|2/2/2017 by mdc|
|Malcolm Shaw blogs about the recent upturn in uranium activities worldwide. Uranium stocks have been busy digging themselves out of the basement in a very rapid fashion. This is an industry that was pretty much left for dead by late October last year... and then, all of a sudden, something changed. Was it the U.S. election and pro-nuclear comments? Maybe. Was it that every other commodity had rallied already and uranium was overdue to play catch up? Maybe. Was the rally helped along by a new Kazakh approach to the market (clearing sales through Switzerland) and the subsequent telegraphing of the removal of roughly 5 million pounds per year from that market? Probably. |
Does it also have something to do with the fact that utilities are looking at a huge wedge of uncovered uranium demand for which they will eventually have to sign long term contracts? Probably a bit of that too. Whatever it was, sector bellwether Cameco saw its lows in early November 2016, and since that time the whole uranium sector has staged a very impressive rally to the upside. Literally every stock that Shaw has reviewed has looked at in the industry is up somewhere around 50 to 200% over the last three months and yet they have barely even started to move if you step back and look at the bigger picture... they are moving up from very low levels. Judging by the record volume (and I mean record volume) in the Global X Uranium ETF (URA in the U.S.), something is clearly up.
Perhaps even more telling is the fact that Uranium Participation Corp now trades at a premium to NAV rather than a discount. When that happens, this physical ETF can raise money by issuing shares to the market via financings and it is always accretive... that means that it can keep raising money to buy spot uranium as long as the market is willing to fund it. That sets up a very interesting dynamic.
Read on ...