It has been a long time since my last update on uranium. With some exciting developments this last week I can finally remedy that with a short post today.
Being a commodity investor has not been the most pleasant of occupations this Summer. Most of us have seen our portfolios decrease in value. Except for giving encouragement, there is not a lot we can do. I wrote a bit about this in June and July and the volatility we have seen is normal. It is the price we have to pay if we want outsized returns. I did not have a lot more to say on the subject after that. I hope that all of you have been able to stomach this volatility and keep your focus on the prize in the meantime.
Sprott ATM financing
This week we’ve all been anticipating the launch of the Sprott ATM financing. There have been people saying this would change the market dynamics drastically, and there have been people saying it would disappoint.
The Sprott Physical Uranium Trust Launched their “At-The-Market” Equity Program on 17. August. We now have completed four trading days where the Ux uranium futures went from $30.35 at the close on Monday to $33.00 at the close of Friday. An 8,7% increase in just four trading days and a new 52-week high. We see the dramatic U-turn in the one year chart caused by this. Before that the price was trending down on very low volume.
The increase in spot comes after less than 1 million lbs have been gobbled up by the Sprott trust. We still have a bit of ground to cover to get above the 2020 highs, but we are off to a good start. In 2020 we had Covid-19 led to production disruptions at Cigar Lake in Canada and in Kazakhstan. Companies like Cameco then had to increase their spot purchasing to be able to deliver on their contracts.
If the steady increase of funds into the Sprott Physical Uranium Trust continues, we can move towards $40 and beyond faster than many of us have hoped for. I am excited to see the continuation of this next week, and the coming months.
I would like to give a special thanks to John Quakes for all the updates he has given us lately. Not that this week is a lot better than his regular output, but this week we all have been following the spot price action a lot more than usual.
Going forward
However, we have not seen a corresponding move in the uranium equities this week. We can find a lot of different reasons for this. (The juniors are overvalued compared to the spot price is a reason many people give). I think a great deal comes down to uncertainty in the general markets and commodities. If investors are worried about a correction (or a crash) they will not look to the junior miners. If the sentiment in the general market changes in a more positive direction going forward, I think we can have a very pleasant second half of 2021.
