Categories: Energy Stocks
Topics: Lithium Stocks / Uranium Stocks

Expert contrarian reveals secret path to life-changing uranium and lithium gains in 2024

To say uranium and lithium have been on starkly different commodity price tracks of late would be a profound understatement.

Gaining more than 50% and topping US$100/lb for the first time in a decade and a half, uranium — aka yellowcake or U3O8 — outperformed ALL other metals in 2023 and looks primed for even greater price escalation in 2024… bringing select small-cap equities along for the profitable ride.

On the complete opposite side of the spectrum, the lithium spot price has cratered by more than 80% in the past year, now fetching just ~US$13,500 per ton — its lowest level since 2020 — from a recent peak of ~US$80,000 per ton in Q4 of 2022.

A significant rebound in the lithium price is undoubtedly on the way; it’s really just a matter of timing.

As steadfast contrarians, understanding the primary reasons for these polar opposite trajectories, with an emphasis on price cycle, is really the key to positioning for profit windfalls within the clean energy metals space in 2024.

The first thing you need to look at, obviously, is supply and demand.

Other than gold, which trades primarily on investor sentiment, virtually all other metals trade in cycles predicated primarily on supply/demand fundamentals.

For uranium in 2024, what we have is a market that’s consuming close to 200 million pounds U3O8 annually — yet producing only around 140 million pounds.

That equates to a 60-million-pound structural deficit this year… which, when compounded over the next 6 years to the end of the current decade, balloons to a massive ~360 million pound deficit.

That’s the primary reason why we’re seeing such a powerful and sustained bull cycle in the uranium price as we kick off the new year.

And it’s happening in concert with production shortfalls from some of the world’s largest producers. That includes Kazatomprom, the world’s biggest uranium miner, who now says it’ll come up well short of previously announced production targets over the next two years at a minimum. 
Similarly, NYSE-listed major uranium producer Cameco has now lowered its own near-term production guidance.

What it all translates to is escalating uranium demand amid constrained supply resulting in decade-plus commodity highs in a booming bull run… with plenty of hoofs!

Adding further fuel to the demand side, there is a ton of positive sentiment brewing in the global uranium space as nations are fast-realizing that net-zero emissions goals are unattainable without clean-burning, carbon-emissions-free nuclear energy being a major component of the energy transition away from coal-fired plants.

Underpinning that seachange in sentiment, at the recent COP28 Conference in Dubai, nearly two dozen nations, including some of the largest economies in the world, signed a joint declaration pledging to TRIPLE nuclear capacity by 2050.

That’s obviously welcome news for the industry AND for the future health of our planet.

Yet, the million-dollar question remains…

Where will all of that nuclear fuel come from?

And the answer is…

More uranium mining in safe mining jurisdictions such as the United States, Canada, and Australia! 

That coordinated push, coupled with the favorable supply/demand fundamentals now in play, points to continued strength in what may soon prove to be the most powerful uranium bull market the world has ever seen.

For those who closely follow the small-cap “junior” uranium space, like our own Gerardo Del Real of Junior Resource Monthly, Skyharbour Resources’ CEO Jordan Trimble had this to say as the two sat down just the other day for an in-depth discussion on the uranium space:

It's a very exciting time for the commodity. I think we're going to see much higher uranium prices. One other thing to talk about here is the fact that there is some catching up to do with the uranium equities, in particular the smaller and mid-cap names. This isn't unusual to see a bit of a lag as, typically, the smaller and mid-cap mining stocks outperform later in the cycle. I think that's yet to come. And so investors have a lot to look forward to over the coming months and over the coming years with this sector and with the uranium price.

In other words… plenty of tailwinds ahead for uranium and for select small-cap uranium equities in 2024. Again, we were very, very early to the uranium bull, and, as Gerardo explains here… there’s still LOTS of room to run!

Lithium, on the other hand, and as we touched upon earlier, finds itself at the far other end of the spectrum in terms of where it currently sits in the commodity price cycle.

To illustrate… just over a year ago, lithium prices were charging toward US$80,000 per ton. At that time, major lithium producers such as NYSE-listed Albemarle were so inundated with lithium orders from EV makers that they began holding auctions, which, in turn, drove prices further skyward.

Today, the global lithium story has swung a full 180° with the metal down some 80-plus-percent to the ~US$13,500 per ton level and with industry-leader Albemarle now resorting to staff cuts and project resets as a means of reining in costs as it, along with the rest of the industry, hunkers down to weather the temporary squall.

Again, it all comes down to the ever-shifting forces of supply and demand.

At present, demand for the aptly-named “white petroleum” has fallen off the proverbial cliff due in large part to slumping EV sales in China — the world’s largest EV market — as well as in other large EV markets such as the United States and across much of Europe.

EV automakers worldwide are now toeing that delicate line of “price reductions” versus “bottom line fiscal performance.”

Tesla, as just one example, has slashed prices pretty much model-wide while simultaneously lowering earnings projections for fiscal-year 2024. Ford and GM are also scaling back their own EV production plans — at least temporarily.

Adding to the metal’s precipitous slump, China has been purposely flooding the market with lower-quality, lower-cost lithium concentrates from various African nations in order to advance their own self-interests… something the Chinese regime is very well-versed in.

Chinese-owned companies, for instance, have recently allocated more than US$1B to the acquisition and development of lithium projects in Zimbabwe (a nation that has seen very little Western investment), further tightening China’s iron clad grip on the global critical minerals supply chain.

In essence, China is creating its own lithium market while simultaneously selling into it, thereby exerting additional downward pressure on the key EV battery metal at a time when global electric vehicle sales have hit a bit of a plateau; still rising but not as fast as previously forecast.

Of course, the Fed has only compounded the issue with its recent string of rate hikes, which has served to rattle the entire automobile industry — including, of course, EVs and hybrids.

So what we have, in essence, is a tale of two different stories for two vastly different clean energy metals.

While uranium is currently in the midst of an historic bull run with plenty of runway left… lithium finds itself under the temporary weight of the bear.

Yet, with the predictable cyclicality of metals, as discussed, and with a Fed pivot anticipated for later in the year, there are astute moves to be made in both uranium and lithium equities — particularly in the small-cap space.

You heard from Skyharbour’s Jordan Trimble who has witnessed multiple uranium price cycles throughout his distinguished career; he sees tremendous near-term upside in select uranium equities, stating, “…investors have a lot to look forward to over the coming months and over the coming years with this sector and with the uranium price.”

On the lithium side, a more contrarian approach is duly warranted as the exact timing of the forthcoming rebound in the lithium market is, at this stage, truly anyone’s guess.

And while not quite as robust as previously projected, the global EV market is still forecast to attain record sales volume of ~17.5 million units for fiscal 2024 — at a, call it, “respectable” year-over-year growth rate of 27%.

So, for those wondering if a spirited lithium rebound is indeed imminent, the answer is… absolutely, 100%! 

Right now, it’s about preemptively positioning in the best small-cap lithium names, early and low, as “non-contrarians” have their attention diverted elsewhere.

For those seasoned contrarians among us… we’re ecstatic to be kicking off the new year with a brand-new, feature-length video presentation on Clean Energy Investing in 2024.

It’s the work of our own Nick Hodge (below with “yellowcake” firmly in-hand!) of Foundational Profits and covers not only uranium and lithium but a whole host of other “green metals” deemed critical to the global energy transition.

You can check that out in its entirety right here. 

Yours in profits,

Mike Fagan
Editor, Daily Profit Cycle