Yesterday we talked about the inevitable end of the Environmental, Social, and Governance (ESG) movement. It’s now upon us.
And there’s a tremendous opportunity here.
As we discussed, nearly $2.2 trillion poured into the development of renewable energy over the last eight years. Solar and wind power were the major beneficiaries.
The problem is, these energy sources will never be able to power our electric grid. Because they are intermittent. They only produce power when the sun is shining and the wind is blowing.
So we are going to see an avalanche of investment shift back into traditional energy production in the years to come. And it’s already happening…
Both Uranium Energy Corp. and Ur-Energy recently resumed commercial operations.
These are two uranium miners who had paused activity specifically because the political climate had demonized nuclear energy – prompting the world to decommission over 100 nuclear reactors since 2016.
That drove uranium prices down to a low of $18 per pound ($18/lb) in 2016. And the spot price languished between $18 and $30/lb for the next four years.
At those price levels, it just wasn’t economical for companies like Uranium Energy and Ur-Energy to operate. They would lose money.
But the spot price of uranium just surpassed $100 per pound in January. Uranium hasn’t been this expensive since 2007.
This signals a strong rising demand for nuclear power production… which is why these two companies just went back to work.
And the latest report from the World Nuclear Organization suggests that this trend will continue…
Per the report, 60 nuclear reactors are currently under construction around the world. It will take years for these reactors to come online. And when they do, each of them will need uranium fuel to produce power.
This dynamic prompted Sprott Asset Management CEO John Ciampaglia to upgrade his forecast for the uranium spot price to $160 per pound by the end of 2024. And he suggested that the price will remain at elevated levels for “a very long period of time”. That’s because of how long it takes to get new nuclear reactors up and running.
If Ciampaglia is right about this, uranium still has roughly 60% upside ahead of it. And the top uranium mining stocks could stand to do even better from an investment perspective.
We maintain a core equity portfolio within our investment membership The Phoenician League. Our uranium position has more than doubled in value for us thanks to this trend. And it certainly looks like it will continue to perform well for us.
This speaks to how a tactical stock portfolio can help us build financial security. We just have to leverage the big trends in our favor.
Looking at the bigger picture – a shift back to nuclear power is very good for the world.
Nuclear is the most dense form of energy available to us today. And nuclear reactors emit mostly steam. They produce little to no pollution.
Of course, this begs the question – why didn’t the ESG movement embrace nuclear power? After all, nuclear reactors do not emit any carbon.
We’ll explore that question tomorrow.
-Joe Withrow
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