Uranium ETF Shares Uranium Uncertainty as a Commodity

The last time when we covered uranium as a commodity there was an easily identifiable upward trend, so the most well known tool to invest in the popular nuclear plant fuel was precisely the Global X Uranium ETF (URA). Unfortunately, as of now the fund is down 20% versus the market.

Since Sprott Asset Management took over Sprott Physical Uranium Trust (SRUUF), it has loaded it up with uranium. Rising premiums to NAV in both cases obviously created an opportunity to issue more shares and buy more uranium. SRUUF has accumulated an additional 24 million pounds this year and was pretty much the driver of the move.

That cycle appears to be over for now and even though the 41 million total pounds held in the trust will likely keep this market from falling, it is still only about 2 months' worth of global consumption. The base fundamentals of uranium supply and demand will have to drive the price higher. URA speculators hoping for a quick rebound are likely to be disappointed as nuclear power plants contract supply out many years at a time.

Most importantly, recently the German government said it opposes the European Union's plan to classify nuclear power as a sustainable technology suitable for green investment, as the country shuts three of its last six nuclear power plants. The reactors of Brokdorf, Grohnde and Gundremmingen C, run by utilities E.ON (EONGY) and RWE (RWEOY), shut down on Friday, and Germany's final three nuke plants - Isar 2, Emsland and Neckarwestheim II – will be turned off by the end of 2022. A draft of the proposal would label at least some nuclear power plant investments before 2045 as green.