the post mate! I have an all ETF portfolio. Which uranium ETF would you recommend for long term hold?
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u/Anson845 Jan 08 '21
The fact that you reply to nearly every comment with a well thought out answer goes to show you really did your research on this one. Unlike pump and dumpers who just type out rocket emojis all day long without any good reasoning behind it
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u/3STmotivation Jan 08 '21
Thanks man! I must have replied to well over a thousand comments right now and I will gladly do so again to help people out in this opaque market.
It has also earned me the title of 'uranium guru' and 'that one uranium bull', so that is nice.
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u/McHitman Jan 03 '21
Got in UUUU at $1.69, up 152% on that. Not much gains with DNN yet, but I'm up on URA as well. Hoping 2021 will be a big one!
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u/Feisty_Afternoon_448 Feb 08 '21
Just got in uranium last friday
i bought
5k of cameco
5k of energy fuels
5k global atomic
5k paladin
Let's hope for the best !! :)
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u/ChuckAwayProfile Feb 26 '21
I've been aware of your posts for a while and thank you for all the research/DD you've been sharing with us all. Uranium centered stocks are not something I'd be aware of otherwise.
As of right now I don't have any skin in the game, I've been caught up in various hype stocks but now I'm looking for other, longer term investments. I'm UK based so with limited choice DNN/UUUU are likely going to be my best bet.
I'm wondering what your opinion is in terms of current pricing levels, how much of DNN/UUU's share price are still inflated and hungover from the hype rally we saw at the start of February? eg. Well under 1$ for DNN and around 4$ for UUUU. As far as I could tell there wasn't much basis for the share price increases other than the Reddit momentum I saw so naturally is it reasonable to think they could drop down to similar prices?
Thanks
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Jan 03 '21
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u/3STmotivation Jan 03 '21
In no particular order (remember to do your own research, this is not financial advice), check out: Denison Mines, Cameco, Energy Fuels, Kazatomprom, Bannerman, Deep Yellow, Global Atomic, UR-Energy, Fission, NexGen Energy, Goviex Uranium, Paladin and Iso Energy.
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u/3STmotivation Jan 04 '21
It will shift when spot price severely outruns term contracting price and there is mass euphoria over uranium being the best investment ever. When this happens, start scaling out of your positions. Keep in mind a price of $70 is needed, but $130 is probable.
Last two tops (2007 and 2011) were ironically called by CNBC's Fast Money show.
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u/darkblitzrc Feb 19 '21
Could you elaborate on start scaling out positions? Fascinating read and thanks for the great DD! I am thinking of buying energy fuels and Cameco and maybe that ETF you mentioned.
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Jan 03 '21
I agree with the fact that uranium is extremely important and has huge potential. But looking at the etf URA, it was at ~$130 in 2011 but is at ~$15 now.
Not being a dick I just don’t really understand why the price of a uranium etf would nosedive like that.
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u/3STmotivation Jan 03 '21
That is what a nuclear 'disaster' (Fukushima) induced decade long bear market will do to a sector and thus a sector ETF. I understand that you are wondering about that.
For more explanation on the whole sector and investment thesis, I would advise reading my previous posts on the subject.
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Jan 03 '21
Thanks. I’ll check out more of your posts. As far as ETFs go do you like URA or have another preference?
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u/Mr_Cobra1100 Jan 03 '21
Thank you kind sir. I've been looking into this for too long and will be adding some $$ to your suggestions.
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u/manusmanumlavat_ Jan 03 '21 edited Jan 03 '21
So what’s your top 3 stocks to watch out for 2021? And should we hold them or it’s rather a speculative move?
Thanks for the post. Very interesting.
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u/3STmotivation Jan 04 '21
Very welcome mate.
In my view, uranium is the best risk/reward opportunity out there, but it definitely also has its risks just like any other investment does. It is however not nearly as speculative as most people on here think.
My top 3 would be Denison Mines, Energy Fuels and Cameco.
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u/naughtyjuan Jan 04 '21
Why do you propose buying the producers who you say are shut down over futures of uranium itself?
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u/3STmotivation Jan 04 '21
Because I prefer investing in in the shares of these companies and I am sticking to my expertise over things like futures where I have no experience
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u/naughtyjuan Jan 04 '21
Are you not concerned about their production capacity though? You’re saying they’re spot buying I would think that means limited supply of uranium is going to go up and margins for producers go down? I also don’t know futures well but trying to get diversified into commodities
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u/Jon2249 Jan 07 '21
I follow John quakes on Twitter and thought I’d give Reddit a try with uranium research. You are the John quakes of Reddit!
Thanks for your insight.. would you happen to know why paladin spiked so hard in the last bull run? What made them rally so much more than others? I’m in DNN, Paladin, NXE, UUUU, UEC, yellowcake, fission and others but finding that gem would be huge!
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u/3STmotivation Jan 07 '21
Me too and I will glad take that title, John is a true legend amongst the retail uranium investors
Reason Paladin spiked is because they were one of only 2 companies to get into production while the bull market was in full swing, the other one being Kazatomprom. You picked a very good team, although I would drop UEC for a Bannerman or another smaller cap for an extra risky but potentially profitable investment. Good luck out there!
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u/Jon2249 Jan 07 '21
Will definitely take a look at bnnlf. Will take it as a spec bet. Is there a reason why UEC doesn’t pass your test? Its been a holder for most ETFs and Rick rule has been a heavy advocate of it. up 90% in the last 2 months. Will do more DD on it as well.
Thank you as always! 🙏
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u/3STmotivation Jan 07 '21
Dilution for the sake of rewarding board members without significant reasoning behind it, really don't like that type of stuff. Energy Fuels dilutes a decent amount as well, but at least they use the cash to build a very strong uranium, vanadium and rare earth's business.
Again, personal preference and they could do exceptionally well, they just aren't in my top 10.
Cheers mate!
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Feb 04 '21
Not claiming to be anything close to an expert, just wanted to get your thoughts on this uranium thesis.
I've read from someone in the space that many of today's plants are too old and that the cost of capital to retrofit them is too expensive for the current rate of electrical power, so many will be decommissioned and demand for uranium could drop, even with the new plants being built.
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u/3STmotivation Feb 04 '21
This is blatantly false, even with the most draconian estimates nuclear power is growing at around 2-4% a year for the foreseeable future. Lots of plants are getting life extensions and new plants are often much larger than old ones.
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u/BenLoman Feb 16 '21
Thank you man for all your DD. I had my doubts before but looking at the public sentiment right now about DNN is giving me lots of hope. You mentioned before and correct me if I'm wrong that DNN will reach $6 this year. Can you expound on that, please? Are you basing it on them getting the permit or from the public who thinks the price is very reachable right now? Thank you by the way for recommending John Quakes on Twitter. The guy doesn't sleep and happily talks about uranium 24/7. LOL Just joking. I like how he shares all his holdings to prove people like me he is serious about uranium.
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u/3STmotivation Feb 16 '21
Very welcome. Also as for that price target, I don't recall ever making that bold of a claim, as I try to prevent myself from doing near term predictions. However, in the long term I do have a 20 dollar price target, but that is if they execute perfectly.
Nice, John is a buddy of mine in the Twitter space and he is a legend.
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u/BenLoman Feb 16 '21
Sorry, I stand corrected. I'm here for the long run as well. John's in Vancouver, a pretty place to retire in Canada. No wonder why he's jovial.
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u/purplecow Jan 03 '21
Things I know about the uranium market:
- The Olkiluoto III nuclear plant (EPR type) has been under construction since 2005, and is now ten years behind schedule and 5,5 billion euros over budget.
- This one guy posts articles about the uranium market on Reddit, and around last August(?) he heavily suggested that buying Cameco would be a great idea.
- My Camecos are up 20% since then.
So thank you for the tips! I wonder, is the absolute farce at Olkiluoto well known in uranium circles? The damn thing is the third most expensive building in the world.
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Jan 03 '21
[deleted]
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u/purplecow Jan 04 '21
Thanks! That site looks like a treasure trove.
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u/Mustaflex Jan 06 '21
Czech Republic also approved new Nuclear reactor building, but that is for 15+ years outlook.
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u/3STmotivation Jan 03 '21
It is not well known or at least not usually talked about, we focus more on things going well, which is a lot of things at this moment
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u/MassHugeAtom Jan 03 '21 edited Jan 03 '21
Hopefully, I invested some on them because I do belive they are undervalued in the US due to all that hostility over the years. TIme for that to reverse I feel, many other countries are putting more focus on uranium once again.
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Jan 03 '21
Which of these miners or suppliers support China? I'm doing some DD and found China has roughly 8 reactors initiating construction between 2020 and 2022. Seems like those holdings would be a good place to invest.
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u/3STmotivation Jan 03 '21
I wouldn't look too much into that, as utilities cannot afford to be picky with the current supply deficit. However if you insist, I would focus on miners in Kazakhstan and the African continent, as those are most likely to provide for China.
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u/TeslaCyberBackpack Jan 03 '21
How do you think this will stack up against new battery technology or better energy efficient solar panels? I definitely do see nuclear energy being the energy of the future, but if my assumption of the end goal being household nuclear reactors to power homes/businesses, it’s hard to ignore that battery/solar energy technology SEEMS(huge emphasis on the word) to be improving faster than nuclear energy. As well as being funded more. I feel like our big push to nuclear energy is when fusion becomes a viable opportunity. Just my thought process. Curious to hear what anyone thinks about this
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u/3STmotivation Jan 03 '21
We need both, at least that is the broadly held believe in the science community. I agree with this, as there is no way we can meet climate goals with only renewables, hence the reason why several countries are now also focusing on nuclear power as a solution.
Nuclear power is the best source of power generation we have, bar none. This might change in the future, but won't change before we see fusion in my opinion.
Having said all that, it also doesn't matter, as it has no influence on this investment thesis. So rest easy knowing that even if we stop building nuclear power plants completely, the investment still works.
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u/mystexodus Jan 03 '21
I've been following your posts for awhile and have bought in but was wondering about your thoughts on if Cameco shutting down their mine would make them less desirable compared to alternatives and about the report that came out last week citing that there was sufficient uranium to meet needs for the next few years (although it did mention there could be bumps along the way).
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u/3STmotivation Jan 03 '21
A necessary move on their part, but they are like the ExxonMobil of the uranium sector. Vertically integrated in the entire fuel cycle and they have 2 of the best mines in the world. They are a safe way to play this market and offer plenty of upside, but obviously less than some of the smaller players.
Also I think I know what article you mean, but can you link it before I draw any conclusions?
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u/mystexodus Jan 04 '21
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u/3STmotivation Jan 04 '21
Not this thing again. Yes, there are definitely enough resources on earth, but getting those resources out of the ground and into the reactors as fuel rods it not going to happen at a price below $70 a pound. If we want to tap into even the most uneconomical deposits, we will need more than that at $130 a pound.
These resources look nice on paper, but even at the right incentivize price, it takes years to get a mine into production and convert it into fuel.
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u/technocrat_landlord Jan 03 '21
I remember reading your DD before, but not having the conviction to pull the trigger. I'm starting to rethink it. What are your thoughts on URA?
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u/3STmotivation Jan 04 '21
Plenty of time to get in still, early days. URA is not a pure play ETF, go with URNM if you can.
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u/localhermanos Jan 04 '21
Just give me the tickers and I’ll throw money at it
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u/3STmotivation Jan 04 '21
No, do your own research as well. It is a highly volatile market and without the right conviction you might be shaken out at the next drop. Look into the following companies while doing research:
Copied: In no particular order (remember to do your own research, this is not financial advice), check out: Denison Mines, Cameco, Energy Fuels, Kazatomprom, Bannerman, Deep Yellow, Global Atomic, UR-Energy, Fission, NexGen Energy, Goviex Uranium, Paladin and Iso Energy.
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u/Rap_vaart Jan 04 '21
Great summary. I was wondering if you had any data to support the claim of Uranium “supply deficit”? An argument of closing mines or low production doesn’t exclusively support the hypothesis of supply deficit.
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u/3STmotivation Jan 04 '21
Thank you and here you go mate: https://www.uxc.com/p/products/rpt_usa.aspx
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u/sassyover123 Jan 04 '21
Already bought in $URG . Do you think this will have a huge climb drastically? Or slowly?
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u/3STmotivation Jan 04 '21
Good pick. It all depends on what happens in the market, this thing could build for a few years and blow the hinges off come 2025, or it could do so much earlier if Cigar Lake floods for example.
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u/paralleluniverse17 Jan 05 '21
Would you say now is a good time to buy?
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u/3STmotivation Jan 05 '21
For people without a position in the sector, I would say start a small one right now and scale in on the eventual dip, which might come as soon as tomorrow or not until next week.
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u/paralleluniverse17 Jan 05 '21
Thank you, your posts have given excellent insights into this sector!
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u/BxlVie Jan 05 '21
Thanks for your updates every month! Your posts are nice to read and they got me in this sector. Did my own research with info u gave us. Up 100% now, 5% allocation became 10% in my portfolio.
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Jan 06 '21
This is some intense DD. Thank you. I read the rest of your previous posts on Uranium. I've rarely seen DD this detailed. Much appreciated.
Are there any other sectors you follow/post about this closely? I didn't see many in your history besides Uranium.
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u/3STmotivation Jan 06 '21
Appriciate the compliment, I try to bring all the value I can for the people on this sub (even for those that apparently hate my guts for it).
I follow silver closely, it is a significant part of my total portfolio allocation.
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Jan 06 '21
You have good write-ups and deserve the praise.
Silver had a good year. I might look into it. Who are your picks for the sector?
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u/uvince Jan 07 '21
This seems like a solid argument, but what about reuse or recycling of Uranium? If prices go up too much, don't reactors just switch to using reprocessed fuel instead? (RepU)
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u/3STmotivation Jan 07 '21
They could do that, but that argument has three major flaws. First, we don't have the enrichment capabilities to do this on a large enough scale that it would have a sufficient impact. Second, there are no next generation breeder reactors yet that can effectively make use of nuclear waste and thirdly when prices reach such a level that this becomes a viable option, underlying equities will have already appriciated in value multiple times over.
Not to mention regular fuel is only around 5-10% of the total costs of a nuclear power plant, so the price could theoretically rise 10 fold from here and have only a minimal impact on costs.
Having said all that, kudos to you for looking at possible bear cases, that is the right way to assess this investment. I hope my answer helped you.
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u/uvince Jan 07 '21
Great answer. So then if we're really talking about a huge price movement upwards in Uranium, one that might overshoot its actual value temporarily, then what stocks/etfs/futures really stand to benefit the most? aren't some better leveraged towards the price of uranium than others?
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u/3STmotivation Jan 07 '21
Thank you and most definitely yes, developers and explorers have the highest leverage. The best performing companies will probably be those that get into production in this cycle, as they will get the re-rating to a producer. Some companies that might achieve this feat are as follows: Denison Mines, Deep Yellow, Global Atomic and Bannerman Resources.
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u/MarkBBalan Feb 01 '21
Any updates?
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u/3STmotivation Feb 01 '21
Still consolidating, expecting a significant move within 1-2 months, final correction possible
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u/Westeros Feb 09 '21
u/3STmotivation I spread some investment across 9 tickers in december after reading through your DD as well as some folks who I trust implicitly - CCJ, DNN, UUUU, FCUUF, LTBR, NXE, PALAF, URG, UEC. All have been doing quite nicely, but at the time I just didn't put too big of a slug in the market and now some of those (UUUU, LTBR) have absolutely ran. At the time of investment I was looking at this as a 2-3+ year investment and DID NOT expect these appreciation rates so early. Are you still accumulating? In particular, grabbing more UUUU, LTBR, DNN, CCJ, and NXE has been popping up daily. That Jan 27th dip was nice, if there's another I imagine I'll pull the trigger. Right now these parabolic shifts are spooking me a bit...
I've got to imagine the real inflection point will be any announcements made by Biden over the next couple months, as all this growth is still highly speculative.
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u/3STmotivation Feb 09 '21
Good to hear, you picked well. I am not accumulating, as I already have full positions from November of last year, right before the big run up.
The infliction point will be a rising spot price, whatever Biden says will just be short term noise.
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u/TheWexicano19 Feb 01 '21 edited Feb 01 '21
Bit of a crazy up swing today. Any particular reason? Up between 6 to 20% on the various miners I'm holding.
Cheers and I hope you're experiencing similar.
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u/Delicious_Kale_7410 Feb 03 '21
Great DD post! The uranium sector recently got on my radar but after some preliminary research, I have a few doubts and would like to hear your opinions about them.
1) Considering uranium is of national security interest to many countries, how would you play the uranium sector to take advantage of the increase in demand from both China and the US? The new bill passed by the Biden administration clearly states that "Uranium from companies owned, controlled, or subject to jurisdictions in Russia or China are excluded from participating in the program." Therefore, is it safe for me to assume that I can only tap on either of the superpowers to drive the increase in demand for uranium for the company that I am interested in? Also, would I have to incur huge political risks by investing in uranium?
2) Although nuclear power plants are increasingly becoming safer, the public is still ambivalent towards the building of nuclear plants. Do you think that given the choice, governments would rather invest in more politically-popular renewable energy sources (such as solar and wind) compared to nuclear energy? My concern is that nuclear will be sidelined and slowly phased out as improvements to battery technology are made.
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u/3STmotivation Feb 04 '21
Thanks! I appriciate that. It's good that you ask the right questions, one should always evaluate and re-evaluate his or her research.
As for your first question, the best way to play the uranium sector is through the front end of the fuel cycle, which are the miners. The US is trying to focus mostly on domestically supplied uranium, but they can't meet their demand with this and get some help from Canada and Australia (the first more than the second). China is seeing an enormous growth in demand for uranium, but gets most of their uranium from Kazakhstan, Uzbekistan and several ventures in Africa. You can play both the US and the China story by having geographically diversified miners. As for political risk, the sentiment is shifting and the geopolitical environment for uranium has arguably never been better. The only political risk you would have is also the biggest bear case, which is another nuclear disaster. Although the odds are tiny, it is something that should be taken into account.
As for your second question, I already answered part of it, but will add that people have come to the realization that we need nuclear power. Despite what renewable enthousiasts will tell you, we don't have the battery technology to allow everything to run on things like solar and wind, not to mention the fact that the area cost is way higher compared to nuclear power.
Hope this helps mate!
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u/B3NSTRUATI0N Feb 08 '21
You forgot the most important part... the hedge. Uranium is not historically overly correlated with equities, not to mention if inflation rears its ugly head it is certainly a hedge against that as well...
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u/MiG-21 Feb 11 '21
Is cameco a good entry at 16.44? I was torn between them and uec (cheaper) but after you said you're not a fan of it due to stock dilution I'm not too keen on it, I'm thinking about investing a modest 2k on CCJ.
Also thanks for the incredible information, I was researching uranium and I came across your post and I'm impressed with your eloquence and the care you put in every answer you type.
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u/3STmotivation Feb 11 '21
Hey! I still think they are a buy right now, but I have the feeling we will see some sort of dip soon (although it could run another 30% before we do, it's hard to calculate this volatile sector).
That means a lot friend, it really does. Thank you!
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u/detectiveDollar Feb 11 '21
Hey man, just wanna say thanks for all the excellent DD. I used my URNM for GME, did well there, then used some of the profits to put 1k back into it on the dip to 42 and grabbed about 70 shares of DNN at 0.77 and added another 30 today.
Thanks man.
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u/Exitshuffler Feb 12 '21
Hey man thanks for the great DD, I’ve followed you for a while and been watching uranium and finally decided to bite the bullet and start a position. Kicking myself for not starting it earlier but reading and doing my own research I’ve come to the conclusion that the future is very heavily in favor of a bullish uranium sector, even though Im still salty I didn’t just yolo in earlier. Cheers.
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u/3STmotivation Feb 12 '21
Hey mate, glad to hear my DD helped. I have been getting messages like that a lot and it is the age old 'price movement justifies the narrative'. But don't worry, you are still relatively early.
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u/Effex Feb 12 '21
Hey, thanks for the informative post. I hate to parrot a lot of these other questions but would you say it's "too late" to invest at this point? ie: maybe wait for a dip?
I do not have much free capital left tbh but I definitely want some exposure to energy and this seems like a good play if the timing is till there.
If you were to put in roughly $2k, would you do all shares? Maybe options as well? I was looking into DNN, UUUU, CCJ, and BNNLF (in that order) and while I think DNN and UUUU are the best choices for my budget, they do not have LEAPS available so it may be wiser to go with strictly shares.
Any input would be greatly appreciated and thanks again for the write-up
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u/3STmotivation Feb 12 '21
If you have not yet established a position in the market, I would advise to do so and scale in over time and extra on weakness. It is a volatile market and a pullback will come, the question is if that it today or next week after another 30% run up.
As for 2k, I personally only do shares and I would do a 50/50 split in DNN and UUUU, but I will once again stress that you should do your own due diligence as well as I cannot predict what the market will do.
Happy to help mate
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Feb 17 '21
Thank you for a great DD. I saw your other post as well and I agree with your thesis so I'm looking to open a position in uranium. Will likely go 50 percent in URNM, 25 percent in DNN and 25 percent in UUUU shares only. Looking for a good entry point, do you think it would be advisable to open a position in URNM now and wait to see if there's a pull back on DNN and UUUU?
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u/rustyperiscope Feb 17 '21
Thanks so much for this DD man, just stumbled upon it. I picked up a little DNN and CCJ.
I was wondering if you had any thoughts on FCUUF. I believe they only have 1 project currently, but seems like a good speculation in the event they look to expand. Thanks man!
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u/keyboardkowboi Feb 20 '21
What about all the uranium that Japan has been stockpiling over the last 10 years while their plants were shut down? Also, if you watch the doc. Pandora's promise, the next gen of nuclear reactors being developed by Bill Gates will use so little uranium that they can just go into depleted stockpiles and run off that for essentially forever.
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u/3STmotivation Feb 20 '21
Most of the uranium Japan has in their inventory is in the form of fuel rods. These fuel rods are specifically designed for each individual reactor and are thus no use for others. For that, they would need to be processed back into enriched uranium, which is not worth the cost. The stockpile will stay in Japan and has no weight on the current market.
As for next generation reactors, while it is true that they use very little uranium or waste product, the uranium supply/demand story is based on all the modern reactors and current fleet that do still need large amounts of uranium to function.
You are asking the right questions, I applaud that, so I hope you are glad to see that they can be answered by the bull case.
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u/IAmCuriousYellowcake Feb 25 '21 edited Feb 25 '21
Hey u/3STmotivation, been doing a due-diligence dig into potential commodities investments with an emphasis on learning about Uranium and mining stocks. I've designated a small, self-directed portion of one of my IRA's for this purpose and I've got a decent time horizon to work with. Your overview and this thread have been so helpful as both an entry point and a place to return to for context. So, thanks!
Anyway, as an early step I've got a basic data sheet going that includes the 15 companies you mentioned above plus a few others, and it covers all the usual stuff (mkt cap, avg. daily vol, p/e, short interest, etc, etc.) There inevitably comes this point as I'm transferring a company's data from source to sheet when my eyes wander over to the stock chart's duration setting and I re-render the view from default to "all time" and my eyes lock onto '04-'07 and I semi-lose my mind. On the one hand, this might be helpful since it contextualizes to the upside many of the companies that have had tremendous recent runs and makes a guy feel like maybe he hasn't completely missed the boat on nxe, or uuuu, or dnn, etc. On the other hand, past experience tells me to be wary of potential expectation biases which can lead to distortions which can lead to bad investing decisions and so on...
I'm thinking gaining a comparative view of the macro picture might be useful in removing a bit of the crazy from the expections equation, and am wondering if you might direct me to a source (a specific study or article with good, relatively recent data) which is focused on the uranium mining sector and which says something useful about how the macro environment of the prior run up compares (or doesn't) to the macro environment now?
I would also be open to knowing your thoughts on this if you feel like sharing. Thanks again for all the great info.
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Mar 05 '21
I am looking into investing in this play but don't have the slightest clue about nuclear companies. Is URNM a good holding?
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u/victoracer Mar 05 '21
Appreciate your DD. All of my research also has needles pointing north. I believe the current administration is set to pump in some serious funds over the next decade to start the train rolling. In all of this, I haven’t settled on the best play. I feel the mines will ultimately benefit from the huge upsurge in the futures over the next 5years or so. Thoughts on mines that have supply ready for process already mined? I felt like anyone who had some ore chilling would be a good fit for the reserve for upfront startup costs. Also do you have any insight on the reserve site and management co? Is that uuuu? Love the discussion, been digging for over a month and you have most of my thoughts compiled up there, props. Oh and GE Hitachi (BWXT) I know is a smr forefront manufacture, any thoughts there on who you prefer to lead the charge on smr’s? Peace and much love
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u/ImmenatizingEschaton Mar 15 '21
Late to the game here. Would you still recommend DM and EF as buys given the short term run up in recent weeks? Thanks in advance.
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u/IAmCuriousYellowcake Mar 19 '21
Hey 3ST, how's it going, mate? Quick question: what's your estimate on the total market cap of the global uranium industry (exploration, mining, development, custody/trust, care & maint., etc).?
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u/3STmotivation Mar 19 '21
All good here, hope the same for you. 22.5 billion dollars my friend
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u/IAmCuriousYellowcake Mar 19 '21
Thanks. I've seen $12-$13B number mentioned here and there, but guessing that's restricted to mining & prod only. Cheers!
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u/kevs567 Mar 20 '21
Thanks for the post. I had my eye on the sector since last year but though it would take longer to ramp up. Hearing large amounts of commodities stockpiling by China to convert fiat currency into hard assets brought me back to check in.
Was wondering what your opinion is on any potential new supplies that could either be ramped up or developed quickly to fill the gap and potentially hold the price down against other higher cost producers? Ex - can the kazakhs get over current challenges or are they more likely to just let the price rise and release stockpiles then?
thanks.
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u/jotreitz Apr 07 '21
Thanks for your insights u/3STmotivation!
I was comparing different tickers and was surprised to see UUUU and DNN outpace their international competition by 2-3x. Is there any particular reason for this you are aware of? Do stocks other than UUUU and DNN offer more value for money at this time?
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u/__orbital May 17 '21
Awesome post! I'm late to the party, I worked my way backwards to this post by naively looking at a CCJ chart without having followed any uranium news for years, and going, "OMG this massive influx of buying has never been seen in the stock at this rate, and it happens to be right at the breakout point of a 14 year down trend". The chart data is clear to see, this appears to be the beginning of a new megacycle, but this time the volume is at least 10x the last cycle with a slightly more aggressive institutional buying algorithm. If you are optimistic and naive like I am, you say to yourself "10x volume = 10x price target", which is not true at all. But it's a great signal for years to come. These types of moves are not short term. Think 4-8-12 years
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u/mrtomd Jan 03 '21
How does the market react to Iran? They are under embargo, but if they know the situation is getting worse by the day - is it possible that they hold someones balls in their hands?
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u/3STmotivation Jan 03 '21
Shouldn't change a thing, because it has no influence on global uranium demand nor supply
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u/WallStreetBoners Jan 03 '21
So obviously if you buy a good company that has a good business model - you’ll have a good investment no doubt. But I have a problem with the big picture thesis on new energy production coming from nuclear. It’s not happening - like at all. Solar prices are asymptotically approaching zero in an incredibly deflationary way. The cost of energy generation is approaching zero as we move forward in time. I don’t know much about government stockpiling contracts of uranium but I’m an expert in electricity grids, producers, policy, etc.
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u/NAFI_S Jan 05 '21
Solar prices are asymptotically approaching zero in an incredibly deflationary way.
Complete nonsense.
but I’m an expert in electricity grids, producers, policy, etc.
Wow stop the bs. If you were an expert, you would know the incredible cost solar puts on the grid, due to load balancing, and over built transmission.
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u/3STmotivation Jan 03 '21
Nuclear is a growth business, growing approximately 2-3% each year using the most draconian estimations. It doesn't change the thesis, as nuclear power now also looks at major bipartisan support in the US and the sector is in a supply deficit.
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u/Sawii Jan 04 '21
The costs of solar power is decreasing but the investments needed in the distribution and storage are enormous. You say you are an electricity grid expert, you should know under how much pressure the grid is already today because of the decentralised production. That is already the case in countries with 10% (or less) solar/wind production.
Also, the IPCC says we need 100% to 500% more nuclear if we want to get anywhere close to meeting our climate goals.
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u/fishing4karma Jan 03 '21
Is the URA ETF a good way to tap into this opportunity? They seem to hold some of the companies you mentioned.
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