⛏ Is Nuclear a short-term or long-term play?

Greetings Contrarian,

This is another Sunday edition, with your most pressing question. Here we go:

Hello dear Long-term-nuclear-believer.

Yes, you’re very right in saying that there are strong reasons to be positive nuclear and as a consequence, uranium mining, in the long run.

Maybe it’s the 150 nuclear power plants that China is building, or the US Department Of Energy defending an idea to triple their already large nuclear output, or maybe it’s the fact that Japanese plants are being switched on and the middle east is investing heavily in them.

In the short-term, however, the picture is also extremely exciting.

We have seen producers’ order book filling up in 2023 - as we mentioned previously here:

So you have a situation where a lot of production from now until the next 7 years or so is already spoken for. So where is production going to come from?

New mines! OK, but where are these mysterious new mines?

Maybe a bit of Global Atomic in Niger, Encore Energy in the US, Paladin Energy in Namibia (who’s already filling up their book), Uzbekistan …? Look up how much these few projects are going to be producing in the next 2 years and the math becomes clear: it’s not enough.

We’ve just started a new contracting cycle - there were about 110m lbs contracted in the long-term in 2022, but already 99m lbs sold 5 months into 2023!

Lots of these contracts are tied to the spot price to a certain extent, which means when Cameco needs to deliver to their clients, it’s going to be exquisitively (we made this word up) profitable for them to come into the ever-smaller spot market and bid the prices up, making their book look so much more profitable.

We’re not saying they will, but they should.

At the right time, this would mean massive profits for producers, with prices finally reaching a point where other production could come online.

Also, there is a Swiss vehicle ready to deploy about $100m into the spot market in about two weeks. Two weeks is now.

And if the price runs too much, we could see a price crash, right about when you’d imagine you should be buying because of the long-term nuclear trend.

Nuclear is a very long story - uranium, however, is more speculative and explosive when it does move.

Happy speculating,

The Editor

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational/entertainment and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own researc