Earlier this week, I laid out my case for why I was going long uranium in detail in a subscriber-only post that can be viewed here.
Since then, my friends over at Zerohedge have published a wonderful piece adding to the discussion that there have been major inflows into uranium ETFs:
Even more notable was their observation that “Yaro Kono, the administrative reform minister and the most likely candidate to replace Yoshihide Suga as prime minister” of Japan, has done a 180 on nuclear power:
"It's necessary to some extent to restart nuclear plants that are confirmed to be safe, as we aim for carbon neutrality," Kono, currently regulatory reform minister, told reporters according to Japan Times.
"Basically, our priority is to increase the use of renewable energy sources, but it would be possible to use nuclear plants whose safety is confirmed for now if there are power supply shortages," Kono said, adding that while "nuclear plants will disappear eventually, I'm not saying that they should be scrapped immediately, like tomorrow or next year."
The comments are notable as Kono had been a vocal opponent of nuclear power in the past; some renewable energy stocks have surged on bets that he’ll win the race to become Japan’s next prime minister. And once the world realizes what a Japanese restart of NPPs would mean for uranium demand, uranium stocks could double from here purely on uranium supply/demand dynamics, returning to levels last seen before the 2011 Fukushima disaster which mothballed Japan's nuclear energy.
“Every once in a while you feel like you’re seeing things incredibly clearly,” I wrote earlier this week:
It’s not going to come as a surprise to anybody that I own significant amounts of gold and silver stocks and have a lot of exposure to precious metals, I wrote. As I noted in a previous post about my portfolio, I also have exposure to oil, not only as a Covid re-opening play, but also as a hedge against inflation.
The common sense case for uranium that I laid out in full comes from the fact that nuclear power is obviously the overlapping part of a Venn diagram between insane people on the left side of the political aisle and insane people on the right side of the political aisle both having extremely irrational views on power generation.
What I’d like to know from my readers is:
Have you examined uranium as a potential investment? What do you like and dislike about it?
Have you researched the pros and cons of nuclear power and, if so, what are you personal feelings toward it meeting the “ESG” standard that most things need to now meet?
Do you think uranium can also be a hedge against inflation, since there is a finite amount of it?
What other commodities are totally unloved at the moment that you think meet this criteria (without mentioning gold or silver)? Could all commodities with finite supplies be inflation hedges?
well, as Benedict h. pointed out, there was a uranium bubble aournd 2007/2008 ... dozens of compaines flocked into Africa and other parts of the world exploring for U ... One out of many dozens got lucky - Mantra from Australia, by identifying the Mkuju River depostin in Tanzaia . ANd selling it to ROSATOM - some say, ROSATOM overpaid for it ...
The rest of the companies did not get lucky, nor did their shareholders ... the much laudated Paladin barely escaped bankruptcy in the 2018ies ... and French nuclear 'giant' AREVA was betrayed in the UraMin deal by the owners of UraMin :-) ... and AREVA (now renamed ORANO) suffered big time and had to be bailed out by the French Gvt with 4,5 billio (!) €€€.
Things aren't that different now ... Japan only got a few NPPs restarted ... at the same time, Germany is phasing out its NPPs ... the overall number of NPPs worldwide is not increasing (read "World Nuclear Industry Status Report").
Most (2/3+) of NPPs are built in China ... and China already secured enough U for running tose plants.
Now, WHERE is the increasing demand? ... just not there.
Was a buy side mining analyst when I started working back in 2005, the start of the last uranium bubble, learnt some valuable lessons. Also did reactor integrity work(homer Simpson suit on the reactor face) for a few years in Canada so have experienced the regulatory bureaucratic beast these plants are and the type of cost over runs, both in building and maintaining (MMT fixes this....)
From the uranium side of things the difference this time around is downgraded HEU(old warheads being recycled to supply fuel) is not nearly the supply behemoth it once was. might be net demand given the way arsenals are being rebuilt(haven't checked data recently but I'm sure there will be a slide deck on every Miner and E&Ds website).
However the ESG/social perception quagmire nuclear power is currently in is somewhat perplexing, back then it was still being pitched as a no carbon base load necessity and China was going to be bringing some ridiculous number of plants online over the next decades to start phasing out coal. And the no nuke crowd was silenced by the anti fossil fuel hoards. Now seems post Fukushima, that the existential threat of nuclear accidents and dealing with their spent fuel offsets the benefits of no CO2. which immediately brings up the obvious logic trap of well I thought we weren't going to exist in 50 years if we don't massively reduce our carbon output, why worry about how well we can store something for 1500 years if we won't make it 50.... anyways it's not about making sense it's about walking the masses in a circle and then selling them the fucking circle. I think at some point if the new green deal types actually want their narrative to hold water they will have to do a nuclear pivot but it's going to take a whole lot of posturing ahead of time.
At Around $90 a pound people will start talking about a natural ceiling of $140 as some PhD will start pushing his process on extracting uranium from sea water(naturally dissolved at 4ppb) and extraction having a b/e of $135 (these are 2005 $ terms probably have changed, or not as they tend to just reuse the same sht from the last cycle).
Worked for a long/short equity PM, had the displeasure of having to run paired trades. lesson learned if you have to be short, short the high grade established miners and buy the dodgiest POS "pounds in the ground" assets with the slickest Investor Relations person, preferably and ex hedge fund sales guy(should be lots of them floating around these days), go to PDAC they will find you. Even if the asset is located in Namibia and plan is to build a massive Heap leach operation in the middle of the fucking desert, using water that doesn't exist for the leaching process, then switching to a 200 mile pipeline to a non existent desalination plant on the coast after you publicly call them out on water issues on their quarterly. Side note: you'll know the market has topped when the largest power plant operator decides it wants to secure its own supply and buys said POS asset for 2x previous close. And while you will lick your wounds from being short it you'll take solace when that operator writes the entire asset off to the tune of a few billion two years later.
Also another sign for the top, when producers start locking up long term supply agreements with utilities, usually prefaced by a large mine having "issues" causing utilities to scramble and buy what ever they can.
But it's early days in this cycle, buy all the marginal non producing POS assets you can find and ride them for 10 baggers.
When I was in chemical engineering my senior year in 1972, I took a number of nuclear engineering classes at The Ohio State University. Besides my interest in nuclear energy, I had another ChemE that was going into US nuclear navy in my nuclear engineering classes—-he actually had to be interviewed and approved by Admiral Rickover, the father of the US nuclear navy to be assigned to nuclear ships. Anyway, in one of the instrument labs for nuclear engineering, the professor had taken pity on we two ChemE’s who were probably out of their depth in a mechanical and electrical engineering lab with oscilloscopes and electrical signal generators. While getting our lab assistance from the professor and chatting about our beliefs about the potential of nuclear energy, we found this nuclear engineering professor tell us in 1972 that nuclear power was too expensive given the decontamination and decommission costs of old nuclear plants. He told us wind and solar were the better energy solutions—- yes, he said this in 1972. Amazing!
So, I do not think that professor’s assessment of nuclear energy has become invalid over time, but now huge construction cost overruns and Chernobyl and Fukushima have now entered into the economic equation. Yes, maybe those existing plants in Japan once restarted will require additional Uranium fuel, but I understand Germany plans to decommission all their nuclear plants here in near future. That is why the Nordstream 2 gas line was so important to Germany. They were closing coal-fired and nuclear plants and needed clean and cheap replacement natural gas to stay competitive in world economy.
Instead of Uranium, you need to be looking at Bismuth metal as the next big precious metal. Almost as rare as Gold and Platinum, I believe Bismuth has the highest diaelectric permittivity and the lowest magnetic permability. With new understanding of magnetics coming out and using Bismuth metal in combination with other magnetic materials, I think that solid state electric generators could be developed with Iron/Air or Carbon fiber battery storage to provide reliable distributed power that is not as easily susceptible to climate effects.
Having been a "Navy Nuke" on submarines in the early 2000s, it doesn't take much effort to convince me that nuclear is just about at the top of the list of "green" energy sources. There's no combustion, and if submarines can float under the water and torture test their nuclear plants in the name of training their crews, nuclear power is inherently safe as well, especially on land. Are they 100 percent safe? No, but what is? Can it be an inflation hedge? I suppose so. The quantity of available product is limited, but so is the market for it. With that said, I'm dumping fiat into the Sprott trust. If the world wants to eliminate fossil fuels, there's no way to do it without nuclear power. I don't think anyone wants to see the Earth covered in solar panels, not even AOC.
I found out about uranium in summer of 2020. I was sold on the bull case, and even the bear case seemed bullish. Now about 1/3 of my stock portfolio is in uranium stocks. I follow Justin Huhn and Steve Penny.
well, as Benedict h. pointed out, there was a uranium bubble aournd 2007/2008 ... dozens of compaines flocked into Africa and other parts of the world exploring for U ... One out of many dozens got lucky - Mantra from Australia, by identifying the Mkuju River depostin in Tanzaia . ANd selling it to ROSATOM - some say, ROSATOM overpaid for it ...
The rest of the companies did not get lucky, nor did their shareholders ... the much laudated Paladin barely escaped bankruptcy in the 2018ies ... and French nuclear 'giant' AREVA was betrayed in the UraMin deal by the owners of UraMin :-) ... and AREVA (now renamed ORANO) suffered big time and had to be bailed out by the French Gvt with 4,5 billio (!) €€€.
Things aren't that different now ... Japan only got a few NPPs restarted ... at the same time, Germany is phasing out its NPPs ... the overall number of NPPs worldwide is not increasing (read "World Nuclear Industry Status Report").
Most (2/3+) of NPPs are built in China ... and China already secured enough U for running tose plants.
Now, WHERE is the increasing demand? ... just not there.
Was a buy side mining analyst when I started working back in 2005, the start of the last uranium bubble, learnt some valuable lessons. Also did reactor integrity work(homer Simpson suit on the reactor face) for a few years in Canada so have experienced the regulatory bureaucratic beast these plants are and the type of cost over runs, both in building and maintaining (MMT fixes this....)
From the uranium side of things the difference this time around is downgraded HEU(old warheads being recycled to supply fuel) is not nearly the supply behemoth it once was. might be net demand given the way arsenals are being rebuilt(haven't checked data recently but I'm sure there will be a slide deck on every Miner and E&Ds website).
However the ESG/social perception quagmire nuclear power is currently in is somewhat perplexing, back then it was still being pitched as a no carbon base load necessity and China was going to be bringing some ridiculous number of plants online over the next decades to start phasing out coal. And the no nuke crowd was silenced by the anti fossil fuel hoards. Now seems post Fukushima, that the existential threat of nuclear accidents and dealing with their spent fuel offsets the benefits of no CO2. which immediately brings up the obvious logic trap of well I thought we weren't going to exist in 50 years if we don't massively reduce our carbon output, why worry about how well we can store something for 1500 years if we won't make it 50.... anyways it's not about making sense it's about walking the masses in a circle and then selling them the fucking circle. I think at some point if the new green deal types actually want their narrative to hold water they will have to do a nuclear pivot but it's going to take a whole lot of posturing ahead of time.
At Around $90 a pound people will start talking about a natural ceiling of $140 as some PhD will start pushing his process on extracting uranium from sea water(naturally dissolved at 4ppb) and extraction having a b/e of $135 (these are 2005 $ terms probably have changed, or not as they tend to just reuse the same sht from the last cycle).
Worked for a long/short equity PM, had the displeasure of having to run paired trades. lesson learned if you have to be short, short the high grade established miners and buy the dodgiest POS "pounds in the ground" assets with the slickest Investor Relations person, preferably and ex hedge fund sales guy(should be lots of them floating around these days), go to PDAC they will find you. Even if the asset is located in Namibia and plan is to build a massive Heap leach operation in the middle of the fucking desert, using water that doesn't exist for the leaching process, then switching to a 200 mile pipeline to a non existent desalination plant on the coast after you publicly call them out on water issues on their quarterly. Side note: you'll know the market has topped when the largest power plant operator decides it wants to secure its own supply and buys said POS asset for 2x previous close. And while you will lick your wounds from being short it you'll take solace when that operator writes the entire asset off to the tune of a few billion two years later.
Also another sign for the top, when producers start locking up long term supply agreements with utilities, usually prefaced by a large mine having "issues" causing utilities to scramble and buy what ever they can.
But it's early days in this cycle, buy all the marginal non producing POS assets you can find and ride them for 10 baggers.
When I was in chemical engineering my senior year in 1972, I took a number of nuclear engineering classes at The Ohio State University. Besides my interest in nuclear energy, I had another ChemE that was going into US nuclear navy in my nuclear engineering classes—-he actually had to be interviewed and approved by Admiral Rickover, the father of the US nuclear navy to be assigned to nuclear ships. Anyway, in one of the instrument labs for nuclear engineering, the professor had taken pity on we two ChemE’s who were probably out of their depth in a mechanical and electrical engineering lab with oscilloscopes and electrical signal generators. While getting our lab assistance from the professor and chatting about our beliefs about the potential of nuclear energy, we found this nuclear engineering professor tell us in 1972 that nuclear power was too expensive given the decontamination and decommission costs of old nuclear plants. He told us wind and solar were the better energy solutions—- yes, he said this in 1972. Amazing!
So, I do not think that professor’s assessment of nuclear energy has become invalid over time, but now huge construction cost overruns and Chernobyl and Fukushima have now entered into the economic equation. Yes, maybe those existing plants in Japan once restarted will require additional Uranium fuel, but I understand Germany plans to decommission all their nuclear plants here in near future. That is why the Nordstream 2 gas line was so important to Germany. They were closing coal-fired and nuclear plants and needed clean and cheap replacement natural gas to stay competitive in world economy.
Instead of Uranium, you need to be looking at Bismuth metal as the next big precious metal. Almost as rare as Gold and Platinum, I believe Bismuth has the highest diaelectric permittivity and the lowest magnetic permability. With new understanding of magnetics coming out and using Bismuth metal in combination with other magnetic materials, I think that solid state electric generators could be developed with Iron/Air or Carbon fiber battery storage to provide reliable distributed power that is not as easily susceptible to climate effects.
Having been a "Navy Nuke" on submarines in the early 2000s, it doesn't take much effort to convince me that nuclear is just about at the top of the list of "green" energy sources. There's no combustion, and if submarines can float under the water and torture test their nuclear plants in the name of training their crews, nuclear power is inherently safe as well, especially on land. Are they 100 percent safe? No, but what is? Can it be an inflation hedge? I suppose so. The quantity of available product is limited, but so is the market for it. With that said, I'm dumping fiat into the Sprott trust. If the world wants to eliminate fossil fuels, there's no way to do it without nuclear power. I don't think anyone wants to see the Earth covered in solar panels, not even AOC.
I found out about uranium in summer of 2020. I was sold on the bull case, and even the bear case seemed bullish. Now about 1/3 of my stock portfolio is in uranium stocks. I follow Justin Huhn and Steve Penny.