Uranium

How to Invest in Uranium

How to Invest in Uranium
chart line breaking through stone as it rises

How can investors enter the market while the price of is beginning to grow? Here’s a look at stocks, ETFs and uranium futures.

Many have been waiting for the uranium price to increase and strengthen the market. As the trend toward clean energy continues, some believe that day is soon to come.

The uranium price has faced difficulties since the 2011 Fukushima nuclear disaster. A massive earthquake damaged several Japanese nuclear reactors, and they had to be taken offline. Fears over the radioactive risks posed by nuclear power reactors post-Fukushima, paired with excess supply, have weighed on the spot price in the years since then.

But in 2021 and 2022, rays of hope have returned to the uranium industry. High-profile supply cuts from major producers such as Kazakhstan’s Kazatomprom and Canada’s Cameco (TSX:CCO,NYSE:CCJ), COVID-19 related output disruptions, the Russia-Ukraine conflict and the introduction of the Sprott Physical Uranium Trust (TSX:U.UN) have all culminated in higher prices. Now, optimistic market watchers are beginning to position themselves for a potential global uranium boom.


On the demand side, there are signals that nuclear power is expected to play an integral role in a clean energy future. John Ciampaglia, CEO of Sprott Asset Management, noted investors' heightened attention on materials needed for the green energy transition.

“As countries strive to achieve energy independence, many are turning to reliable, carbon-free nuclear energy,” John Kotek, senior vice president of policy development and public affairs at the Nuclear Energy Institute (NEI), said via email. “This interest in carbon-free technologies offers a tremendous global export opportunity for new nuclear energy systems, as evidenced by the growing number of countries including nuclear energy in their long-term climate strategies.”

But how do traders invest in uranium? Unlike gold, owning physical uranium is not possible, especially due to the metal’s radioactive characteristics. So where does that leave investors?

How to invest in uranium: Stocks

One of the three ways to invest in uranium is to purchase stocks. With the current price of uranium still relatively low — its all time high came in 2007, when it hit US$136.22 — it’s possible to get good deals while companies are “on sale.”

When looking at stocks, beginners may want to start by considering some of the world’s largest uranium-mining companies. These include uranium producers like Cameco, Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) and BHP (NYSE:BHP,ASX:BHP,LSE:BHP).

Of course, these large mining companies are not the last word in the market. In fact, there are quite a few mid-tier and junior uranium exploration companies that investors may want to discover. As a starting point, check out our list of the top-performing TSXV- and TSX-listed uranium stocks.

Understanding where these companies’ uranium mines and production facilities are located can also help investors make informed decisions. Those interested in uranium stocks may want to look at the countries that produce the most of the metal. Last year, the three top uranium-mining jurisdictions were Kazakhstan, Australia and Namibia.

Finally, another interesting option for uranium investors is Uranium Participation (TSX:U,OTC Pink:URPTF). The company holds physical uranium inventories and its share price tracks the underlying price of uranium. In this way, it provides investors with exposure to physical uranium.

How to invest in uranium: ETFs

For investors who want exposure to the market, but crave the diversity of a basket of equities instead of single stocks, exchange-traded funds (ETFs) are generally the way to go. Unfortunately for uranium investors, the selection of uranium-focused ETFs isn’t very wide, but the options are growing.

For starters, investors can look at Global X Funds (ARCA:URA), which tracks a basket of mining firms. The fund is made up of both American and international uranium miners and producers. An alternative to that ETF is the Van Eck Market Vectors Uranium + Nuclear Energy ETF (ARCA:NLR), which tracks a market cap-weighted index of companies in the uranium industry.

Another is the Horizons Global Uranium Index ETF (TSX:HURA); it is designed to give investors exposure to the rebounding uranium industry. HURA features Canadian uranium miners and was launched by Horizons ETFs Management in mid-2019.

The latest uranium ETF is the Sprott Uranium Miners ETF (ARCA:URNM). It’s an international uranium fund comprised of companies in Kazakhstan, Canada and the US. Using the North Shore Global Uranium Mining Index, the ETF tracks producers and explorers, as well as holders of physical uranium.

One of those holdings is the Sprott Physical Uranium Trust (TSX:U.UN), a fund that invests solely in physical uranium.

“As global governments increasingly turn to nuclear energy to address the dual challenges of achieving energy transition and energy security, we expect demand for uranium to remain strong,” Ciampaglia said in a press release. “Uranium mining is critical to the clean energy transition and URNM provides investors with access to producers, developers, exploration companies as well as vehicles that hold physical uranium.”

How to invest in uranium: Futures

As a third option, investors can look to the futures market while awaiting a rise in the uranium price. Futures are financial contracts that obligate the buyer to purchase (or the seller to sell) an asset like a physical commodity or financial instrument at a predetermined future date and price.

In terms of uranium futures, investors once again have few options. CME Group (NASDAQ:CME) offers UxC uranium U3O8 futures. These contracts track U3O8, and each one represents 250 pounds of the nuclear fuel. The NYMEX also provides investors with a U3O8 futures trading option.

Futures are an important part of the market as there is currently no exchange-listed, transparent price instrument that consumers and suppliers can use to manage prices and risks. Furthermore, uranium futures provide investors with a marketplace for direct exposure to the price of uranium.

How to invest in uranium: Why pick uranium?

When it comes to uranium investing, the thesis is simple: Many investors believe that the market could be on the cusp of a renaissance.

Believers include Lobo Tiggre, editor and founder of IndependentSpeculator.com, who told INN at the 2022 Prospectors & Developers Association of Canada (PDAC) convention that of all the metals commodities, uranium gets him the most excited.

"Of all these metals and minerals, uranium is the only one that's still below the average incentive cost or cost of production around the world right now," Tiggre explained. "It's the only one that you can actually say is still too cheap, that the price has to go up for there to be more — that's unique."

Nick Hodge, editor of Daily Profit Cycle, also runs with the uranium bulls and sees a number of catalysts that could kickstart the uranium market, most notably cash flow. "Once there's contracted cash flows that are out on a longer time horizon that Wall Street can sink its teeth into, and the sector grows in general … I think you get to a point where the 'large players,' the Wall Street banks, can no longer ignore the sector and that money starts to come in," he said in an INN interview at the 2022 Vancouver Resource Investment Conference (VRIC). "And that can be a real game changer for people who are in early."

As it stands, nuclear energy provides 10 percent of the world’s electricity. With new capacity growing annually, the International Atomic Energy Agency forecasts that percentage could reach 12 percent by 2050.

As the need for clean energy grows and uranium oversupply diminishes, demand for the energy fuel is likely to grow. Investing while the spot price continues to show improvement could offer an opportunity.

This is an updated version of an article originally published by the Investing News Network in 2016.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no investment interest in any of the companies mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

How to Invest in Uranium:

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