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How to invest in uranium

key takeaways

  • Investments in uranium soared after Japan announced it would reopen its nuclear power plants and fund next-generation nuclear technology.
  • Uranium investments are risky and profitable, but first you need to know What invest in uranium
  • Some of the best options include mining stocks, uranium-focused ETFs, and nuclear or green energy funds.

Many people know that uranium is the main fuel for nuclear power plants. The radioactive properties of uranium allow it to produce massive amounts of emission-free energy more reliably than wind and solar power.

Unfortunately, uranium also has a dark side, as the 2011 earthquake-tsunami-Fukushima reactor meltdown trio illustrated. nuclear plans. Uranium prices tumbled as demand fell while supplies increased.

But now, it looks like uranium is having a moment, one that can propel the world toward a clean energy future. (And boost investor profits along the way.)

And it all starts with Japan.

A collapse to signal the fall

Just over a decade ago, Japan was considered the apex of the global nuclear power boom. It boasted dozens of nuclear power plants, downplaying the mineral-starved country’s reliance on imported energy sources like coal and fossil fuels.

Then, in March 2011, an unprecedented earthquake sent a 46-foot wave crashing into Japan’s Fukushima Daiichi nuclear power plant. The wave destroyed the emergency generators and sent several of the plant’s uranium cores into a partial meltdown.

Nuclear power plant meltdowns are incredibly rare, and the risks are diminishing as technology races to meet science. But when they do happen, they can be catastrophic and lead to substantial policy changes.

Immediately after the catastrophe, Japan shut down all of its nuclear power plants. In the aftermath, many major nations move on, shutting down reactors or reconsidering their nuclear plans. As a result, the global nuclear power industry stopped dead in its tracks, dragging the uranium industry down with it.

New hope for nuclear power

Since 2011, Japanese public opinion on nuclear power and its expansion has soured. In 2021, nuclear power plants produced only 7% of the country’s energy supply.

And then came the global energy crisis.

Lifted lockdowns and extreme weather around the world have increased demand for fossil fuels, while the war between Russia and Ukraine has drastically reduced supplies. Since Japan suffers from a shortage of native fossil fuels and is not connected to power from the mainland, the country’s imported energy costs have skyrocketed.

As high fuel prices and extreme weather hit homes (and budgets), public opinion seems to be shifting and taking government policy with it.

On August 24, Japanese Prime Minister Fumio Kishida announced that his administration would restart 7 of the country’s suspended reactors. That brings the country’s total to 17 online reactors (out of 33 operable). Additionally, officials will consider extending the life of existing reactors beyond the current maximum of 60 years.

Said Kishida about this policy change: “In order to overcome our looming crisis of an energy supply crisis, we must take the necessary measures to mobilize all possible policies in the coming years and prepare for any emergency.”

Japan’s Economy and Industry Minister Yasutoshi Nishimura agrees. β€œIt is extremely important to ensure all options to redesign a stable energy supply for our country. From that perspective, we will also consider all options regarding nuclear power.”

global implications

Japan’s announcement represents a significant policy change to address issues including rising prices, tight supplies and extreme weather. Japan is not alone, and the country’s changing stance could force other nations to reconsider as well.

Already this year, the media reported that Germany is reconsidering its decision to shut down its reactors amid a gas shortage. Belgium plans to extend the life of two reactors by more than a decade. India plans to build a “megajet” to boost its shift from coal to clean energy, while France plans to build 14 from 2028.

But it’s not just about money.

As more countries shift to clean energy, safe, affordable, zero-emission nuclear power looks more appealing every year. And, as the war between Russia and Ukraine has highlighted, modern countries need reliable energy supplies – supplies that, for many, are now threatened or extinct.

Nuclear power promises to fill these gaps as smaller, safer and more efficient models come to market. The United States recently polished up its nuclear sector with $30 billion in tax credits to encourage nuclear power. As more countries pour capital into these next-generation investments, the potential for power and profit could be enormous.

That is exactly what uranium investors are betting on.

Uranium’s big comeback

After the Fukushima disaster, the price of uranium, the crucial ingredient for nuclear power, plummeted.

Two of the world’s largest uranium miners, Cameco and Kazatomprom, have slashed production to support prices, with little success. As a result, uranium has largely remained a no-go option for investors.

Some of that changed in 2022 when the global focus shifted to low-emission renewables and cheaper alternatives to Russian fuel. Investments in uranium faltered again as Kazatomprom announced plans to boost production in 2024, fueling fears of a surplus and depressing prices.

But following Japan’s announcement, it appears the world may be ready to address its concerns about nuclear power. With long-term demand poised to meet rising production, miners, investors and the future of green energy may be in for a sweet surprise.

For investors, part of that surprise has passed.

Uranium stocks soared immediately after Kishida’s comments.

The Global X Uranium ETF was up 11.5% after Wednesday’s announcement and was up 16%. Uranium Energy is up a whopping 30.3% since last Wednesday (gaining 14% on Monday alone), closely followed by giant Cameco’s 27% gains.

How to invest in uranium

Properly built and maintained, uranium power plants can generate tons of safe, efficient, and even profitable energy. However, knowing how to invest in uranium is not as simple as investing in stocks. Your options are also much more limited, and you certainly can’t buy and store it like gold.

That doesn’t mean you can’t invest in uranium. You just have to know where to look.

How to invest in uranium stocks

One of the easiest ways to invest in uranium is through uranium-related stocks. Large mining and production companies such as Cameco, Kazatomprom, BHP and Rio Tinto offer exposure to uranium on the stock market. You can also invest in smaller or more specialized companies such as Uranium Energy Corp and Yellow Cake PLC.

Investing in uranium stocks provides many of the common benefits of the stock market, including liquidity and ease of access.

However, mining companies carry unique risks, including moral, political, environmental and social responsibility concerns. You may want to do your research to make sure the companies you invest in align with your values.

How to invest in uranium ETFs

If you prefer to avoid the pitfalls of stock picking, you can jump into uranium through exchange-traded funds (ETFs).

In addition to uranium exposure and liquidity, you’ll enjoy additional benefits like automatic diversity. Additionally, some funds offer exposure to nuclear or clean energy in general, which could cushion volatile uranium prices.

On the other hand, its uranium-focused ETF options are slim compared to other industries.

One option is the Global X Uranium ETF, which tracks domestic and international mining and production companies. It also has the Van Eck Market Vectors Uranium + Nuclear Energy ETF, a market capitalization-weighted index of uranium players.

Another potential option is the Sprott Uranium Miners ETF, which invests in companies based in the US, Canada and Kazakhstan. And the North Shore Global Uranium Mining ETF provides broad exposure to uranium mining, exploration, development, production and storage companies around the world.

How to invest in uranium futures

For risk-loving investors, uranium futures offer a way to invest in uranium futures prices. These derivatives allow investors to lock in the price and date of future transactions of financial instruments or commodities. (Note that for investors, uranium futures are financially settled only. In other words, you can’t buy radioactive materials.)

Currently, futures are crucial for uranium markets to establish a semblance of transparency of prices and expectations. They also provide investors with a market to enjoy direct exposure to uranium investments.

However, uranium futures are also limited and particularly risky. Futures contracts are already generally recommended as experts-only investments, and uranium’s lack of additional liquidity means most investors should stay far, far away.

Looking at unusual investments in uranium

Uranium investors can also look to slightly more unusual investment options.

For example, there is the Sprott Physical Uranium Trust. This exchange-traded fund lists units that trade like shares, with each representing a physical allocation held by Sprott.

There is also the Uranium Royalty Corporation, which makes physical purchases of uranium and invests in uranium-based companies in exchange for royalties. The company provides crucial capital for the uranium mining industry while providing easy (sort of) access for everyday investors.

Knowing how to invest in uranium does not mean you should

With many major nations rethinking their approach to affordable, clean energy, nuclear power plants are an obvious choice. That’s good news for uranium investors, since more nuclear power means more demand for the radioactive metal.

Unfortunately, uranium is not investment grade in the same way that beef or gold is. While a handful of stocks and funds provide direct or indirect exposure, they also carry unique risks both inside and outside of your portfolio.

Instead of going all in on uranium, Q.ai offers a variety of investment kits to help you achieve your goals. For example, the Clean Tech Kit allows you to invest in the future of zero emissions (and sleep well doing it). And for those who want to invest in precious mined assets, our precious metals kit provides all the brilliant exposure you need.

Download Q.ai today to access investment strategies powered by AI. When you deposit $100, we’ll add an additional $50 to your account.

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