A commodity sector with special interest

The Uranium sector has been conspicuously bullish lately

I have not had time to go fishing about to find out what may be at the heart of this, but on Friday per the NFTRH Trade Log, URNM was added as it dropped toward the SMA 200. It was added to an existing position in NexGen Energy (NXE).

Added URNM. URNM chosen over URA because it sells for a slight discount to NAV and because it holds physical u3o8.

It does not look like much on this chart but 6% at the open is something to take note of, especially after the previous moves that put it above the SMA 200. The objective now would be to change the trends back to up, which the sector is still working on. The commodity sector – especially in the outliers like Uranium – is notorious for dynamic and volatile rotations.

From NFTRH 721:

That said, there are still combined inflation/supply chain/simmering global war pressures that could pop certain commodities at certain times, especially strategic commodities and materials like Natural Gas, Rare Earths, Uranium, Lithium, etc. Despite the negative (vs. gold) analysis above, oil can also be a wild card subject to politics as much as inflation or economics at any given time.

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This Post Has 2 Comments

  1. David Allen

    The catalyst for the Uranium market this time isn’t completely clear, but the timing suggests that announcements about the breadth and timing of Japanese reactor restarts may have been the main cause. There has been a lot of positive news recently, including more commitments to reactor builds and the need to overfeed (use more source U308) in the fuel cycle to fulfil short term demand to supply customers. More demand, less supply (Russia restrictions and SPUT/U.UN holding a lot of U308).

    URA holds the main physical uranium funds too, although in a smaller quantity (~11% vs 15%). The main difference is that it is not a pure uranium fund. It also holds companies like BHP and RIO where Uranium is a small part of their business. URA has a much deeper options market, not that you really need leverage!

    Uranium stocks showed in Q1 that they can rise (quickly) while the broad markets are in an orderly descent. They may do that again, although in a crash gains could disappear very quickly.

    1. Gary

      David, that is so very helpful. Thank you so much. Side note: NFTRH has some of the most astute subscribers. I know this from experience, including its very 1st subscriber back in 2008, the late Jonathan Auerbach of Auerbach Grayson. It puts me in awe sometimes.

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