Uranium ETFs Ride New Wave of Nuclear Enthusiasm
Uranium sector-linked exchange-traded funds surged as bullish day traders jumped into the nuclear fuel market.
Over the past month, the North Shore Global Uranium Mining ETF (NYSE: URNM) increased by 15.3% and Global X Uranium ETF (URA) advanced 17.3%. URA has increased 121.3% so far this year while URA has gained 86.8%.
After the Fukushima disaster that led Japan and Germany to shut down nuclear reactors, investors are starting to pay more attention to the nuclear market with spot uranium prices climbing to $ 47 a pound from early $ 32 August, reports the Wall Street Journal. However, prices remain below their 2007 peak of $ 137, according to price tracker UxC LLC.
Market watchers attribute the recovery to a rise in uranium prices driven by individual traders who have turned to a new confidence that offers a cheap and easy way to access the nuclear fuel market. Canadian trust Sprott Asset Management LP Trust has twice raised new liquidity from shareholders and has accumulated uranium since the summer to maintain its exposure as heightened investor attention forced the trust to strengthen its assets.
Sprott’s purchases helped reduce the global uranium glut that slowly built up after the 2011 Fukushima disaster in Japan. Traders also pointed out that these sudden buying surges in confidence have contributed to sharp price swings with little to no fundamental support for basic supply or demand dynamics.
“These periods of intense volatility will become the norm,” Hyder Ramatala, vice president of commerce at UG USA, a unit of French nuclear fuel company Orano SA, told the WSJ.
Uranium stocks also rallied this week after the world’s largest producer, Kazakh state-backed miner Kazatomprom, listed its own uranium fund in partnership with Kazakhstan’s central bank and Genchi Global Ltd. .
“We’ve never seen this before in the uranium market,” Amir Adnani, managing director of Uranium Energy, told the WSJ of the Kazakh and Sprott fundraisers. “In the long run, it has to be bullish. “
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