No Longer Not Green
A change in the zeitgest is likely to usher in a new nuclear era. Here's how to play it with traded funds.
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Uranium? It's Now Not Not Green
In staff personal accounts we had a nice run last year investing in a basket of uranium names - the physical uranium trust of which we are about to speak, and a bunch of miners to boot. We’ve also flagged the funds here in the newsletter before - prior notes cover U.UN / SRUUF, URNM and URA.
In short: long run uranium fundamentals are likely positive because the West can’t generate enough power from renewables to enable it to use less fossil. And the price of fossil is going up bigly following the Russian invasion of Ukraine and the tensions between the US and OPEC. So, nuclear is likely to rear its head before too long.
This week we saw what we believe will be a material catalyst for the sector. The European Union declared that natural gas and nuclear power were off the verboten list of doubleplusbad things that must not be mentioned. And with that - with the charts of U.UN already beaten up and approaching a potential reversal position - we move to Accumulate rating on U.UN.
To be clear what we mean by Accumulate is - if this idea interests you, consider building a position in these instruments slowly over time, adding on red days, then, holding for the ride up. We believe uranium names are likely being accumulated by institutional capital whilst prices are low; we expect a markup phase to follow in the coming months. If the accumulate-markup-distribute-markdown cycle of institutional capital behavior is news to you, read this note (“Raise Your Game For Free”) first:
The touchstone logic here is:
- Energy shortfall gives you fundamental long term demand trends
- Regulatory / zeitgeist change gives you the catalyst
- The recent risk-off selloff gives you the entry opportunity
The rest comes down to charts for us.
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