Uranium in the 2020s = Silver in the 2000s
Why I am loading up on select uranium plays
Like a college kid who can’t seem to let go of a beautiful but psychotic girlfriend, I have an inexplicable and potentially dangerous attraction to uranium. Our history goes back a long time. In the prior cycle of the 2000s when U3O8 rallied from its years-long ~$10/lb torpor of the 1990s/early 2000s to an all-time high of ~$148/lb in May 2007, I made a bit of money, and that along with many other bullish commodity experiences warped my reality for a few years thereafter. You have to understand…everything in commodities was rallying back then, few people had experience in the space, I was on my first real commodity cycle, and bull markets have a knack for making geniuses out of everyone — even young idiots like yours truly.
The 2011 Fukushima earthquake and subsequent Japanese moratorium on nuclear power was the nail in the coffin for the market (by then uranium had already fallen to $70/lb). I told myself I wouldn’t look at it for ten years, because that’s what it would take to even begin healing a market at a time when the western world was obsessed with solar and wind while turning its back on the safest, most reliable and highest EROI (energy return on investment) form of power in the history of humanity. To paraphrase Churchill, in the same way that the US eventually makes the right decision after making all the wrong ones, the Western world would make all the wrong decisions on energy before eventually making the correct one. It would just take a very, very long time. In the end, there is a natural cycle to everything, and that includes making a seemingly endless series of bad decisions (if you’re an experienced trader, you know what I’m talking about here too).
For context, this is what the uranium spot (light blue) and term price (dark blue) has done since 2000:
Source: Cameco
When a decade of my self-imposed “uranium time out” ended in mid-2021, by sheer dumb luck I took another look and really dug in once I saw that Sprott took over the Uranium Participation Corp (UPC), relabeling it the Sprott Uranium Trust (“SPUT”). After all, if anyone can pump a commodity into North American retail and Canadian institutional buyers, it’s Sprott.
And so I rode the wave in uranium from 2021 when spot was trading in the lower-mid $30s through late 2023 (spot peaked shortly thereafter at $107 in Feb2024). After several red flags, I decided to aggressively reduce positions and managed to sidestep much of last year’s drawdown with the notable exception of a brief attempt at a long in NXE in April 2024, where I was soon run over with management’s scramble to raise capital in two extremely sloppy offerings (it happens). I even went so far in Dec 2023 to write a uranium thread on Twitter decrying the sector as a yellow-laser-eyed “clown show,” and I got so much vitriol and grief over it that it made my Twitter feed unmanageable and the experience unbearable, so I had to delete it (and I never delete anything unless it’s patently fake news…rules). In a curious twist of fate, my disappointment with Uranium Twitter and that insanity was one of several motivations to try out Substack, and a few weeks later I decided to start writing my long form notes here. Funny how things work out…like moving on from a psychotic pretty girlfriend to something far more meaningful and fulfilling!
As the U3O8 price corrected from the $107 high in Feb24 to ~$80 by 3Q24, I started buying back into some uranium exposure (primarily UROY). Since then I have discussed uranium here, here, here, and here. I would particularly encourage recent subscribers to read the Uranium — Time to Go note in the third link, where I lay out the long thesis for 2025-26 in fundamental and technical terms.
Fast forwarding to the present, I believe the uranium complex is likely to rally hard within the coming quarters, but rather than rehash every point and recent development, I wanted to layer on an analog. I know that reads like clickbait, but it cannot be helped — I have rebuilt my position in uranium equities to significant size (including buying more today during the smash). For a dose of confirmation bias: