Nuclear Energy - Crisis Equals Opportunity

Just in case you haven't been following along there's a full-on energy crisis happening in Europe and China.

The Energy crises roiling Europe and China - and beyond - AXIOS
Oil surges to US $80 as global energy crisis threatens supplies - BNN/Bloomberg
Natural-gas prices are spiking around the world - The Economist

Very few would argue that lowering carbon emissions by switching to renewable energy like solar and wind is a good idea. But can we depend entirely on renewables at this point in time? Clearly not yet. 

Harris Kupperman said it best: "the underlying problem was the same—they reduced the “carbon economy” before they had sufficiently built out the “green economy.”

Ever since the Fukushima disaster, few consider nuclear as a clean and safe source of energy, even know it supplies countries like France with 70% of their electricity. 

Here's how the largest energy sources stack up when it comes to safety and cleanliness...

I'm not here to tell stories as I've heard plenty of great stories in the past that fail to be reflected in stock prices. Because of this, I always revert to price. It doesn't lie. 

The price of uranium was on a steady decline since 2011 but has started to trend higher since bottoming in 2017. It has since doubled from where it was trading back in March.

What about uranium mining/exploration stocks?

After a quick and nasty false breakout, URA (Uranium Stock ETF) is once again breaking out to highs not seen since 2014. The weakness that we encountered over the last few weeks looks to be a classic shakeout of weak hands.


How does the long-term picture look for uranium stocks? They are currently breaking out of a massive six-year base. This is NOT bearish.

How high could the price go? As you may or may not know, markets tend to retrace high to low and low to high moves by at least 50% or more. These retracements are normal and to be expected across all time frames. This doesn't mean it has to happen but right now the price action is acting like it could.

If URA retraces 50% of its 2011 high that would take the price back to around $70.

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