Uranium is my highest conviction long-term play. There are dozens of reasons why I feel this sector of commodities will see serious growth in the next decade. Uranium itself is used for two things and two things only, weaponry and nuclear power generation. The latter of which, I am extremely bullish on. I believe nuclear will become the forefront of renewables and generate cleanly sourced electricity to the globe while working in tandem with fossil fuels.

It obvious that the global economy is moving towards more renewable and sustainable methods of generating electricity. Oil and natural gas have dominated the energy industry for over 100 years and will continue to do so as exploration and drilling techniques improve. There is no lack of fossil fuels, the invention of natural gas fracking at the turn of the century has shown that this industry could still be in infancy for a large part of the world. In the European Union, natural gas production is considered a renewable energy along with wind and solar. The switch to renewables will be slow and expensive, with increasing demand for energy along with choked supply lines (COVID, Ukraine War, idiocy etc.) most countries are not intending to make that switch so soon. The ones that have tried to rely on strictly sun and wind power have failed their people miserably as the output fails to meet demand and reliance on foreign powers has skyrocketed energy prices, I’m looking at you Germany. Regardless, the global push to renewables is still existent and the nuclear is only logical solution to beat out oil and gas.

I could spend hours talking about the short comings of solar, wind and hydro power. The cost of infrastructure, unreliable output, scarce source materials and other factors have shown that these sources are not feasible at large scale. On its face, these renewables appear green and sustainable but when you actually look at the methods of building these systems its anything but green. For example, solar panels require specific rare earth metals that must be mined in unstainable ways. Windmills require absurd amounts of steel which is refined by burning coal. I like to call these types of renewables virtue generators, as they produce very little energy under the false pretense of sustainability. Don’t get me wrong, on a small scale (residential and commercial buildings) these types of renewables can be effective, albeit expensive. However, to power a grid for an entire municipality, they fall short. Hydroelectric power is an exception to these shortcomings but it does come at a cost with clean drinking water, please refer to the soon nonexistent Lake Mead.

Here is where nuclear comes in. While the cost of infrastructure can be immense, the kilowatt hours produced by nuclear plants severely outweighs the cost to build. Plants pay for themselves within years rather than decades. Only oil and gas wells can compete with nuclear’s return on investment if you can look past market manipulation by OPEC and other big players. The main input for nuclear power generation is of course Uranium. This extremely dense chemical element can be found in nature as uraninite ore which has a yellow appearance and can pretty much turn up anywhere. Typically, the isotope Uranium-238 occurs naturally but must undergo enrichment to become Uranium-235 which is the main isotope with fissile properties (nuclear fission) and can be used to generate power. A majority of the worlds production and enrichment comes from Kazakhstan, Canada and Australia.

Ok enough with the nerd stuff dude, why should I invest? First off, nuclear has gotten a pretty bad rap for the last few decades. Uranium publicity has never been great since humans decided to use it to blow each other up in extravagant fashion. In addition, freak accidents like Chernobyl and Fukushima have given a perception that nuclear power generation is dangerous and not worth the effort. The oil & gas energy lobbies along with the virtue generator lobbies has also alluded to the waste products resulting from nuclear. Consequently, these shortfalls can be easily disputed. First, a majority of nuclear warheads have been decommissioned after the US and USSR realized they could each blow up the world 10 times over. Second, the two disasters mentioned contain the only deaths derived from nuclear power and they pale in comparison to the deaths caused by other sources of energy (see chart below). Third, The total nuclear waste generated from every plant for the last 70 years can be consolidated into a warehouse the smaller than a football field. Compare that to waste and pollutants derived from other sources and nuclear waste becomes a trivial matter.

Because of the reasons mentioned above, nuclear power has been hindered by it’s optics. However these myths and and controversies are becoming inconsequential as the demand for sustainable energy increases. We can thank these poor representations for cheaply priced uranium. On a historical basis, uranium spot is trading about 1/3 the price of its all time high in the early 2000s. In the inflationary environment we face today, we could expect uranium to reach that ATH and then some if compared to other commodities like copper and nickel. In addition, the Sprott Uranium Trust now allows this market to be paper traded similar to silver and other commodities. This has brought in an immense amount of institutional investors to potentially push up the price of uranium. The biggest reason is the current supply compared to the demand. Even with increased production the global supply is absurdly inadequate to reach current demand. My friends, the price must go up. Regardless of how you feel about energy production or geopolitics, uranium is cheap, everything is expensive, buy uranium miners, collect returns. It’s simple, YELLOW ROCKS!

Current Outlook: Uranium miners and enrichment companies have done very well for the past few years. Some stocks doubled some went 5-10x. It was lots of fun but the spot uranium price is still well below its ATH. Many mining stocks are at local highs and will likely pull back as investors accumulate. This sector has been following the broader market but like oil stocks, uranium companies have been outperforming. Every dip in this sector is an opportunity. I will continue to load on these stocks and I may even buy some raw ore if I knew how to properly store it. Production of new plants and recommissioning old plants is already happening. Also, the biggest player in uranium enrichment, Kazakhstan, is good buddies with Russia. This tells me that countries that are not big fans of Mr. Putin are inclined to source uranium from other sources which will obviously increase production. Things move very slow in this space for long periods and then go crazy all at once. Positioning yourself in a variety of mining stocks, royalty companies, and ETFs will be profitable in the long run. It does not hurt to take profits as there has already been major price appreciation.

Long-Term Outlook: It is not easy to track this market. Charting these tickers makes almost no sense but they are arguably cheap compared to last year and abysmally cheap if you consider and much higher price of uranium. This is of course a long term play, don’t expect to get rich off yellow rocks unless your pulling the stuff out of the ground yourself and making fancy yellow furniture with it. Yes that’s a real thing. My conviction is high that we will see a decade of inflation. This is good for commodities but many of these metals and raw materials have already seen crazy swings in price. That doesn’t mean that they are finished increasing by any means but in comparison, uranium has more upside potential than other markets. Energy moves slow, it takes awhile to build new plants, and pull the crap out of earth and make cores and finally produce the energy. The shift is in motion but it won’t happen immediately. It is worth noting that the US is behind the rest of the world. Countries like France are already receiving most of their energy from nuclear and they look like geniuses for having the foresight to not be dependent on Russian oil and gas. Looking at you again Germany. Bottom line is, the world is moving to renewables. The green energy we were sold on does not produce enough at a large scale and there is no way to make the sun any sunnier or the wind any windier. Lets pretend those are real words. Nuclear is still improving, it was the obvious solution in the past but lobbying has hindered its ability to take over Oil & Gas. Methods of enriching uranium are becoming more sustainable and innovations in nuclear reactors are entering the 21st century. To me, this is an obvious long-term investment. Worst case scenario, we enter World War III and the nuclear arms race begins. Either way we get rich.