It will not be like the last time

When most people talk about a repeat of the last bull market in uranium, they are thinking in terms of expected returns. One of the biggest deciding factors for expected returns is the valuation of your investment at the time of entry. If the company you are investing in is pricing in a price of $200/lb for uranium, you might need an Elon Musk at the helm to get great returns.


Some veterans of the last bull market were waiting for uranium companies to fall to real liquidation levels in 2020 and 2021. I think there are two factors that made certain that we did not go there compared to the valuation of uranium companies in 2000.

First of all, during the early 2000s, retail did not have the same availability of tools like Youtube and social media to get to know about the uranium sector. There were message boards, but the uranium story did not get far outside that group. People who invested in the sector in 2000 had connections to the resource investment community, or had industry knowledge about the sector. This led to only a select number of investors buying into the sector and giving financing to the mining companies.

Now we have social media that have helped spread the message of the sector far and wide for years. Veteran, and new investors who have talked publicly about uranium, have led to a steady stream of new investors entering the sector, bidding up the companies. This has helped the uranium companies from dropping to valuations where speculators could find Paladin at the bottom of the last market. In companies where trading volumes are low, even small amounts can move the price and influence the valuations of companies.

Secondly, I think we probably could have seen a last big capitulation in 2020 or 2021, if we did not have Covid-19, which led to the closure of Cigar Lake and the disruptions in Kazakhstan. This led to increased buying in the spot market from producers like Cameco, which in turn led to the spot price going up. For the first time in years we saw the sentiment shift.


The spot price going up above $33 in April 2020, up $6 from March 2020, was enough for companies being able to raise money at considerably better terms in the second half of 2020 than the first.

Know what you want to get out of the market

Valuation is key when it comes to expected returns. We are not in the first inning anymore. A stock that has gone up 100%, all else being equal, is half as attractive. A bull run like the early 2000 is also very rare, and is not something we should count on. I think we will see a very strong uranium market going forward, with returns at multiples from the valuations we see today. Inflation, secondary demand from financial players like SPUT, an actual supply deficit (and not just a hypothetical one in the future), are just a few factors that make me very optimistic.


It might not look like it, but not everyone invested in the sector is looking for Paladin returns. Going from $0.1 to $10 where an investment of $10,000 can go to $990,000 is not what most people are aiming for. Personally, I have invested so that I will be happy with a 10X for the average holding in my portfolio. (The equivalent of holding Paladin from $0.1 to $1.0). It is important not to be a victim of the monkey trap. Following a strategy for scaling out your positions is key.

It is important to note that my strategy is based on the fact that most of my positions were set during 2019 and 2020. With later positioning I would not aim for the same returns. I do not need a bull market like the last one to be happy. For every investor in the sector it is important to know in advance what returns you will be happy with.

2 thoughts on “It will not be like the last time

  1. I’m measuring more by 1) uranium priced in gold & oil 2) uranium equities priced in uranium. Some allowance for term & supply. We are EARLY. I still expect a 30x overall.

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