Five reasons uranium investments are rising are led by the price of the naturally occurring radioactive element topping $60 per pound in early September as the commodity climbed for an eighth straight week.
Even though uranium prices had not reached that level since last April, other key reasons include the Biden administration’s backing, an ongoing clean energy campaign, persistent supply risks, growing demand and Russia’s war against Ukraine that has boosted prices for the oil. In addition, governments around the world are pursuing “clean energy” alternatives to fossil fuels such as gasoline, diesel oil and coal.
EWTN News Anchor Tracy Sabol interviews Paul Dykewicz.
I side-stepped partisan politics when interviewed recently on EWTN to focus on how rising mortgage rates, persistent inflation and climbing food prices do not support President Biden’s boasts about the benefits of the Inflation Reduction Act passed in August 2022. Despite giving the new law a name that suggests it will battle inflation, prices instead have risen for housing and many other expenses that fall especially heavily upon people of modest means.
Uranium Energy Corp. Soars
Uranium Energy Corp. (NYSEAMERICAN: UEC), an Austin, Texas-based pure-play uranium company, seeks to advance the next generation of low-cost, environmentally friendly In-Situ Recovery (ISR) mining uranium projects. The company has two production-ready ISR hub-and-spoke platforms in South Texas and Wyoming, anchored by licensed and operational processing plant capacity.
UEC also has seven U.S. ISR uranium projects, all with their major permits in place. The company further has other diversified holdings of uranium assets, including one of the largest physical uranium portfolios of U.S.- warehoused U3O8, a major equity stake in the only royalty company in the sector, Uranium Royalty Corp., and a pipeline of resource-stage uranium projects in Arizona, Colorado, New Mexico and Paraguay.
Mark Skousen, Ph.D., first brought Uranium Energy Corp. to my attention through his TNT Trader advisory service. He recommended the stock and related call options in TNT Trader on June 28. In just 10 weeks, the stock has jumped more than 41%.
Mark Skousen, Forecasts Strategies head and Ben Franklin scion, meets Paul Dykewicz.
“Regardless of what the Fed has planned for the economy, uranium remains on a hot streak,” Skousen wrote to his TNT Trader subscribers on June 12. “The price of the nuclear fuel rose above $60 and consequently our Uranium Energy Corp. recommendation keeps rising. It’s up again today and the options are up more than 300%. “
After recommending the sale of half the UEC call options for an “astounding 144% gain recently, ” Skousen wrote that his TNT Trader subscribers should keep holding on to the other half to ride the uranium bull further.
“We believe UEC is going to keep going up in the short term, so let’s hold on for even bigger gains since we are already playing with house money,” Skousen wrote.
Chart courtesy of www.stockcharts.com.
Five Reasons Uranium Investments Are Rising: Biden’s Backing
The White House guidebook for the Inflation Reduction Act provides a detailed overview of the clean energy and climate mitigation, agriculture and conservation-related investment programs. It further identifies eligibility to apply for funding and for what activities. A quick glance at the guidebook shows an emphasis on government funding of projects, not ways to curb inflation, stem price increases and stop runaway mortgage rates.
The legislation’s true aim appeared to be signaled about a year ago on August 16, 2022, when the White House called the new law one of the “most significant” acts Congress has taken on clean energy and climate change in the nation’s history. That law is another reason uranium is gaining interest as the fuel source for nuclear energy.
In the United States, climate-conscious provisions were included in the Inflation Reduction Act championed by the Biden administration when it became law during August 2022 to boost the use of nuclear power and other clean energy alternatives.
Five Reasons Uranium Investments Are Rising: Clean Energy Thrust
In August 2022, the White House released a statement claiming President Biden redefined American leadership to confront an “existential threat” to the climate and set forth a new era of innovation and ingenuity to cut consumer costs and boost the global clean energy economy. But the latest Consumer Price Index shows prices keep rising.
In July, the Consumer Price Index (CPI) for All Urban Consumers rose 0.2%, seasonally adjusted, and 3.2% over the last 12 months when not seasonally adjusted. The index for all items — less food and energy — increased 0.2% in July when seasonally adjusted, up 4.7% for the past year when not seasonally adjusted, the U.S. Bureau of Labor Statistics reported. The CPI measures average change over time for the prices paid by urban consumers for a market basket of consumer goods and services.
“The Fed’s tight money policy is having its effect,” wrote Skousen in his Forecast & Strategies investment newsletter hotline. “Interest rates are rising sharply, with the yield on the benchmark 10-year Treasury topping 4.25%, the highest it has been in 15 years. And the 30-year mortgage rate is now over 7%.”
The most recent rates show 30-year mortgage rates now at or topping 8%.
Five Reasons Uranium Investments Are Rising: Supply Risks
“We don’t want Treasury yields to collapse, as that’d signal a hard economic landing,” said Jim Woods, leader of the Intelligence Report investment newsletter. But a drift lower, especially in the 10-year Treasury Note, would help support the market multiple and make the argument for a 20X valuation (up from the current 19X) more viable.”
Investors are close paying attention to Fed Chairman Powell’s comments about future interest rates, especially during speaking engagements. He fortunately did say anything alarming when speaking at the Jackson Hole Economic Policy Symposium in late August.
Five Reasons Uranium Investments Are Rising: Growing Demand
Nuclear power equities offer a viable way to invest in uranium, Skousen said. Nuclear fission is nearly 8,000 times more efficient at producing energy than traditional fossil fuels or even solar, water and wind power, he added.
The construction of average U.S. nuclear power plants required 40 metric tons of steel and 190 cubic meters of concrete per average megawatt of electricity generating capacity, Skousen commented. Compare that to a typical wind-energy system, which requires construction inputs of 460 metric tons of steel and 870 cubic meters of concrete, he added.
Uranium-powered nuclear energy benefits during times like now as oil prices rise. Oil has rallied into the mid-$80s, fueled by OPEC’s extended production cuts. Crude oil could continue climbing as demand surpasses supplies in the months ahead.
Five Reasons Uranium Investments Are Rising: Russia’s Unrelenting Attacks
Interest in nuclear power has jumped since Russia invaded Ukraine in February 2022, causing many nations to seek alternative energy supplies, according to the World Nuclear Association (WNA) biennial Nuclear Fuel Report. Geopolitical instability, especially from Russia’s sustained attacks against Ukraine, has heightened the appeal of nuclear power for energy security and sovereignty, the Sept. 7 report added.
“The same instability has had significant implications for the globalized market for nuclear fuel cycle services, with utilities, suppliers and governments in North America and Europe pursuing opportunities to diversify supplies,” the association continued.
Demand for uranium in nuclear reactors is expected to climb by 28% by 2030 and nearly double by 2040 as governments increase nuclear power capacity to meet zero-carbon targets, the World Nuclear Association reported.
“The Russian conflict is going to bolster the case for continuing nuclear energy output at current levels with existing facilities,” said Jim Woods, who heads the Successful Investing and Intelligence Report investment newsletters, as well as premium trading services such as High Velocity Options.
“There is also a good chance that several nations take additional steps to enhance their energy security using this established method,” Woods continued. “Those factors enhance the appeal of global stocks engaged in the discovery and production of nuclear components.”
Paul Dykewicz interviews Jim Woods, who heads Intelligence Report.
Cameco Has Climbed as Clean Energy Advances
Canada’s Cameco Corporation (NYSE: CCJ) pays a small dividend, but it also offers an opportunity for capital appreciation as a clean energy stock. The company paid a dividend of $0.089 last Nov. 29. It does not offer much yield but many checking accounts don’t either. Cameco also may be able to raise its dividend in the future.
Skousen has recommended Cameco in the past and recently added it to his Fast Money Alert portfolio. He previously has profited by recommending Cameco in the past.
Chart courtesy of www.stockcharts.com.
Woods’ preferred vehicle to participate in this sector is the Global X Uranium ETF (NYSEARCA: URA). The diversified ETF seeks to provide investors access to a range of companies engaged in uranium mining and the production of nuclear components, including extraction, refining, exploration or manufacturing equipment for the uranium and nuclear industries, he added.
Chart courtesy of www.stockcharts.com.
The stock paid a small dividend of $0.049 on December 29, 2022. Dividend payments never are guaranteed but another payout was provided by the company late this year, too.
Carlson Chooses PICK as a Way to Invest in Uranium
Bob Carlson, a pension fund chairman who also heads the Retirement Watch investment newsletter, said he prefers to invest in uranium through iShares MSCI Global Metals and Mining Producers (PICK). Carlson drew my attention to the exchange-traded fund (ETF) last fall. It has advanced by double-digit percentages since then.
“I was attracted to this ETF even before the invasion of Ukraine,” Carlson told me. “The mining companies had gone through a long bear market. They worked to reduce debt and otherwise clean up their balance sheets. Their more efficient operations mean most of them can profit at relatively low prices for their commodities and will earn strong profits as prices rise.”
Retirement Watch leader Bob Carlson meets with Paul Dykewicz.
Michelle Connell, who heads Dallas-based Portia Capital Management, told me that she prefers to invest in PICK rather than individual uranium companies. One reason is most of the stocks held in PICK are profitable, while having positive revenue growth and book value. PICK also has shown superior long-term performance versus gold and silver ETFs by outperforming the precious metals on a total return basis for one year, three years and five years, Connell said.
Chart courtesy of www.stockcharts.com.
“Maybe this is a better way to hedge for inflation than a gold ETF,” Connell said.
One point of caution is that PICK is market-cap-weighted, with its top 10 stock holdings comprising more than 50% of the ETF’s portfolio, so underperformance by one of those key positions could crimp the fund’s returns, Connell continued.
Freeport-McMorran (NYSE: FCX), of Phoenix, Arizona, ranks near the top of the ETF’s biggest positions. The company owns copper mines worldwide. Copper is in short supply and is used in many manufacturing processes, including green technology and electric vehicles, Connell continued.
Michelle Connell heads Dallas-based Portia Capital Management,
Nuclear Power Proves Cost-Effectiveness
Former Republican presidential candidate and media mogul Steve Forbes, who I interviewed in July at the FreedomFest conference, recently said the “green energy” projects funded by President Biden are “expensive” and “not good for the environment.” For those who are skeptical of his views, click this video link to hear his reasoning.
A wind farm on the left is between Middelfart – Kaslunde, in southern Denmark, while the one on the right is in Hachenburg, Germany. Photos by Paul Dykewicz.
Forbes accused the Biden administration of spending hundreds of billions of dollars on “schemes” to replace fossil fuels with renewable energy sources. For instance, Forbes said one wind turbine requires the use of 2,500 tons of concrete that goes 30 feet deep into the ground.
“Imagine trying to reclaim that land,” Forbes said.
Five Reasons Uranium Investments Are Rising: Wind Power Limits
A wind turbine also requires 900 tons of steel and 45 tons of unrecyclable plastic, Forbes continued. To operate the wind turbine, it requires 700 gallons of costly synthetic lubricants that are vulnerable to spills since they must be replaced each year, he added.
Wind farms dot the landscape between Frankfurt and Cologne, Germany. Photos by Paul Dykewicz
Solar and wind farms need “gargantuan” amounts of land, Forbes said. For example, New York City occupies 205,000 acres of land, but it would require 2,000,000 acres of land to fuel the Big Apple solely with renewable energy, he explained.
A 100-megawatt gas-fired turbine is about the size of a residential house and would provide electricity for 75,000 homes, Forbes counseled. To give equivalent energy to the same number of homes, 20 wind turbines would occupy 10 square miles of land.
“Renewables are very expensive,” Forbes continued. “Cost overruns here are as common as they are at the Pentagon.”
Wind farms are “notorious bird killers,” degrade existing transmission lines and displace wildlife, Forbes warned. Plus, what should be done with the 1,000-pound batteries in electric vehicles that require replacement with no recycling of the worn-out ones? he asked rhetorically.
I spoke to Duncan Dykewicz, a resident of Hachenburg, Germany, who said there was no community opposition to the use of wind turbines as a source of energy. The appearance of wind turbines in the community’s scenic landscape seems to have become accepted as an environmentally friendly move, he added.
Renewables do require an immense amount of mining for minerals, Forbes said. To replace fossil fuels, a 40-fold increase would be required in lithium, Forbes added.
These matters warrant substantive discussion and analysis, Forbes advised. Without it, the result will be bad environmental results and record-breaking waste of federal money, he added.
The key five reasons uranium investments are surging add support to the powerful trend. Amid high inflation, rising mortgage rates and increasing prices for food, fuel and other goods, uranium appears primed to keep ascending.
Rising political risk is raising the prospects for uranium further amid Russia’s unrelenting war in Ukraine, with the latter country engaging in a staunch counteroffensive. In the face of those and other political risks, uranium still keeps rising.
Paul Dykewicz, www.pauldykewicz.com, is an award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C. In that role, he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other reports. Previously, Paul served as business editor and a columnist at Baltimore’s Daily Record newspaper and as a reporter at the Baltimore Business Journal. Plus, Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many other sports figures. To buy signed and specially dedicated copies, call 202-677-4457.
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