Liquid Alternatives: Uranium on a Roll as Supplies Taper; ETFs Trend Higher

April 22, 2020 | Alternative Investments

Year-to-date, uranium is the best performing commodity.

Uranium, the radioactive metal used to power nuclear power plants, has gained 31% this year. Its price has shot up because coronavirus lockdowns have forced producers to idle mining operations. Meanwhile, nuclear power plants, designated an essential service, have maintained generation. With production down by a third, a demand-supply gap is pushing up the metal’s price. (Mining.com)

According to Cantor Fitzgerald analyst Mike Kozak, the shutdowns have removed about 46 million pounds. That’s about 35% of annual global uranium output gone over three weeks.

Moreover, in a long-term shift, inventories that were high due to the shuttering of Japanese nuclear plants following the 2011 Fukushima disaster, have started to turn down. The coronavirus lockdowns come at a time of dwindling stocks. Moreover, nuclear power plants will need to build up inventories typically for 1.5 to 5 years.

These factors may cause uranium to wake from its long term bear slumber. The current scenario has the potential to become “the turning point in a 10-year bear market,” according to Scotiabank analyst Orest Wowkodaw.

ETFs that can ride uranium’s coat-tails

The North Shore Global Uranium Mining ETF (NYSEARCA: URNM) has gained 54.79% this past month, and is up 66.55% from its 52-week low. It last traded April 21 at $25.90.

The ETF has an expense ratio of 0.85%. Its top three holdings are Cameco Corp (NYSE: CCJ) 14.65%, NAK Kazatomprom AO (LON: KAP) 12.79%, and Uranium Participation Corp (OTCMKTS: URPTF) 10.48%.

The Global X Uranium ETF (NYSEARCA: URA) has surged by 37.57% over the month and is 46.57% higher from its 52-week low. It closed April 21 at $10.18.

URA has an expense ratio of 0.69%.

Its top three holdings are NAK Kazatomprom AO (LON: KAP) 23.37%, Cameco Corp (NYSE: CCJ) 22.88%, and Barrick Gold Corp (NYSE: GOLD) 6.52%%.

Related Story:   Alternative Investments: The Virus is Killing Uranium Production; An ETF That May Benefit

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