We first wrote about nuclear and the coming epic uranium “supply squeeze” in South African Investor as far back as April 2022. Since then, uranium’s price has more than doubled – sending our investments in uranium ETF and miners 30%, 40% and 80% higher.

Now that the uranium price is past a 16-year high, the big institutional players are piling in.

And that means, the uranium profit-opportunity for investors just got even bigger…

So much so, it could see investors 2x, 5x even 10x their money!

Let me explain why…

The EPIC uranium supply squeeze…

Governments have finally realised nuclear power is the cheapest and most reliable form of low carbon power.

At the recent United Nations Climate Change Conference – COP28 – 22 countries committed to tripling nuclear capacity by 2050.

Demand for uranium isn’t the big issue…

The supply of uranium is!

Since the last uranium bull market (2000s), there’s been little new investment in mines.

This makes sense. Why invest with prices so low?

Secondly, inventories at the largest producers have become dangerously low.

Back in the 2000s, inventories stood at around +30 million pounds. Today, that figure stands at HALF – 15 million pounds.

And it’s not getting any better.

Cameco’s (world’s second largest producer) inventories fell by 35% in 2023.
Production isn’t booming today either.

Both Kazatomprom (world’s largest producer) and Cameco recently reported production revisions. Combined, these uranium giants control around HALF of global supply.

Then add in the fact, new competitors (in the form of funds) – such as Yellow Cake and Sprott Physical Uranium Trust – hold physical uranium on behalf of investors – effectively taking more uranium supply out of the market.

The result?

Today’s demand stands at around 190,000 pounds, while supply is around 140,000 pounds. That’s a 25% deficit.

In short…

There simply isn’t enough uranium!

And expanding the supply isn’t quick or easy. Uranium prices have to remain high for the near future to incentivise producers to increase production.

Secondly, when you mine uranium, you can’t shovel it into a plant and hope for the best. It needs to be enriched. And 35% of the global enrichment market is controlled by Russia.
So there you have it.

Hedge funds want uranium…

ETFs want it…

Governments want it…

And nuclear power providers need it.

However, there simply isn’t enough uranium to go around.

The chart below gives you an idea of the uranium supply/demand imbalance…

uranium supply squeeze

It shows the actual expected mined pounds out of the ground on an annual basis compared with the actual burn up rate of the global nuclear reactor fleet.

You can see that we’ll remain at a deficit even with expected peak production toward the end of the decade.

Ultimately, the uranium price is expected to continue higher in 2024 with estimates of between $130-$150 per pound – as much as 40% higher from today’s prices.

So what can you invest in?

In my latest issue of South African Investor,  I list 3 uranium stocks. You can get the full details on each one here.

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