Home etftrends.com An ETF to Play the Uranium Rally as Demand Spikes

An ETF to Play the Uranium Rally as Demand Spikes

Solar and wind power might get the majority of attention in renewable energy, but higher demand for nuclear energy could be on the horizon — a good sign for uranium.

In turn, this could give the Global X Uranium ETF (URA) even stronger gains if the trend persists. URA, which is already up over 60% for the year, seeks to provide investment results that correspond generally to the Solactive Global Uranium & Nuclear Components Total Return Index.

“Investors are flocking to a new uranium fund that’s amassed a huge stockpile equal to about 16% of annual global demand,” a Bloomberg report noted. “After languishing at historical lows for the better part of the last decade, uranium suddenly came back from the dead.”

“Prices have surged about 40% just in September, outpacing all other major commodities,” the report added further. “In just a few weeks, millions of pounds of supply was scooped up by the Sprott Physical Uranium Trust. It’s a massive bet on nuclear energy’s prominence in a carbon-free future. The problem is — at least for the investors who poured more than $240 million into the fund — the debate is still raging over whether and how nuclear can come to the forefront.”

Changing Views on Nuclear Power

Disasters from nuclear power plants in the past have plagued the perception of nuclear power as a renewable energy source. However, views could be changing, but it will take quite some time given the polarizing sentiments on nuclear power.

“Nuclear power has always been controversial, but the debate perhaps has never been so polarized,” the Bloomberg report said. “Even uranium skeptics tend to agree that for global governments to achieve their ambitious plans to wean off fossil fuels, nuclear could eventually take on a bigger share of power generation.”

While it may take time for views on nuclear power to become completely favorable, URA presents an interesting growth opportunity to consider.

“What’s really changed is the financial-investment world’s view on uranium,” said Jonathan Hinze, president of UxC LLC, a leading nuclear fuel market research and analysis firm.

“It’s very possible this pickup in the spot market will be the catalyst to push more utilities to get in involved and get going on term contracting,” Hinze said. “That’s the piece that would be the next part of the cycle.”

— With assistance by Nariman Gizitdinov, Dan Murtaugh, and Aoyon Ashraf

For more news, information, and strategy, visit the Thematic Investing Channel.

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