URNM - Should you buy uranium miners as pro-nuclear sentiment improves?
2023-09-27 11:08:18 ET
The world is in a climate crisis, and each year that passes, it gets worse – waters are warmer, and temperatures rise every year. Governments are searching for solutions and have ambitious plans to reduce greenhouse gas emissions.
But the road ahead is difficult as most governments are elected, so they compromise their goals.
In any case, no one can deny that a green revolution is happening. Just look at the electric vehicles on the road today compared to five years ago.
The race today is to obtain green energy as much as possible and as cheaply as possible. This is a daunting task because electricity demand is set to increase by 76% by 2050.
However, most of today’s energy production comes from fossil fuels. Alternatives are needed, and one is nuclear energy.
The number of nuclear reactors in the world is set to increase exponentially
Uranium is a component for producing nuclear fuel needed to power nuclear reactors. Nuclear energy is greener, and primary uranium mine supply is forecasted to trail demand by 2040 by some 1.5 billion pounds.
One of the main reasons is that the number of nuclear reactors worldwide is set to increase exponentially – no less than 111 are planned for construction.
How to invest in uranium
Investing in uranium is cheaper than indirectly owning an ETF dedicated to uranium miners. Such an ETF is Sprott Uranium Miners Fund (NYSE Arca: URNM). It invests at least 80% of its total assets in companies part of the North Shore Global Uranium Mining Index.
This index, also called URNMX, tracks the performance of companies involved in uranium mining operations, exploration, development, etc.
The market price vs. net asset value since inception can be seen below. One can note a bullish breakout after a long consolidation above support in the $30 area.
Alternatively, one can choose to invest in individual companies part of the index, such as Paladin Energy or Cameco. However, as mentioned earlier, investing via a dedicated ETF is cheaper.
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