Uranium ETFs are all the rage these days and retail traders on WallStreetBets are realizing it
Uranium, the raw material needed to generate electricity through the nuclear fission process, was dismissed by analysts after the devastating catastrophe of the Japanese power plant Fukushima in 2011 with a viable bullish thesis as a raw material has turned in recent years, with a sonorous forecast one new bull cycle emerging in financial halls.
Keep in mind that the Global X Uranium ETF (NYSEARCA: URA) has made over 70 percent profit since the start of the year, with around 50 percent profit since August 19th!
There are two key factors that underpin the current bullish thesis about uranium.
The demand for uranium continues to rise as the supply cannot keep up
The COVID-19 pandemic has reduced global uranium supplies by around 30 percent as the mines ceased production. Meanwhile, the demand for uranium continues to rise. There are currently 444 nuclear power plants in operation worldwide, and a further 51 are in the construction phase.
In addition, small, modular nuclear reactors seem to be gaining traction lately due to their increased safety as well as the potential to increase grid stability in a CO2-neutral manner as the world increasingly switches to renewable energy sources such as solar and wind energy. The IAEA stated in a recent report:
“There are about 50 [Small Modular Reactor] SMR designs and concepts worldwide. Most of them are in various stages of development and some are considered to be useful in the short term. There are currently four SMRs in the advanced stages of construction in Argentina, China and Russia, and several existing and new nuclear countries are conducting SMR research and development. “
This means that electricity generation from nuclear power will not only continue to exist, but will also increase in the near future, thus significantly boosting the demand for uranium.
In another recent development that has received a lot of attention from uranium bulls, Japan is now restarting its nuclear power plants that were shut down after the Fukushima disaster in 2011. Keep in mind that by 2011, the Asian country was generating up to 30 percent of its total electricity from nuclear power. This means that a full revitalization of the nuclear industry in Japan would significantly increase the country’s demand for uranium.
The Sprott Physical Uranium Trust is devouring valuable supplies
On July 19, 2021, the Uranium Participation Corporation (UPC) was reorganized into the Sprott Physical Uranium Trust. The trust is currently listed on the Toronto Stock Exchange (TSX) and will have to apply for listing in the United States at a later date. The Trust trades in Canadian dollars on the TSX under the symbol [U.UN]. It is also traded in US dollars under the ticker symbol [U.U].
The Sprott Physical Uranium Trust strives to invest and hold almost all of its assets in the form of Yellowcake Uranium in order to provide its investors with a safe and liquid alternative to uranium ETFs. The trust has now accumulated $ 1.08 billion in physical uranium, which equates to 24.914 million ounces of yellowcake uranium and 300,000 KgU of UF6. Remember that the total spot volume of uranium in 2020 was £ 92.2 million. This means that the Sprott Physical Uranium Trust has already cornered around 27 percent of the total spot volume in 2020!
WallStreetBets retailers are noticing this new paradigm
Comments on the URA ETF on WallStreetBets
There are currently 26 ETFs offering exposure to uranium. Of these, the Global X Uranium ETF (URA) appears to be drawing the most attention from retailers on WallStreetBets and other forums. As an illustration, the URA ETF has been mentioned 84 times in comments on the Reddit-based forum in the past seven days. As a reference, AMC Entertainment (NYSE: AMC) was mentioned a total of 992 times during the same period. This means that the attractiveness of URA in the forum is currently only around 8 percent of that of AMC. Still, the trend is important here. Most of the retail interest in uranium has only been generated in the past few weeks, and with the commodity fundamentals firmly in stock for the foreseeable future, this burgeoning interest is only likely to grow.
Do you think WallStreetBets’ burgeoning interest in uranium sets the stage for an explosive rally? Let us know your thoughts in the comments below.