Why #Uranium is the most asymmetric trade opportunity I've ever seen

Uranium is the fuel that powers nuclear reactors, which currently supplies around 1/5th of the USAs Baseload power. It is the most reliable green energy source, with no close competitors.

Following the 2011 #Fukushima disaster, the Uranium spot market entered a brutal bear market, sending #U3o8 to a low of $18, and brutalizing all the miners, with some of them losing around 90% of their value.

With the U3o8 price at $18, and the cost of producing U3o8 at $30, miners were losing money by producing the fuel that powers nuclear reactors, which was the cause of their tumultuous decline.

In this scenario, there are two outcomes:

A. Uranium miners cannot run anymore and the mines shut down, in this scenario the power crisis we saw recently in Texas would become commonplace.

B. U3o8 Spot price increases to incentivize new production.

4/ n
We've been in this situation before, as many investors saw in the last bull market, U3o8 price had to rise violently in order to keep mines producing.

U3o8 was at $20/lb in 2005, by 2007 it was at $130/lb.

Stocks responded even more violently.

Then Fukushima happened.

The market is now at a similar inflection point, a lot of miners are 90% below their highs.

With some key catalysts that were not present in the last bull market.

The pandemic has caused most of the miners to shut down, causing a supply crisis that's yet to take off.

Companies know this, recently a lot of miners are opting to hold U3o8 over cash.

U3o8 is now $30/lb. Cost of production is around $50/lb. Miners are still losing by producing.

The political climate is pushing for greener solutions.

The price will rise. It's when, not if.
In the words of the legend @RealRickRule.

If in 5 years, you expect your lights to come on when you press the light switch, then you are bullish on uranium.

Either the price of U3o8 rises the meet production, or the lights go out.


• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with QUANT

QUANT Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!