Are you keeping to your investment plan?

With two weeks away from everyday chores and work I have had some time to think and look at the big picture. That has led me to consider my initial investment plan. Should I stick to it, or should I change it in light of the developments we have seen in the uranium sector?

I am not that original. I think I have seen this song referenced in other articles about investing:

«You’ve got to know when to hold ’em

Know when to fold ’em

Know when to walk away

And know when to run»

Kenny Rogers – The Gambler

This applies both to when you are winning and when you are losing.

I am trying to stick to my plan and start scaling out of my positions around certain targets that I set in advance in 2019. (You can see posts and videos from Ferg and Smithweekly for inspiration on how to scale out of your positions). That is hard to do when you see the case you invested in just continues to get better and better. (In a bull market, all of a sudden, everything seems a lot better than you imagined. This is also the time you have to be extra careful). You hear about people who rode the market all the way up and down the last time. Most do not want to end up doing that.

Talking about scaling out is not me bailing on the sector. So far I have done very well by not listening to other peoples advice of “taking my initial investment off at a double”. If I had followed that advice I would have limited my upside by a lot. My initial plan has been to sell down at certain spot price levels. (I hoped that the portfolio would be at 10x the value of my initial position in 2019 by that time. — At the moment it seems to be within the realm of possibility). I will still have a massive allocation to the sector if I sell down 1/10 of my allocation (as an example). Anything can happen anytime with investments, and the blue sky potential can turn on you very quickly.

Still I am a greedy bastard…

I have thought about the bold people that history remembers, the Rockefellers and the Carnegies, and what they would have done. (I just need to remember that there are many that lost most of their fortune doing similar things). If you diversify too early you will have nice returns, but they will not be life changing. I am still aiming for life changing.

A compromise

The base case for uranium has always been the supply and demand imbalance. We have new production waiting for higher prices, inventories running low, and growth in nuclear from the East. The developments we have seen the last couple of months have not been part of my thesis. I invested in a sector priced for liquidation from 2019 and early 2020. I had the base case that we would go from the sector being absolutely horrible to being OK. We are in a very different place right now.

SPUT, Yellow Cake and ANU Energy (with help from Kazatomprom) stacking uranium. Uranium developers (Denison, UEC and Boss among others) and producers (Cameco and Kazatomprom) buying uranium from the spot market. Nuclear looks to get into the green taxonomy with renewables. Japanese restarts seem a lot closer to happening. (One certain guru wanted to see this before he would give a green light on the bull market in uranium). UK and France leading the way for nuclear renaissance in Europe. The US turned from closing down plants to fighting for extensions of them and a lot more I have forgotten to mention.

To help me with sticking to my plan, I have done one adjustment. I just increased my investment to the sector by about 5% in September. (The 5% increase is about half my yearly salary, so it is a substantial amount). When I do my first scale down it will be from this «extra» investment from the September amount, and not the longer term investments that have been through the ups and downs the last couple of years. I managed to invest 5% extra into the sector by postponing renovation of me and my wife’s apartment. History will prove if I am right about this call or not.

(This is the time to mention: do not take anything of what I say, or of what I do as investment advice).


The later you start investing (or invest in a sector), the bigger the amount you need to invest to keep up with a person who has been there longer. (At least if they have several 100% in return already). My biggest edge is that I have invested hard the last 10 years, and that I have been in uranium since early 2019. They often say something like «The best thing is to have started 10 years ago, the second best is today». I felt like late to the party in early 2019, and I am grateful for all the extra time I have had to invest in the sector.

Price Formation/Discovery

dollar banknote on white table

If I learn something new, or get a new perspective on the uranium sector, I think that someone else might find it useful too. That is the reason why I write this short piece. It is about the time around 2010-2011 that most people skip in favor of the 2007 run, and price formation/discovery.

TD Securities just had a Virtual Uranium Roundtable yesterday (October 7, 2021). Among the speakers were Grant Isaac, CFO of Cameco. He had a very good talk. What I, and other more recent investors to the uranium sector should take note of, was the topic of price formation. I will therefore try to recap and elaborate on what he said here:

Price formation/discovery

Utilities are covered 2022-2023, and some do not expect us to get price formation/discovery in the market for a long time. However, two things might be true at once here. Utilities do not need to be involved in the market, at least for long periods of time. (We have not seen a real move in the long term price until recently). Still, this sector moves differently than other sectors (like natural gas and oil). 

Grant Isaac, explains what happened when the Chinese entered the term market and contracted 150M lbs of uranium (1/3 with Cameco, Kazatomprom and Orano respectively) in one big move during the Summer of 2010. They contracted for the 2015-2024 period. 

Utilities were covered 2011, 2012, 2013 and 2014. However, the Chinese moved in with contracts in the period 2015-2024. The time slot when the rest of the utilities were uncovered. Suddenly a lot of pounds were made unavailable by one big move. Therefore the rest of the utilities had to make sure that they also had security of supply for their nuclear plants. The spot price went from $40 to over $70 in a couple of months. Long term prices also improved from $49 to over $70 in the same period.

Cameco, Price chart 2010-2012

This trend continued until the unfortunate events at Fukushima in March 2011 that put brakes on the uranium sector for over a decade.

Long term 2030

According to WNA we are seeing an increasing production gap in the 2030s. Some of the utilities are investigating contracting in that period now. As things are today, not everyone will have enough supply. Communication out to utilities from UxC and TradeTech must be stronger. – This production gap will continue to manifest itself the longer we wait, and there is only one solution, we need higher prices.

Kazatomprom with source WNA

We need all the assets in the pipeline to come online. This includes the tier 1, tier 2 and tier 3 assets. Price for all of these different players will need a price of at least $70 to cover their all in sustaining costs. (We will also need greenfield development and new discoveries).

I for one am looking forward to when Kazatomprom and Cameco start communicating to the market about contracted supply to see the response from the market.

The inflation of silver


I have not written about silver (and gold) for a while, and there’s no secret why. Even with the #silversqueeze movement early 2021 the price has still not moved anywhere. However, the lack of interest in the sector only increases my conviction long term.

Gold and silver are my most frustrating investments, at least so far. The interest rates go up, precious metals go down. Interest rates get pushed down, no response from the precious metals. (Don’t get me started on the money supply). This is an exhausting situation, and I think many have given up on the sector. I am stubborn, and have been in a similar situation with uranium, so I still hold my position. (If I had started with investing in uranium earlier, maybe 2017, I would maybe be fed up by the start of 2020. Right at the beginning of the turn for the sector). A year of underperformance or flatlining can turn around very quickly.

Gold and silver trade very similarly, but with my risk tolerance, I follow silver more closely. Silver also has the more interesting demand structure with about 50% from retail and 50% from industrial.

Why are we here

As in many other commodities I think investors do not believe in it after several years. We are in a “The boy who cried wolf” situation. We even had the #silversqueeze this Winter and retail trying to drain the COMEX. (COMEX is the primary futures and options market for trading metals such as gold and silver. However, they mainly offer paper contracts, and do not want customers to stand for delivery. Their physical supply is more what you see at a car dealership showroom. They do not have that many cars parked outside). With the massive buying of physical silver, both from coin dealers and through the PSLV (Sprott Physical Silver Trust) we had a spike up in the paper contract price over $28, but it was soon pushed down again. Still, the movement continued to stack silver and buy PSLV for months afterwards. It is therefore frustrating for many to see the silver price is trading lower than it did a year ago.

The big inflation of silver

The reason why the price of silver is trading lower is the inflation we have in silver supply. (In this case I am talking about “paper silver”). With so many paper contracts for silver, the amount of “silver” in the market gives the market an image of oversupply. If you have an oversupply of a product the price usually moves down. Very few of the paper contracts are expected to be held for delivery. Some people are talking about a 500:1 ratio for paper to physical silver. In the midst of February 2021, when the #silversqueeze frenzy was at its highest, you suddenly saw a tremendous supply of paper silver being sold in the market. The silver market seems to be trapped in a situation where the paper contracts decide the price, and not the supply demand of the physical silver.

The supply and demand we see for physical silver

Production of silver is falling, and according to First Majestic Silver, mines produce about 800 Moz a year. Annual consumption of silver is about 1.0 Boz. The 20% that is not covered by mining comes from recycling and above ground supplies. How big these above ground supplies are is difficult to estimate. No one really knows. (We have a similar situation with estimating above ground mobile inventories of uranium). 

57% of silver consumption is from industrial applications. We are talking electronics, medicine, solar, water purification, window manufacturing, etc. (Silver used to be in high demand due to its application in photography, before digital cameras became widely available. Industrial use of silver fell due to the transition to digital photography. This slack has now been picked up by demand from photovoltaics (solar panels) and EVs).

The remaining 43% demand comes from coins and bars who absorb 22%, jewelry with 17%, and silverwarewith 4%. With the #silversqueeze movement this year, the demand for coins and bars have been a lot higher than normal.

Why do you invest when the market is rigged?

The average silver investor

At the moment, financial players are able to control the market, but I do believe that one day we will see an end to this silver manipulation. If silver had 100% industrial demand there would be more held for delivery. (The retail demand for coins and bars we are seeing now, is trying to force the same effect). The more people try to force delivery of actual silver, the less paper silver will be able to dictate the price. 

In the Palladium sector they had a situation we hope will repeat with the silver sector. (The key commercial use for Palladium is as a critical component in catalytic converters – a part of a car’s exhaust system that controls emissions). Palladium had a futures market that broke down because strong physical demand broke the short interest players.

Sprottmoney had the following explanation for the price going vertical from $1,600 to $2,600 in just a few months in 2018: “After a rally from January 2016 to January 2018 of over 150%, or $682, Palladium fell just 28%, or $318. Then it took off again, and as we know now, after a vain attempt to cap the price they decided to give up this time and not risk being even more record short this time around. They realized that paper futures no longer had the same effect on the price of the underlying commodity anymore and did not want to risk being caught massively short as the price continued to soar higher.

The increasing demand for the physical product, together with a high short interest in the futures market, made the massive price increase possible. The longer the price is kept down, the more energy is stored. This is the reason why I am not letting my eyes off silver.  If $21 is the floor for silver, or we might have to go lower remains to be seen. I am keeping my silver position and hope to get rewarded in the long term.

Uranium, why do we hold?

top view of valley near body of water

To invest in the uranium sector you need a bare minimum of conviction. If not you will be thrown off the investment by the violent corrections we see at regular intervals. We are in one of these now, and there are more to come moving forward. I am of the opinion that if you are not holding strong now, you will leave a lot of money on the table.

Disclaimer: nothing of what I say here can be interpreted as investment advice.

Going back to basics

Before you invest there are a minimum of questions you have to answer. John Polomny challenged you to do this in one of his videos a couple of months back. If you can’t answer these, you should maybe do more research before you increase your exposure to the sector. The most fundamental of them are:

  • How many nuclear reactors are operating in the world? 
  • How many are under construction? 
  • How many are planned?

As of September 2021 there are 443 operating reactors in the world. (The US has the most with 93, followed by France and China with 56 and 51). The last couple of years we have seen the number of reactor closures roughly match the new reactors coming online. The only difference being the new ones have a higher output than the old ones.

The more encouraging statistics are the 57 nuclear plants under construction. (18 of these are in China, with India and South Korea next with 7 and 4 under construction). If you dare to hope, we can at least expect some of the 101 planned nuclear plants to become a reality. (38 of them in China, 25 in Russia and 14 in India. The future growth is mainly in South East Asia). By the latest developments we are looking at a healthy growth for the sector. You can find all of this information after five minutes visiting the World Nuclear Association.

Growth in a sector is not a must to get a higher price. Even a sector in decline can experience periods with higher prices, or spikes in price. Look to the coal sector. In the West we have said we will stop using coal entirely by a certain date, and the Norwegian Oil Fund sold itself out of its coal investments. (Something I, as an indirect investor of the fund, do not like). Still, even if we have decided to stop using coal in the West, reality is completely different. Recently renewables have really shown how unreliable they are with the weather we have seen the last couple of months. The developing world is completely dependent on fossil fuels to cope with their increasing energy needs. There is an ethical argument for coal. If you look at the chart of Peabody, the most popular coal miner, you see a sector that has been oversold and left for dead, but suddenly sees an increased demand. (This is what we look for with our uranium investments).

You just need a couple of years with low demand, leading to lower production and inventories. When just about everyone needs your product at once, and there is not enough to go around, the price goes up. Sometimes violently. 

WNA expects modest growth for uranium demand in the coming years. We have gone through years of lower production, and drawdowns of inventories. There have also been encouraging developments, where it seems that nuclear has become more of a palatable political solution for phasing out fossil fuels in the West. With the energy spikes in Europe in the last weeks, because of the low winds, the case for steady baseload power from nuclear power is even more evident. 

When did the last uranium mine come online? 

This has not been as easy to find as I thought, but I got some great help from John Quakes who pointed me to the “Uranium 2020: Resources, Production and Demand” report. Also called the “IAEA NEA/OECD Uranium Red Book”. In that report I found what I was looking for: The Husab mine in Namibia started up production in 2016. After that there has been no new major developments completed in the sector. The 2020 report also mentioned the possibility of expanding Olympic Dam, but those plans were scrapped late 2020. Low prices do not tempt new production to come online.

I also looked to Kazatomprom, the company that has increased their production the most over the last 15 years. They actually increased production on their Inkai mine by 20% as late as in 2019. (This mine is a joint venture with Cameco (who owns 40%) and production went from 2,643 tonnes to 3,209 tonnes in 2019). This is the last big production increase I have found in the sector. This increase was in the very middle of the bear market.

How many mines have come offline and how many pounds have left the market?

In 2021 we have seen two mines coming offline in Cominak and Ranger. Cominak is located in Niger and it had been in operation since 1978. The mine was approved to produce 5,2 mlbs per year, even though the last couple of years the production was about 3 mlbs. Together with the closing of Ranger in Australia, about 5 Mlbs has been removed from the market in 2021. This has to be sourced from somewhere else.

Ranger Uranium mine

Before this we have seen mines like McArthur River, ​​Langer Heinrich and Honeymoon go on care and maintenance. This has helped deal with the oversupply we saw after 2011. None of these will come online before they get long term contracts. Preferably in the $50-70 range. They will not start up production to sell into the spot market.

We also have the entry of the Sprott Physical Uranium Trust that has already removed about 10 Mlbs from the market in 2021 so far. A total higher than the two mines that closed down production in 2021. SPUT will continue removing available supply from the spot market if they trade at a premium.

How many mines can we see come online in the next few years? 

In the next 2-3 years we expect mainly that the care and maintenance mines will come back online. We have many previous producers around the world, and all of them are saying they can get their mines up and running quickly. In a sector where a lot of knowledge has left, and workers have gone elsewhere, getting into production can take a lot longer time than most people think. What we have seen from the presentations is the company putting their best foot forward. (Correction 27.09.2021: There is one mine on track to come online the next 2-3 years. ARMZ Uranium Holding Co. (owned by Rosatom) is on track to come into production with its Mine no.6 in Siberia in 2023, and fully operational by 2024-2025. The assumption is that CNNC would take 49% of the output (maybe 1250t/year), with ARMZ taking the rest).

We can also not expect that all the near term producers will have a smooth ride into production. There are always obstacles that make things take longer than expected. Getting hold of equipment will for many be a challenge with all the supply chain problems we have seen around the world. The companies also have very different levels of expertise at running a mining site. As John Borshoff says, many companies are in the market to sell flights, but they do not have a pilot to fly the planes. 

I do not agree that “all in” sustaining costs (AISC) are as low as many of the companies say. They are at least not accounting for all the costs they need to cover. We have several mines, McArthur River being one of them, who have been on care and maintenance for years. This comes at a cost and when it comes back online it will have to cover this cost, and produce at a profit. The company needs profits so it can buy new assets and give something back to its shareholders. The higher costs you have up front, before you produce a single pound, the higher price you need for starting up the project.

Even Kazatomprom has a coming production gap. They need to increase CAPEX by a lot to close this. That equipment is most likely not produced in Kazakhstan and does not benefit from a currency that is devalued. They are also committed to a 20% production cut out 2023. If they break this commitment they will be punished by investors selling out of the company.


These investments are burning matches. They will probably peak out a very long time before supply can cover demand. Just as the market anticipated a rising spot price months before even the announcement of SPUT, the market will anticipate lower prices when the market seems to get closer to an equilibrium. Investment returns are made on expectations of the future, not on today’s situation.

With a price far under the costs of the marginal producer, we are no way near a solution for the supply/demand imbalance. For me this means we are a long way from selling or trimming for my part. I will use Rick Rule who has said: “The uranium juniors have gotten ahead of themselves.” By mid September they were closer to pricing in the spot going to $70 than $50. I would say that today they are pricing in spot going towards $30 again. If you sell now, I believe veteran players like Rick Rule can be on the other side of the trade. The coming months ahead have a lot in store for us, and one has to be prepared for anything, positive and negative.



roller coaster ride

I have already compared the uranium sector to a roller coaster. Today I will expand on that a bit more. The peaks and valleys you will have to go through will only increase with the higher valuations. You therefore have to be prepared for it.

It is not easy to hold on to uranium positions in a bull market. (I have used a graph for Global Atomic for illustration, but the story is similar for most of the companies in the sector). Since mid June 2021 we’ve had a two months long correction that lasted till the end of August. Most of the companies went down 25% or more during this time. When we reached the second bottom in August, the sentiment was close to rock bottom. Most people knew that Sprott was coming during these months, but towards the end several were doubting that it would have an effect on the spot market. This however quickly turned with SPUT launching their ATM on 17. August. We saw the spot price going up from about $30 to $50 inside one month. Many of the companies doubled during this time. Suddenly investing in uranium was considered a sure bet. Just buy SPUT and count your gains. We went from one extreme to the next.

This did not last long. When sentiment did not seem it could get any more positive, we got the news from China that the real estate giant Evergrande may become the Lehman Brothers equivalent for the markets in 2021. Several uranium companies then corrected down by more than 25% within two to three trading days. These moves up and down within a month can make the most veteran of investors nauseous. 

A question for many is, how should you deal with this? Should you sell down and diversify your portfolio? I can share some thoughts I have made on my own portfolio allocation.

Value, volatility and allocation of positions

From 1. August 2020 the value of my portfolio has gone up almost 3X. (I picked August 2020 because the value of my uranium portfolio was still reasonably low then). The increase of almost 3x is partly from new money invested, but mainly from returns on the existing uranium positions.

At 1. August 2020 my allocation to uranium was just over 60% with gold, silver and other investments amounting to the last 40%.

As of september 2021, my allocation to uranium has gone up the most because it has had the best returns. Uranium is the most volatile of the sectors I am invested in. For my portfolio this means that for any given day, the volatility is now expected to be higher than it was in 2020. I have allocated funds to other positions, but my uranium positions have grown a lot more than my new ones. The volatility in my portfolio is therefore mainly uranium.

From the June top, my portfolio value was down about 27% of its June value when it had its first bottom in July. After a failed recovery, it dipped again in August. At the beginning of September we went vertical with SPUT purchases, and the portfolio recovered its losses and went up to about 30% above its June value in just a couple of weeks. (From the bottom in July the value was up almost 78%). After the latest week of fear in the market I am now down to 5 % above the June high, or about 18% down from September the top. The difference from the June top is the sums are a lot higher, and it feels worse to loose the higher amounts. Other, less volatile sectors can take a year to make any of these moves we have had the last couple of months.

You can compare holding your uranium positions through a bull market to raising a tiger. At the beginning it is not that big and scary, and it is still relatively easy to control. When it is fully grown, you risk losing your arm if you are not careful.

I will take my initial position off at some time to reduce the risk, but we are not there yet.

Uranium chugging along

train in railway

This week we have seen SPUT is continuing to drain the spot market. Kazatomprom is in talks to supply both SPUT outside the spot market, and Chinese stockpiles. Today I will have a shorter update, and my focus will mainly be on the action in the market on Friday. I also share some of my thoughts for new investments going forward.


Friday was a very interesting day. I hope that everyone that has entered into the uranium sector has been aware that these daily moves are both possible and normal. Volatility is the name of the game, and it cuts both ways. There can be several reasons why the companies, on average, lost 10% on Friday:

  • The situation in China with Evergrande Group and their creditworthiness we are seeing going down. This is scaring the general market who is afraid of contagion. A lot of people remember the housing market in the US was the first domino to fall in the 2007-2008 financial crisis. If not a full blown crisis, people might just be afraid of a correction. That however usually means a run to the dollar. With the uranium sector having a high beta, the moves down in the general market is amplified among the uranium companies.
  • We can also have traders who look at $50 as a resistance level that could give a pullback and have traded this level. The market is made up of several different players who play a different game than you and me.
  • Friday was also the date for option expiry for a lot of the companies. Before Friday a lot of these options were in the money, but with a 10% correction a lot of these expired worthless. I have not seen any numbers to see how big of an impact this correction had, but I would not find it surprising to see these kinds of moves.
  • Some investors in the uranium sector can have $50 dollars as their first sell target for their first tranche of selling. If enough big players sold down a portion of their holdings, this could affect the market. (I think the marginal cost of producers is more around $60-70, and is where a functioning market could find its equilibrium).
  • We’ve had several tweets shared about utilities that have three years worth of uranium. This can make the utilities wait longer for contracts than we think, and ride this price spike out. I do not think that three years sounds that long. We have the ramp up times for existing (and new) mines that can take years, and the time for the fuel cycle is not that quick too. John Borshoff of Deep Yellow, says that there are many teams that lack the skills to start up and run a uranium mine. He thinks the ramp up speed is way too optimistic for most of the aspiring producers in the sector.
  • We have the existing producers (Kazatomprom and Cameco) who do not want a spike in price. This could lead to overproduction, followed by a sharp decline in price, with the price settling down in the 20-30s again. I believe we can have a spike and a drop, but going back to the 20s again would mean all the utilities have topped up inventories again as they had before Fukushima. They had been contracting over 100% of their yearly consumption for years by that time. I do not think that Kazatomprom and Cameco will be able to cap the price at around $60 now. In 2019, before the supply disruptions by Covid-19, and before SPUT was launched in 2021, I think they could have been successful. Now that the financial players on Wall Street are smelling blood, it’s a whole other game. Wall Street now has a vehicle where they can move the spot market.

When I take the numbers from UxC (that Kazatomprom has been using) for utility term volume (over a simplified assumption of 180 million pounds consumption/demand per year), I get a graph very close to the one Sachem Cove Partners have been using in their presentations. The years with 40% contracting led to several years with over 100% contracting. Several years of contracting at this higher level had to pass before the price could drop from oversupply of the market.

Barring a bigger correction or financial crisis, I do not see much stopping the Sprott Physical Uranium Trust from continuing to push the uranium spot price past $60 the next couple of weeks. The uranium equities can however correct 50% at any time, and still be in a bull market. This volatility is something you have to live with if you want to hold them.

Other commodities

I have to admit that I am looking a lot at other commodities than uranium at the moment. My allocation, and the appreciation, of the sector has made my uranium holdings very large. (The picture was totally different during the Summer of 2020. My uranium holdings were a fraction of what they are now, and their performance made me pinch my nose when I bought more). I do not have that feeling anymore and I am looking to precious metals that have had a horrible year. Copper and tin are also sectors I want to get a better exposure. 

Commodity companies are not buy and hold investments, and the different sectors will have different peaks. I know some think they can surf one wave perfectly and then hit the next one. I doubt that I will be able to do that. I therefore want to average into some other commodities going forward. I have to preface this with the fact that I have tried to do this before, and I have most of the time ended up just increasing my positions in uranium.

Why saving nuclear plants set for closure is a big deal

low angle photo of nuclear power plant buildings emtting smoke

I hope you all have recovered from Friday’s euphoric mood in the uranium sector. With some time away from the markets, I hope you have had time to digest all of the impressions.

Sprott stole most of the headlines on Friday. They released a press statement saying they had filed an amended base shelf prospectus for their Physical Uranium Trust. The total is now for a $1.3B ATM financing to buy more uranium. This is up 1B from their 300M financing they already had in place. What many forgot about in the gif fueled excitement were the life extensions of the Illinois power plants. I think there are reasons why we should not ignore them.

First of all, saving Byron and Dresden is great for the climate. (One can get into a discussion about if subsidies are the right solution for this, but I am not going to get into that here. Nuclear has had enough headwinds and resistance the last 50 years). If you want to convince me you want to save the environment, you can not close down the most effective and most reliable power source there is. You can not run your country on 100% renewables. You need steady base load power.

The Byron and Dresden plants were set for closure, and therefore they do not have a lot of inventory on hand. With the extensions they now have to go looking for fuel, as soon as possible. Exelon, the owner of the plants, says they have ordered fuel to keep the Byron plant running past its 13. September deadline already. I will quote Harris Kupperman (also known as Kuppy) who wrote: as a reactor that runs out of uranium is just an expensive paperweight”. Short term Exelon might want to source fuel from the spot market, but the mid and long term market is where they would want to go longer term. The demand of the power plants who got life extensions is about 3M lbs per year. This has to be updated in the supply and demand models of the research and analysis companies. A couple of more life extensions and the models have to be completely redone.

The last couple of years the utilities activities have been very low in terms of contracting. This might be the first step, helped by Sprott, to get more utilities into the contracting game. If the Sprott uranium trust is not there to buy the pounds, you risk the price going down again. (FYI, I do not expect Sprott to stop buying). Now we have at least one of the utility companies having to source more uranium. Our thesis has mainly been about utilities demand. I look at Sprott as the lighter fluid and the spark, with the utilities as the logs you put on the fire to keep it going all night. I might have to reassess my view and admit that Sprott is more important than I first thought. It is more like another energy source to both light and keep the fire burning, and not just the spark. Maybe I should compare Sprott to oil.

Up until now, the spot market for uranium has been a disaster. The lack of activity has made it impossible to get real price discovery. In short, it has been a broken market. Together with very low long-term contracting, it has created the whole investment opportunity for us. Being taught about the Efficient Market Hypothesis in business school, I should not have a chance to beat the general market. I have avoided this by investing in a non functioning market. Why would I go fishing where the competition is high? I would rather pick the far off, hard to climb mountain lake that no one wants to use.

Going forward my plan is simple: Do not do anything stupid! (Sell too early).

What to do if you get questions on why you support nuclear

I have seen a couple of people discussing nuclear power this week. This is a natural result of the interest in uranium going up on Twitter with the returns. Some people say that they can’t invest in uranium because of ethical reasons. This usually means that they think uranium mainly goes to nuclear weapons. They do not know that the uranium and nuclear market is heavily regulated. Every pound of uranium has to be accounted for through the whole supply chain before it reaches the end user. The main user for uranium is nuclear power plants.

We have the age-old: «What about Three Mile Island, Chernobyl, and Fukushima?» Nuclear is just too dangerous compared to the risks. We also can’t forget about: «What are we going to do with all the waste?» objection.

If you have had problems answering any of these questions or objections, I suggest you watch this video:

I hope you have a great week, and that we continue to see more positive developments for the sector.

An eventful week in uranium

space grey ipad air with graph on brown wooden table

I do not think I am alone in looking back at a great week of investing. From the activity on Twitter it seems many have had a hard time concentrating on their work with the spot moves we’ve had in uranium. I am happy that the Australian market is closed before I start work, and the US and Canadian market opens just as my workday ends. It looks like the games have begun.

The depth of the uranium spot market

We have seen much discussion back and forth the last year about the depth of the uranium spot market. In an interview with Smithweekly, Mike Alkin from Sachem Cove Partners said “With a couple of hundred million dollars they can create their own reality in this sector.” (In this setting he referred to the financial players). I have been in the camp believing Mike Alkin and Timothy Chilleri in this, but there have been people taking a different view. They have been saying we would have seen a move in the spot price already if that was the case. 

Some people reacted to the euphoric atmosphere on Twitter the last couple of days, saying that sentiment is too positive. First of all you have to consider we just went through a 30% drawdown in July and August. Secondly I would say that it was mainly a cry of relief that a key component of our investment hypothesis seems to be correct: The available supply in the spot is very low. There is above ground inventory but it is not readily for sale, or at least not at these price levels. As Brandon Munro also has commented: when sellers see that spot is increasing, it actually reduces available supply. This is because the sellers see they probably can get a higher price in the future. 


With the $39.00/lb spot price in uranium at Friday’s close, the entry of the Sprott Uranium Trust ATM funding has led to a $8.70 increase from $30.30 on 17. August. That is a 28.7% increase in the uranium price.

I think that we were really close at moving the spot price up to today’s levels during the Spring. This was when the developers were buying uranium. Many of them, however, bought pounds several months into the future and did not really challenge the near term spot supply. If we had seen more purchasing with 30 day delivery, I think we could have seen a similar situation to the one we are seeing now.

What I believe we have seen the last couple of weeks is that most of the readily available supply has been removed. Up until now, a couple of traders have (at least in theory) been able to keep the price at or under $30 by selling the same pounds back and forth among themselves. The buyers in the market want to get the best price. Utilities, and producers like Cameco, have been buying in volumes, and with delivery further into the future, so they do not move the price. When production at Cigar Lake halted in 2020 because of Covid-19, we saw the spot price increase by a lot during a short timespan. This was because Cameco had to secure pounds to deliver on their contracts. Securing supply for delivery was more important than waiting for better offers.  

As for some of the profit taking and selling on Friday. People sell out of their positions for many reasons. Many investors reached their objectives and have taken money off the table. (If you want to exit a position you would rather do it when there are many buyers and the interest is high). These sellers might enter later when the spot price goes over $40. In bull markets we have to climb a wall of worry. At every resistance level there are participants that expect the trend to turn downward and sell down their positions. I expect a lot of people, new and old, jumping in when we get above $40.

Can SPUT be stopped?

There are some people who are discussing if SPUT can be stopped legally, with them cornering the market for spot uranium as they are doing now. We have the example with the Hunt Brothers in the silver market who were forced to sell their silver position in 1980. At the time silver was going parabolic. (We have still not made a new all time high in silver since then). Concerns about government intervention is therefore something all of us should consider.

I love using anecdotes from when I was a child, I will therefore share one with you here: When I was about five years old my brother and sister entered into a drawing competition in the local newspaper. After a couple of weeks they both received a participation trophy in the form of a calendar. I became jealous and I cried to my dad and asked him to contact the organizers. He called them and asked them to find my picture, but they could find any. My dad then had to explain to me that they could not send a trophy when I had not participated. Nothing is stopping utilities or producers from entering the market and bidding for the pounds themselves.

Kevin Bambrough says that most people won’t even blink an eye under $150/lb and I agree with him there. It is never too early to consider it, but we should not sell or worry at all under $40/lb. We are still under the all in sustaining cost for most producers, very early in the game. John Quakes does not see why or how the US government could intervene to try to stop a Canadian based company issuing shares and raising cash in Canada to purchase a commodity in the market.

In closing I just have to say we are looking at exciting times ahead. I have no idea how far we will go. My positions in uranium are already doing better than any of my investments up until now.

Good Times Bad Times – The benefits of keeping a journal

shallow photoghrapy of black and gray type writer keys

This week I go over some of the benefits I have had by keeping a journal. One of the better tools I have for dealing with the volatility in the uranium and commodity markets.

First of all, I write a journal, not a diary. For me this means I write to analyse my thinking and experiences in life, and in the markets. Not my innermost secrets or anything like that. I write about my ups and downs in the portfolio to see where my head is during good and bad times. I do not write every day, but I do write when I have a need to clear my head. Getting the thought out of my head and “on paper”.  I have found it just as important to keep perspective when things are going great as when they are bad. 

Some of the drawdowns


I have journal entries from 13. July 2019 where my then two biggest positions, Energy Fuels and UR-Energy fell 36.5 and 33.9% in a day. When I wrote in my journal that day I reflected on getting caught up in the Section 232 hype and what I could learn from it. Still, I have gone over it afterwards to see if I would have done anything differently, and I do not think I would. The odds were good, and a possibility of a loss was something I was aware of in advance. It was just not something I was aiming for. I also made a note to myself about the people who have made a lot on their investments have gone through drawdowns similar to mine. Them being successful is not just luck, and people who discredit them usually have their own problems.

Looking back on this now, the loss (in dollar terms) is about a 4% drawdown of my portfolio value today. It could still be a move outside the normal daily moves, but my added investments (and the increased value of the portfolio), have made it appear less than it did at the time.

What I did not remember was that the shares continued to drop for a long time afterwards, and that the Cameco presentation on 25. July 2019 added to the selling of the sector. (I have afterwards always been more reserved than others for what Cameco have to say at their presentations). I did not trust my stock picking abilities at the time and preferred to invest in the HURA ETF after this lesson.


Moving on to 2020 my portfolio had an even worse experience with the March 2020 sell off. The value of the portfolio went down 50% from what was the value at my previous top in July 2019. (The only thing that did not push it lower than 50% was the USD and CAD appreciated in value compared to my home currency, the NOK). I had added more than 50% of my take home salary every month to the sector for over nine months and seeing it go down by half was the hardest time for me (so far) in the space.

I have to admit that on one of those March 2020 days the thoughts of capitulation were as close as they were ever going to get. I considered going into my account and just stopping the bleeding and putting myself out of my misery. I have been saving my whole life, and when I saw years of my savings disappear in these investments at a very fast pace it felt like the bottom just fell out. Going through drawdowns are easy on paper, but hard in practice.


The funny thing about 2021 is that I already have forgotten about a correction in my portfolio around February and March 2021. The drawdown was mainly from my precious metals portion going down a lot and my uranium positions were not compensating for them and also correcting some. My portfolio did go down by about 16% in this period, but it was a very short while before it turned up again. 

I think the reason for me forgetting is that I made some cash available and got shares “on sale” during this correction. I was therefore still able to be on the offensive during this drawdown. (Something I did not have to the same extent in July 2021). You have to run a balance of having cash available for drawdowns, and not missing the boat with money at the sidelines when share prices are going up.

Good times

A thing I also think people do not have enough focus on is what to do when things are going great. Your mind is just as prone to play tricks on you at these times, both in terms of increasing your risk tolerance because of a winning streak, or that you sell out of a win too early. 

We have multimillionaires and billionaires talking about selling 50% at a double, and riding the rest for free in interviews. This is not how they became rich. They usually white knuckled a great investment from the bottom to the top.

As the value of my portfolio got bigger than I could imagine by February 2021, my head had to adjust to this. My inner critic told me “Quit while you’re ahead.” As your portfolio valuation increases you have this feeling that you are on the way up to the top of a giant roller coaster. The biggest temptation then is to at least take some profits off the table.  

That you have a plan with a rule based exit strategy to follow is essential here. You also have to look if anything has changed towards your investment thesis. If you sell before any change it is more based on your psychology than anything else. I also look to historical figures, and even though I know there is survivorship bias, there are lessons to be taken from them. If John D. Rockefeller or Andrew Carnegie sold down their positions by 50% (in oil and steel) after reaching an arbitrary value of maybe $5 million, they most likely would not be remembered by posterity. Having an arbitrary number in our minds is something I believe many of us have. I do not have plans to reach anywhere near these tycoons’ levels, but I do not want to limit myself by selling 50% and riding the rest for free.

Sprott to the rescue

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.