Uranium’s last major bull market – from 2003 to 2007 – transpired at the same time the Federal Reserve began raising interest rates just like they are today!
The entire sector’s market capitalization over this period increased by 500%. Investors who owned a broad basket of uranium producers did quite well, to say the least.
The last contracting cycle for uranium has been over a decade, and utility companies are about to start contracting for uranium supplies over the next 6 months now that inventories (high tail assays) are near depletion.
This upcoming contracting cycle sets the stage for possibly one of the largest bull markets in uranium’s history.
One of the aspects that FMT appreciates about uranium and its cycles today is that it is independent of the economy.
Utility companies that need baseload fuel contract years in advance, and recession risks or an economic slowdown have virtually zero weighting in their refueling needs or process. The world needs power in any economy and will continue into the future. It’s simply time for utilities to start reloading their fuel rods, and it doesn’t matter one iota what is happening in the economy during a refueling cycle. Utilities simply must hunt for U308!
With decarbonization and net-zero emission goals by 2050, nuclear power plants are having a renaissance, and reactors under construction are growing.
There are 52 nuclear reactors currently under construction around the world (China has a total of 150 planned), and nuclear energy is once again hitting the main stage.
As the utilities start their next big contracting cycle, uranium producers have a collective market capitalization that is just over $30 billion after a decade of near-stagnation! Nuclear power will do more for sustainable energy than Tesla, which has a market capitalization of $1 trillion right now by itself!
When the contracting cycle begins anew and profits start to surge, it will take very little capital coming into the uranium producers to see a potentially huge upside.
Long-term uncovered (uranium supplies) requirements have never been this wide, and the overall 500% sector return in the last bull market could be eclipsed by the next one by quite a bit.
The only critical raw materials sector that has seen solid investment returns in the last few years has been lithium producers. It is not a coincident that lithium had uncovered demand going into its bull run. It looks like uranium is next!
While the sector should be volatile, FMT believes a group of uranium producers are a low-risk, high-return investment idea over the next few years.