This Other Yellow Metal is Hitting Decade Highs

Gold is often referred to as the "yellow metal" but there's another metal of the same color that is quietly making decade highs.

Yellowcake uranium: The powdered typically yellow form of uranium oxide with the chemical formula U3O8. In the nuclear fuel cycle, yellowcake is a product of the second step, occurring directly after mining uranium ore and is created through milling.

I've been bullish on uranium for quite some time and wrote a piece about it last fall - Nuclear Energy - Crisis Equals Opportunity.

There are many reasons to be bullish on uranium and nuclear energy. Here are just a few...

  • The energy crisis in Europe and around the world will impact how nuclear energy factors into a country's plan for electricity generation as well as carbon reduction
  • Current and potential increase of nuclear reactors under construction (440 reactors are currently in operation). Under construction: China 16, India 11, France phasing out 14 and building 14 new reactors
  • The introduction of Sprott Physical Uranium Trust - currently holds 54 million pounds of uranium, making it unavailable for utilities - reduced supply will increase the price of uranium

It was last fall when the uranium story started to attract some attention. We saw a lot of "fast" money coming into the uranium complex that drove the Sprott Uranium Trust higher by nearly 100% but that didn't last long as prices corrected sharply shaking out the weak hands. 

After that initial ramp, prices consolidated for five months and traded sideways before liftoff happened once again taking prices to the highs we see today.

We've been long U.UN since last year but the trend could have a long way to go.

The spot price of uranium is confirming the move in U.UN and is now trading above $60 (USD/lbs) for the first time since March 2011. But it's nowhere near its old high.

What about uranium mining and exploration stocks? 

Uranium mining stocks as a whole (URA - Uranium stock ETF) have lagged the price of uranium and are still trading below the 2021 high. However, the second-largest uranium producer Cameco is leading the pack, it makes up 25% of URA.

We are sitting on nice gains in Cameco (70%) but if you look at the weekly chart it could still have significant upside as the demand for uranium and investor sentiment toward nuclear energy improves.

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Nothing in this blog post should be considered investment advice and is provided for educational and entertainment purposes only. The commentary and information represent the opinion of the author and are not recommendations to buy or sell any security or investment product. The author may or may not hold positions in the securities and investments mentioned. Full disclaimer here.