It might feel like uranium's bull story has gotten long in the tooth, said Justin Huhn of Uranium Insider — but major firms haven't even entered the market yet.
Uranium prices faced headwinds last week, falling below the US$60 per pound level, but Justin Huhn, founder and publisher of Uranium Insider, believes the market still has plenty of room to run.
"From a retail investor perspective, it's easy to look at weekly charts of some of the uranium stocks and be like, 'Oh my gosh, we're up so much in the past three years, this rally has got to be close to over,'" he said.
"And then you talk to somebody like John (Ciampaglia) at Sprott, and he's telling you, 'Yeah, the big money can't even position yet because the market's not large enough — and they will when it (is).'"
Huhn was speaking to the Investing News Network prior to last week's drop in prices, but he emphasized that for him the sector is a long-term bet, and the fundamentals are now at play more than ever.
"Not only do you have this huge disruption to the fuel cycle with Russia, but you also have ... all of the positive happenings in terms of nuclear being embraced," he explained. "And so the sector continues to grow. The growth projections for the sector are not slowing down — in fact, they're increasing."
The Russia/Ukraine war has been a major topic of discussion in the uranium space, and Huhn emphasized that it's important to remember that although Russia produces uranium, its role in conversion and enrichment is even larger; it accounts for 38 percent of global conversion and 43 percent of enrichment worldwide.
"Enrichment and conversion are seeing very large renewed demand from western utilities, and it's looking unlikely that Russian conversion and enrichment is going to be sought after from western utilities any time soon," he said.
As the conflict continues and as demand for nuclear as a clean energy source increases, what's in store for prices? In Huhn's opinion, strong moves are inevitable moving forward. "We're going to see the fundamentals come into play for U3O8," he said during the interview. "We're going to see utility demand compete with (the Sprott Physical Uranium Trust (TSX:U.UN)) — and where the price goes is anyone's guess."
Watch the interview above for more of Huhn's thoughts on the uranium market.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company 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.
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