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CorkRockingham
Member since Jun 2017
331 posts

re: Uranium>Silver
Hmmm.


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wutangfinancial
LSU Fan
Dallas, TX
Member since Sep 2015
7513 posts

re: Uranium>Silver
I own Uranium funds. Go listen to somebody explain the math on supply/demand forecast dynamics over the next decade if you're a skeptic.


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wutangfinancial
LSU Fan
Dallas, TX
Member since Sep 2015
7513 posts

re: Uranium>Silver
quote:

Supply and demand. There’s simply not enough uranium to meet the future demand of utilities. Now add in 2020. Mines have shut down and production fell even further. The supply crunch was present before 2020. 2020 is just speeding this up. Large producers like Cameco and Kazak can’t produce enough uranium at the moment due to shutdowns. They’re buying on the spot market. Spot market is near empty and way under priced. When spot market moves this will be like a volcano. Utilities will come to the table to sign LTC’s and this will be like printing paper.


Damn you beat me to it but I didn't read the thread


CorkRockingham
Member since Jun 2017
331 posts

re: Uranium>Silver
What is the best one to own in your opinion?

That trust bigmikey mentioned shot up today. Makes me feel like I missed the boat to add here.


wutangfinancial
LSU Fan
Dallas, TX
Member since Sep 2015
7513 posts

re: Uranium>Silver
I'd buy a passive fund. Commodities are tough unless you're in the weeds at the firm level. Personally I trade URA. Our boy on Macrovoices pimps this one. I tend to like the larger funds because they get the most coverage and captial flows to the largest assets typically. In some LEAPS.


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Jmart0527
LSU Fan
Member since Jan 2018
56 posts

re: Uranium>Silver
We're having some fun! It pays to be early! Hold on boys. This is just getting started. From what I've heard... Sprott is operating exactly how they've been advised by some experts in the industry to drive the spot market up. They're buying and requiring delivery in 30 days. That's it. What we're finding is that there's much less material available in the spot market than what has been reported. That's the reason spot is moving faster than what even I originally thought with sprott entering the market.

Either way. Prices must go to $65+. The longer it takes the harder the uranium bull market will run. It doesn't really frickin matter. This bull market is happening. How hard it runs is yet to be determined.


Odinson
LSU Fan
Asgard
Member since Apr 2014
2151 posts

re: Uranium>Silver
So what’s the play to buy now?


Texas Tea 123
Member since Sep 2017
53 posts

re: Uranium>Silver
Let me help y'all out. Not written by me.

Last summer, I recognized an odd phenomenon. An obscure entity named Grayscale Bitcoin Trust (GBTC – USA) was slowly cornering the free float in Bitcoin. This was a result of the trust structure where any capital that went in, was converted into Bitcoin, but there was no mechanism in place to ever sell coins and redeem that capital. As a result, GBTC became a growing repository of Bitcoin. At first, it bought a few hundred coins a day, then a thousand, then a few thousand. As the trading volume increased, the inflows also increased. As the inflows increased, the daily bitcoin purchases increased, eventually driving the Bitcoin price higher. As the price went higher, new investors were drawn to GBTC and the inflows accelerated—spinning the flywheel faster. It was so obvious that this would lead to higher prices, that I called it “My Favorite Ponzi Scheme…” Over time, much as I had predicted, these inflows drove the price of Bitcoin and ultimately GBTC dramatically higher. Early this year, I had a well-timed exit for a quick multi-bagger and my capital went onto greener pastures in depressed energy assets.

I bring this all up, as I see a similar phenomenon in uranium—a much smaller and less liquid market, potentially creating a more dramatic effect should inflows accelerate. Long-time readers of this site will remember that I have a sweet spot for Uranium. I wrote about it back in 2019 but sold out during the first quarter of 2020 as the global equity markets collapsed and better opportunities presented themselves. At the time, the thesis, while directionally accurate, didn’t pan out as the supply deficit was insufficient to overcome above-ground stockpiles, capping price discovery.


In the year and change since I sold out, the overall supply deficit has continued to increase, while above-ground stockpiles have continued to be consumed. While uranium aficionados like to fixate on calculating the current deficit to the nearest decimal, for the sake of this post, let’s use some VERY broad numbers. The world is producing roughly 125 million pounds from primary mining, 25 million pounds from secondary sources and consuming roughly 180 million pounds, for an overall deficit of 30 million pounds a year. This deficit will only increase in future years, as additional reactors come online. If you want to quibble with my numbers, quibble away. I know I’m off by a few million pounds, but so is everyone else. No one really knows the true numbers—which is what makes commodity markets so fascinating in the first place. All that matters is that there is a deficit, it’s a big percentage of total production, new mines are not coming online at current prices and existing mines have had years of under-investment—hence production should continue to trail off without new investment.

How large are the above-ground stockpiles? No one knows. All we know is that they’re drawing down rapidly and outside of government entities, most of the stockpiles are spoken for by utilities, which are using their uranium to fabricate finished products for their reactors. However, a new class of investors has entered the market and they’ve completely upended the equilibrium.


My Favorite Ponzi Scheme…

Remember, GBTC?? I remember it quite fondly. What if I told you there’s another entity doing the same thing in uranium, but it is cornering the free float at a rate that makes the boys at GBTC look like amateurs? What if the free float is organically shrinking due to the supply deficit? What will happen as institutional investors jam themselves into a far smaller market? Fukit, who cares? Someone intends to conduct this science experiment; consequences be damned. Importantly, this entity is using an At The Market offering (ATM). Hence, it immediately produces free trading shares; increasing trading volume far more rapidly than GBTC with its 6-month hold—making acquisition by institutional investors possible and driving adoption. Basically, it’s GBTC 2.0—issue shares to buy product. Every day. Relentlessly. Except, against a smaller and shrinking asset class.

Remember, no one ever needs a bitcoin. Everyone who is long Bitcoin is a potential seller and on the way up, they’ll all eventually sell. Uranium is different—almost everyone who owns uranium today, owns it because they intend to consume it in their reactors—these owners are all incremental buyers going forward. In a market with a deficit, they’re all implicitly short uranium. With an entity buying up the free float, they’re going to get squeezed. We all know how squeezes work, but I don’t know of any similar scenario where the squeeze was as aggressive or blatant. The utilities are blissfully unaware, they’re eventually going to panic and pay any price for uranium as a reactor that runs out of uranium is just an expensive paperweight.


Sprott Physical Uranium Trust commonly known as SPUT (U-U – Canada), is the entity that has upended the uranium market. Since launching its ATM 13 days ago, it has acquired 2.7 million pounds of uranium. This is an average daily rate in excess of 200,000 pounds or roughly a third of global production on an annual basis. If GBTC is the roadmap to follow, as the price of uranium begins to appreciate, the inflows into the trust should accelerate. Interestingly, there are plenty of other entities also purchasing physical uranium, uranium that utilities were counting on for their future needs. The squeeze is on.

As expected, the utilities are blissfully unaware. Surprised?? I’m not. Utilities are quasi-governmental agencies, managed by the types of fukwits who’d work at your local DMV, except they enjoy stock options. The fact that they’ve ignored the coming squeeze shouldn’t be surprising. Inevitably, they’ll demand rate increases to buy back this uranium–it’s not their money anyway. This is your bid at some point in the future.


Commodities are determined by supply and demand. Uranium is a small market at roughly $6.3 billion in annual consumption (180 million pounds at $35/lb). SPUT has raised approximately $85 million in the 13 days since the ATM went live. It’s hoovering up supply and is already struggling to procure pounds, as shown by their increasing cash balance—cash that they’re legally forced to spend. Something is going to give here, and I suspect it’s the price of uranium.

In any case, when I saw the rate at which SPUT was issuing shares, I legged into a rather large pile of SPUT. I’m also long a few producers along with some juniors for extra kick. (Please don’t ask me which—if I wanted to name them, I would have). Uranium just broke out to 5-year highs. New highs bring in publicity, which often brings in new buyers and the cycle repeats. I like buying new highs from a big base—especially with SPUT out there playing Pac-Man. I pulled back my exposure all summer as I was awaiting something interesting. I don’t think I’ll see anything better than uranium for a while. Let’s just say that I’m suddenly back to being VERY fully invested.
This post was edited on 9/2 at 5:04 pm


Jmart0527
LSU Fan
Member since Jan 2018
56 posts

re: Uranium>Silver
Thanks for sharing. I like the comparison.

Something else to think about. Sprott is listed on the Canadian stock exchange right now. Last I heard they were aiming to be listed on the NYSE beginning of 2022. That will only increase capital flows and the squeeze.

Buy and hold. Realize that this is a very volatile market. We can see 20% up and down days. Conviction is key.


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itsbigmikey
LSU Fan
NASHVILLE
Member since Aug 2018
218 posts

re: Uranium>Silver
quote:

So what’s the play to buy now?

If you go back through this thread you'll see plenty of good options. The high risk/reward are the junior miners (refer to some of Jsmart's posts). You also have URNM and URA which are ETF's that contain some of the major producers and gives you exposure to some junior miners as well. My heaviest positions are UUUU, DNN, URG, FCUUF, and PALAF. Trying to get heavy in STTDF if there is a good dip. JSmart, are you still liking Standard Uranium's outlook?


itsbigmikey
LSU Fan
NASHVILLE
Member since Aug 2018
218 posts

re: Uranium>Silver
And just to emphasize, if you are invested in uranium, buying shares of SPUT (SRUUF) allows the trust to purchase more lbs of uranium which furthers the supply deficit. It may not be the most lucrative uranium stock you will own, but it will add more momentum to this bull cycle.


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Jmart0527
LSU Fan
Member since Jan 2018
56 posts

re: Uranium>Silver
I still like Standard. I hold a large position with them, but it's one of the riskiest uranium plays since they are still an explorer. Mining is a tough business so the risk is that they don't hit anything for 2-3 years or nothing at all.

I really like the team though. They're experienced in that region and their head geologist was apart of the Nexgen and Fission team when they both hit. Both of those sites are next door neighbors to Standard so they know the rock formations to look for. There will be a few uranium companies that are 10 baggers or more. I think if Standard hits then they are one of those that has the potential to be a 10 bagger or more. Especially with the current hype building.

They just finished up there summer drill program. Standard increased it from 2k Meters to 10K meters. Look for that report to come out in the next couple of weeks. If they hit. Goodbye!


itsbigmikey
LSU Fan
NASHVILLE
Member since Aug 2018
218 posts

re: Uranium>Silver
Awesome man thanks for the update


Upperdecker
US Space Force Fan
St. George, LA
Member since Nov 2014
25033 posts

re: Uranium>Silver
UUUU and NXE looking really good off the double bottom. Added them Monday, looking good today


igoringa
LSU Fan
South Mississippi
Member since Jun 2007
11671 posts

re: Uranium>Silver
So dipping my toe in this - URA, SRUUF and small amount of STTDF for spice.

Still want to do more due diligence, but on the surface it does seem like SRUUF could really jack things up if it got any material inflows, creating some form of self fulfilled prophechy.

Any good sites for actual physical production and demand (I know it is an opaque market)



wutangfinancial
LSU Fan
Dallas, TX
Member since Sep 2015
7513 posts

re: Uranium>Silver
Ya this is quite the moonshot here. I'll probably scale back 50% on my open trade. Really ran on me I didn't think it could keep going.


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Who_Dat_Tiger
LSU Fan
Member since Nov 2015
9893 posts

re: Uranium>Silver
quote:

SRUUF and small amount of STTDF for spice.

Gotten great returns on these just since inception of this thread

Or last week when I discovered it at least
This post was edited on 9/7 at 11:15 am


KCRoyalBlue
Arkansas State Fan
Member since Nov 2020
409 posts

re: Uranium>Silver
I think I'm going to dip in on STTDF. Let's see what happens.


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itsbigmikey
LSU Fan
NASHVILLE
Member since Aug 2018
218 posts

re: Uranium>Silver
MarketWatch article mentioning Sprott

Gaining a little traction. If retail (especially the reddit crowd) gets involved, this could be even more of a slam dunk than it already seems to be. It looks like utilities are very late to the game and all of the inflows to Sprott are going to put a lot of pressure on an already tight supply.


notsince98
Missouri Fan
KC, MO
Member since Oct 2012
14637 posts

re: Uranium>Silver
Another thing that should help the uranium and other nuclear fuel markets is that real, authentic environmentalists are waking up to the facts that solar, wind, lithium and other modern "green" technologies are environmental disasters. The only zero emission, completely clean option at this point is nuclear.

Given the additional research getting spent on recycling programs for the waste, the future is looking good for nuclear.


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