How Russia Blew Up the Bull Case for Uranium Prices

Editor’s Note: Uranium was going to make investors a lot of money even before the invasion of Ukraine. The conflict has magnified and sped up uranium catalysts. Not only could major supply sources come offline, now countries like Germany are considering restarting their reactors to reduce reliance on Russian gas. Uranium was already poised to make one-stock millionaires. Now it’s doing so even faster with uranium stocks on the move in a big way. We discussed the situation in this week’s episode of Bizarro World. 


— Gerardo

Gerardo Del Real: Copper hit $5.00 per pound. Palladium is surging. So is lithium. Platinum looks solid. The entire commodity space looks good. We have to talk about uranium. We have to talk about Germany getting a dose of reality, the same way America's getting a dose of reality when it comes to their critical metal supply. Germany now appears ready to backtrack on shutting down its nuclear capacity, and quite possibly looks to be bringing demand online, which I don't think is anything anybody had on the bingo card. But the writers in 2022 are getting very creative. It's only March and buddy, are they busy.

Nick Hodge: Germany, for those who are new to the energy scene or just coming to this story now, we should lay a little bit of background. They've been one of the countries that have tried to shy away from nuclear. And those of us who are pro-nuclear or bullish on uranium have been saying that was a mistake for a while now. I mean, I've heard Germany slides in talks for several years. And it didn't make sense even before this war, because what happened, and this is a fact, this isn't conjectured, is their emissions went up when they took the nukes offline because they ended up having to make up the gap. And you can't make up the gap with things that don't emit carbon, you have to make it up with something that burns.

And so they weren't even burning clean stuff. They were burning lignite to make up the gap in Germany. And so everybody was already saying that's pretty dumb. You have these fleets of reactors and you have them offline and your emissions are going up. So one of the thoughts in the uranium space was that countries like that were making a mistake and others would realize that nuclear was a green technology. And that has been starting to happen over the past couple of even years. But certainly, in the past, I would say six to 12 months, we've seen environmentalists acclimate to the fact that nuclear's simply a key part of the mix and that's accepted now. It's interesting how these catalysts expedite things, right? We talked in the past two years about how COVID expedited a lot of things — social change and things like that.

Well, here you have a war expediting the energy change, or at least the reverberation back to nuclear. One of the prime bullish cases for uranium is that the world is reliant on Russian states for primary supply. And so when something happens that takes the primary supply from the Russian states offline… the price of uranium is going to go up and you can make a lot of money. It’s precisely what we prepared for.

And so there's a lot of people out there I think who should realize if they didn't already and who should quell their arguments and change their positioning. From a pure investment standpoint, the catalysts are unfolding rapidly. You mentioned oil above $110. Uranium is over $50 and is still not really where it needs to be to incent production to come online. And if Russia is going to be sanctioned, I mean, the utilities are going to have to think about reducing their dependence — long-term dependence — on contracting from Kazak and Russian supply. 

Then you still have the whole climate thing going on. COP26 was just in November. And they finalized Article 6, which is how countries and companies can work together to generate carbon credits. I covered COP13. We’re now at COP26, Gerardo.

Gerardo Del Real: We're gonna be 90 years old talking about this.

Nick Hodge: I know. We now have a ‘Race to Zero’ carbon, and the world is going to need carbon-free sources of energy. So many of the catalysts are coming together and some of them are positive and some of them are unfortunately negative, but all of them were part of the bull case for uranium.

Gerardo Del Real: And look, whether it's lithium, whether it's rare earths, whether it's uranium, whether it's copper, these are all themes that we've been writing about for years, jurisdictional risk aside, just based on supply-demand fundamentals. And I have news for everyone. The risk has always been on the supply side, not the demand side. The supply and demand fundamentals were already robust.

If everything went along smoothly, no strikes in Chile, no strikes in Peru, no mine closures, no war — if none of that ever happened, we still were looking at deficits for at least a couple of years, at the very least in the lithium space, the uranium space, and a couple of other sectors.

War, and everything that's going on simultaneously just amplify the urgent need for safe supply.

And the companies that can provide it are going to make investors a lot of money. 

Let's get it,

Gerardo Del Real
Editor, Daily Profit Cycle