Is it worth investing in uranium? How to do?

It pays to invest in uranium? If you are wondering if should invest in nuclear poweris because the theme ofnuclear energy And returned to the fore, so much so that many investors have focused on ETF e shares on uranium.

Let’s see it together.

Why invest in nuclear power?

We are in the age of alternative energies, the world is changing and the environment is asking for greater sustainability. For this reason, the idea of ​​having to use energy such as nuclear energy may perhaps not seem consistent with the idea of sustainability.

Yet this energy is experiencing a real renaissance in the debate on the energy transition, as in reality new plants would obviously be safer than in the past and would allow for less waste to be produced. It could therefore be an energy capable of allowing us to reach the 2050 climate objectives and reflect the requirements of the ‘green taxonomy’” (a list of energies considered environmentally friendly that the European Commission approves by the end of the year ).

However, it remains a controversial debate, just see that Germany is trying to decommission its plants in a few months, while Great Britain, France and the United States are trying to build new and more efficient ones.

War and the nuclear issue: the rise in uranium prices

Today there is another issue which, however, affects the energy question and ignites the debate: the Russo-Ukraine war which is leading various countries to try to distance themselves from Russian gas.

Precisely these dynamics have led to an increase in the prices of materials such as gas, petrol and some foodstuffs. But that of uranium has also risen… and we know that uranium is essential precisely in the nuclear sector.

What are the data? It has gone from 43 dollars a pound recorded in February 2022, shortly before the Russian invasion, to prices of 57.5 dollars a pound, or an increase of 33% in just one month.

In order to see prices above $55 a pound, it is necessary to go back more than 10 years, i.e. November 2011.

But what is the reason for this rush? Is it destined to continue?

There are two reasons behind the Uranium price hike:

• the possible increase in the demand for investments in nuclear energy, given that several countries have announced nuclear projects following the war;
• the risk that uranium supplies will suffer some negative impact from the war. The country that produces the most uranium is Kazakhstan, whose supplies, however, before reaching the West, pass through Moscow and St. Petersburg. While there are no problems so far, the risks of a tight supply of uraniums remain due to the likelihood of an extension of the conflict to Kazakhstan – and this can only push its price higher. Just think that half of the uranium used by the United States to operate its nuclear power plants comes from Russia, Kazakhstan and Uzbekistan: if these flows were to be blocked, an important share of uranium would be missing from the market.

How long will uranium last?

Let’s open a quick parenthesis before getting to the heart of the matter: it is good to ask ourselves how much uranium is still there.

In fact, like many of the earth’s resources, uranium is a finite and non-renewable source. At the current rate of consumption of 70,000 tonnes a year, these reserves will barely last 70 years old.

However, if, as it seems, we start focusing on nuclear power to overcome the current one impasse energy, its exhaustion will arrive well in advance.

It’s not been many years, as you see, and this could be a reason not to bet excessively on this single resource to try to reduce the impact of human activity on the planet.

Then there are other disadvantages that should not be forgotten, starting with the one related to management of nuclear waste, still radioactive and harmful to health. Let’s not forget the costs of installation, maintenance and decommissioning when nuclear plants get too old and high construction costs.

How to invest in uranium?

Now that we have made this premise, let’s see how it is possible to invest in this element.

Uranium Investment Fund

Let’s start with an investment fund, lo Sprott physical uranium.

This fund, in Canadian dollars, buys real lots of uranium. They are stored in special warehouses. At the beginning of 2022 the trend was very good (+34.3%) compared to prices prior to the outbreak of war.

However, it is not easy to buy, as it is only listed on the Toronto Stock Exchange.

Etf North Shore global uranium mining

To make things easier for you, if you want to invest, you could go for the North Shore global uranium mining ETF, which can be purchased more easily in New York.

This ETF not only invests in companies linked to uranium mining, but dedicates a large part of its assets to the Sprott physical uranium fund.

This ETF has also performed well since the beginning of 2022 (+36.2% in euros). Remember, however, that it is a Non-harmonised ETF.

The shares of uranium

If you prefer invest in stockshere is a stock of a company that mines and produces uranium.

Kazatomprom shares

It is certainly a more dangerous road than ETFs and this must be kept in mind. One stock to keep in mind, if you decide to value individual stocks anyway, is related to the Kazatomprom company, a Kazakh state company active in uranium mining.

Be careful, because it was still affected by the war and, as we have seen, it is a risk that we cannot overlook. This is why I advise you more than ever not to invest in this stock, which I wanted to present to you for the sake of completeness of information, and because perhaps you came here precisely because you were looking for these specific stocks.

Cameco shares

Rather, if you really want to invest in uranium shares, consider those of the Canadian company Cameco.

These, unlike the previous ones, are doing well and have risen by 47% in euros. In fact, this group has profited from the rise in commodity prices and benefited from the possible increase in demand it could receive if sanctions limit Kazakhstan’s activities.

However, remember that the shares closed 2021 at a loss, so don’t think about including these shares in your portfolio without having a strategy and without knowing what you are doing.

A nuclear certificate

A. has landed on Borsa Italiana certificate which focuses on companies in the nuclear sector. We are talking about Strategic Certificate su Vontobel Nuclear Energy Index issued, in fact, by Vontobel Financial Products.

The underlying index consists of 25 companies operating in the nuclear energy sector, not only from developed countries, but also from developing ones.

Companies subject to international sanctions and those related in any way to the development or production of nuclear weapons are not included.

Companies operate in uranium mining and nuclear power generation and are selected based on their market capitalization.

The final composition of the index is not fixed but is adjusted every six months. Dividends and income from securities are reinvested.

Since February 21, this certificate has gained +42.2%, while costs, annual management fees are 1.25% and there is no performance fee

Attention, do not forget that it is a risky investment, but it allows you to concentrate the investment on a single share and is listed on the Italian Stock Exchange, so it is easier to negotiate and also the tax treatment is simpler, compared to theEtf North Shore global uranium mining.

Investing in uranium: pros and cons

Let’s see the advantages and disadvantages of this investment, before focusing on the opinions.

To understand if the current one is a good time to invest in uranium ETFs or other instruments dedicated to this asset, it is necessary to carefully evaluate the context we are going through, examining some aspects we mentioned at the beginning of this study. important.

The first consideration to make concerns uranium itself and its fields of use: are we talking about a raw material that will continue to play an important role in the energy field, or will it soon be replaced by greener energy sources?

Unfortunately it is not easy to give an answer: we have seen that uranium will not last forever, as well as having numerous disadvantages, however the debate is still open and nuclear remains a highly controversial energy source.

It certainly represents a less polluting energy source than others, on the other hand it does not seem to embrace the principles of ecological transition.

The second food for thought concerns the situation of raw materials as a whole: the price of commodities it is determined by the dynamics of supply and demand and tends to remain even in the most complex periods.

The months dominated by the Covid-19 pandemic and the conflict between Russia and Ukraine caused significant market upheavals, driving volatility and uncertainty. However, historically, markets have been characterized by immense resilience. This doesn’t mean that it doesn’t mean you can invest with your eyes closed without getting informed!

Is it worth investing in nuclear power? Opinions

First of all, if you want to invest in uranium, and by extension, in nuclear power, I want to be precise. More than the investment in the “material”, you have to consider the type of instrument you will invest in, also because, unlike for example gold, it is impossible to invest in physical uranium (we are talking about a radioactive material, nobody would keep it in a safe !).

I will opt for the actions? Or ETFs? Or, again, a certificate?

Personally, I always advise against investing in individual shares for those who don’t have a varied portfolio and, above all, don’t have a strategy.

invest in ETFs, if you’re a beginner, it’s always the safest and most stable solution, although, obviously, I don’t suggest investing blindfolded even in ETFs.

It would be like having to perform an operation on the human body without having studied: if you were forced to choose to operate on someone for the first time and the choice fell between open heart surgery or putting stitches on a bad wound, I think without delay, from the bottom of your inexperience (unless you are a doctor) you would choose the stitches! While it’s obviously easier, would you still be comfortable doing such a job without having the skills?

I don’t think so, and the same should apply to investments. So, in conclusion, what I want to say is that nuclear is a sector that is talked about, and it could certainly have many aspects to offer, but the situation, as of today, is uncertain.

Therefore, invest in this sector only if you know what you are doing (choosing an instrument that you know how to manage and investing only a small part of your capital) and only if you really believe in the future of uranium and nuclear power: in this way, if go wrong, you will still have no regrets.

More resources for you

As you may have understood, investing is not as simple as it might seem. It requires a little awareness.

Here I leave you some free reading to consult to expand your skills in this regard and perhaps to discover other investment opportunities:

And here are more guides for you:

I wish you good continuation on Affari Miei.