Thread by @BambroughKevin

$u.un has had a decent take off since the ATM started but everyone invested in the space should appreciate that it’s just the start. The new players that are coming to the theme/trade are first focused on buying calls in miners and a basket of junior #uranium miners

The larger hedge funds will undoubtedly want to get max exposure in miners/explorers first. For multi billion dollar funds and large family offices it’s difficult to get enough money into the space. Once positioned in the general #uranium stocks they will get aggressive w/$u.un

I know there are funds moving into the space with the fire power to fund $u.un to eat up all the avail spot #uranium that will be for sale between $40 and $180. But know the plan for most is buy the stocks first then help squeeze the uranium price.

The Reddit crowd is focused on the $cco $ccj options because they can get incredible torque with the calls and then when they move to funding $u.un to buy more #uranium they will drive their ccj cco option profits to extreme $gme like returns as the u price soars

Which brings me to one of the most asked questions I’ve gotten lately. How do I see the squeeze playing out / what happens if the spot market really dries up because of $u.un (Sprott physical uranium trust or SPUT) ?

As we all noticed $u.un had a nice spike on Friday in part due to the follow through on aussie trading in uranium stocks on the back of the great news of Illinois deciding to keep their reactor feel operating and investing the necessary capital to fund it.

The reason that the price and premium to nav for $u.un exploded (20%+ at one point ~$50/lb equivalent) was because the ATM program was turned off. They likely sent Sedar.com the amendment to the at the market issuance prospectus Thurs shortly after 4pm

For regulatory reasons they were restricted from operating the ATM on Friday because the amendment was being published during the trading day. If Sprott is not running the ATM program no new shares are created and the new investors can get stock is if a unit holder sells

Hence, the premium blows out with $u.un spiking higher. What I believe will happen soon is that the fund flows into $u.un will allow them to buy up so much of the available physical uranium for sale in the spot market that it will become extremely illiquid.

The spot uranium market is obviously already illiquid by anyone’s standard. The SPUT atm buying demonstrated to all how thin this market really is. $200mm of fund flows took the spot price up $12/lb or ~40%

This ‘reveal’ has attracted new investors and hedge funds. There’s been a lot of debate about how much material is really out there and if the price will rise or not. Not many have done the work to understand this market and with its tiny cap it was considered uninvestable

So, everyone should be planning for what will happen when the spot dries up completely. Sprott will just keep having to lift its bids in an attempt to get fills. The gap ups will get larger and larger as available sellers shrink in number and lbs get harder to come by

I believe that there will come a time that Sprott will feel compelled to slow its atm program and limit the number of shares it issues out each day. It needs to be certain that it can issue shares and buy uranium accretively.

What will actually happen behind the scenes is that they will seek out sellers that are willing to give them a spot price for a day or two. Then they will only issue enough shares to purchase these set up spot trades. If/when this happens the atm program will likely be curtailed

We will hear commentary from Sprott reps and market participants that there is basically no spot available. This will just fuel the excitement and scare the shit out of the utility fuel buyers and also make would be sellers of spot material to lift there offers more and more

The narrative of ‘we are gonna break the all time highs’, ‘utilities are screwed and will be squeezed’ ‘$200/lb is coming for sure’ will take over the mindset of all participants and media commentators. Greed will take over and the reddit / wsb and crypto crowd will dominate

They have massive capital and many have huge followings measured in the millions vs the top uranium Twitter guys like @quakes99 with just 40k followers. Wsb said to have 10mm followers alone. They will likely be talking $300 $500 could be $700/lb.

But to most of us $amc $gme and crypto is all nuts and we can actually make a rational arguement that the price can be squeezed to those crazy levels cause utilities have no choice but to pay anything as their inventories are consumed.

A supply response takes time and so in the next 12m the uranium price can go parabolic and there is absolutely nothing that can stop it if traders decide to collectively flow the capital to take it there

The volatility is gonna completely blow out soon. Search of my post on ‘widening Livermore cylinder’ or column. Those posts detail the trading pattern I expect and why many long time investors will be shaken out of the trade. The market will blow out to new extreme highs

But it will also have sharp short lived corrections that will shake people out and then it will turn and rip back up to new heights. All the while it this trading action will help the theme enter the mainstream news media and compel the young generations of youth to invest

The youth of today believe climate change is the biggest problem they will face in their lifetimes. They see green energy as desperately necessary future theme and want to invest in things they care about. Help the planet and make money!

I think a huge number of new investors elect to play the nuclear energy theme via buying $URNM. The fund flows into their etf are going to be huge (at the market issuing just like $u.un) and put to work rather mechanically. All stocks in the etf will be purchased

$urnm will buy stocks in line with their current % weighting’s in between rebalancing announcements. $urnm currently has a ~9% weighting in $u.un so for every $1mln that flows into $urnm $90k will be used to buy $u.un

This will be a massive component of a positive feed back loop in the parabolic #uranium sector rise.

1. New investors hear about the uranium theme and decide to buy in via the $urnm etf. Some of I’ll also buy just $u.un as well at the same time.

2. $urnm takes 9% of inflows and buys $u.un which drives its price and premium higher. $u.un feels compelled to slow its atm and lift its physical uranium bids in the spot market

3. Would be sellers lift there offers for physical realizing that $u.un is trading at a price that allows them to afford to pay higher prices. 100k lbs is traded at a gap up price and this ‘news excites and attracts both additional media attention and many more new investors

The 1,2,3 #uranium investment feed back loop is created and will operate with increased intensity.

On top of it all the utilities / fuel buyers will increasingly become scared and give up on the spot market nearly entirely. They will instead begin serious negotiation

They smartest of them will move quickly and try to lock in some attractive longer term contracts and because of the concern they will have for where the prices may ultimately go, they will seek to lock in many years worth of future supply. 5+ some even 10 years.

The more future supply locked up in contracts the less future supply to be available on the spot market and also the easier it will be for the investing market and maintain control of the spot market and force the utilities to pay good prices to miners.

Last bit to this tweet thread to answer another common question I’m getting. ‘Who the hell is dumb enough to be selling spot here’ when it seems obvious that $u.un will pay more and more.

First, the industry has been trained to back off when ever the price rises and wait

The 10 year bear market in uranium conditioned all participants to do this. The spot market has been a significant component of the yearly uranium trading more for years. Most of the suppliers of spot material also don’t really understand what’s happening with sput

Some savvy investors also have been happy to take some profits on uranium they bought in the 20’s last year or when the premium on $u.un is tight they are happy to sell some lbs and buy hold $u.un so they can get margin and easier liquidity down the road.

I’ve even been debating selling 100k of my lbs if/when the premium is tight again and taking $u.un shares cause then I can hold it in my rrsp and tsfa. But I also like the idea of having it in my brokerage accounts and marginable so I can trade/invest with margin at times

My $55/lb year end target (that some mocked a few weeks ago) will likely get blown away. My 12 month uranium price target of $180/lb might be reached by end of March 2022. If we follow the uranium seasonal charts and $gme like technical patterns.

The ultimate top #uranium will hit as the feed back loop powers the #uranium squeeze. I think it could be me measured in the hundreds of dollars per lb and it’s gonna be a hell of a show.

Investors and fuel buyers should take note. This my friends is the most significant thing to watch now. It’s all about what comes faster money flow to the sector or uranium production and it’s looking like the money will be overwhelming the spot market

reddit.com/r/wallstreetbe…

That video is pure XXX uranium porn for those that understand the feedback loop we have begun #uraniumsqueeze

*only get stock if unit holders sell

Again. Sorry for the typos and errors do to lack of editing. I just try to spit out my thoughts and hope they are coherent enough to be helpful. Cheers

ASX is clearly enjoying being in the #UraniumSqueeze feedback loop. No one wants to sell cause they all know that the spot price will jump again today with $u.un buying. How much will the spot price jump this week? Everyone wants to hold and find out.

Was explaining to some friends this weekend about all the money in crypto, $gme $amc but also the mature tech stocks FAANG tsla. Trillions of capital held buy tech savvy ‘smart people’ that know gains are very limited for the going forward

The thought leaders and early adopters in that crowd are looking for what’s next and they want 10x

$TSLA share holders all believe in EV and green future. They know nuclear is needed and a key part of the future. So monster capital will keep flowing to $urnm and $u.un

This will be part of a bigger trend as the trillions upon trillions that are invested in mature tech companies start trickling out. There will soon be billions upon billions trying to squeeze into the sector. The bold ones will be very aggressive.

There will be big time commodity inflation as a result of all the quantitative easing and this uranium bull will be historic as the capital flows from bloated sectors searching for performance

The more I try to put myself in the shoes of those holding meme stocks, TSLA and FAANG, that are also just starting to look at the nuclear power industry and #uranium mining the more conviction I get that the capital flows will be incredible

The sector will most certainly gain garner the ‘nuclear has entered a new paradigm’ status and many will decide that they ‘need to be in this sector for the next 20 years’.

If you believe (like I do) that the world is going to make ever effort to go from 10% to 30% or more nuclear power while the power grid also doubles, how the hell can you sit back and not be apart of the movement.

Huge growth industry that will play such a key role in the future. It will become the dominate baseload energy source that charges the worlds vehicles every night after the sun has set on solar and the wind slows the turbines