The uranium market has remained strong in 2024, a welcome sign for the investors who had been waiting for uranium prices to increase and strengthen the market for over a decade.
The uranium market has faced difficulties since the 2011 Fukushima nuclear disaster, when tsunamis brought on by a massive earthquake crashed into and damaged several Japanese nuclear reactors. In the years since, fears over the radioactive risks posed by nuclear reactors, paired with excess supply, have weighed on prices.
But how do traders invest in uranium? The path is less straightforward than it is for metals like gold, but there are plenty of uranium investing options to consider. So what’s the best way to invest in uranium?
One way to invest in uranium is to purchase stocks. While the spot price of uranium is currently trading in the US$83 per pound range, its still well below its all-time high was US$136.22 per pound in 2007. In addition, many uranium stocks remain undervalued, meaning that it’s possible to get good deals while companies are “on sale.”
For investors who want exposure to the uranium market, but crave the diversity of a basket of equities instead of single stocks, exchange-traded funds (ETFs) are generally the way to go. The selection of uranium-focused ETFs isn’t very wide, but luckily for investors the options are growing.
One of its holdings is the Sprott Physical Uranium Trust, a fund that invests solely in physical uranium. As mentioned, it’s been credited with helping to boost prices and has become a popular investment vehicle.
As a third option, investors can look to the futures market while awaiting a further rise in the uranium price. Futures are financial contracts that obligate the buyer to purchase (or the seller to sell) an asset like a physical commodity or financial instrument at a predetermined future date and price.
Futures are an important part of the market as there is currently no exchange-listed, transparent price instrument that consumers and suppliers can use to manage prices and risks. Furthermore, uranium futures provide investors with a marketplace for direct exposure to the price of uranium.
Uranium excitement is high, with many experts saying the market is experiencing a renaissance.
Believers include John Ciampaglia, CEO of Sprott Asset Management, who sees many extremely bullish factors shaping today’s uranium market.
“One thing’s for sure, that we’ve found the floor at about US$85 a pound. … I think the price environment is incredibly supportive for investors at these levels,” Finegold said. “I think that we’re going to go higher than the US$106 this year for sure.”
As the need for clean energy grows and uranium oversupply diminishes, demand for the energy fuel is likely to grow. Investing while uranium stock prices have room improvement could offer an opportunity.
This is an updated version of an article originally published by the Investing News Network in 2016.
Securities Disclosure: I, Melissa Pistilli, hold no investment interest in any of the companies mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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