This Hated Commodity Could Make Huge Gains in 2018

Kazakhstan’s state-owned uranium miner Kazatomprom cut production by 20% for the next three years.The result could be a massive boom for the uranium price.

The forecast showed an extra 20 million pounds of uranium production for 2018 … with no buyers. As you can imagine, the uranium price plummeted.

It hit its lowest price in October 2016 at $18.75 per pound. That touched a 13-year low price.

The downtrend began back in 2011. The uranium price peaked at $72.50 per pound in January 2011. It fell steadily since then, down a total of 74%.

This is a shocking result for an energy source that many embraced as a “green” rescue from hydrocarbons just a few years ago. Nuclear power creates safe, carbon-free energy.

The problem is, it can cause huge disasters. That’s what we discovered when the Fukushima disaster struck Japan.

The Demise of Nuclear Power

An earthquake and tsunami damaged the Fukushima Daiichi nuclear power plant in March 2011. The earthquake damaged a reactor. Then the tsunami inundated the area, destroying vital backup generators.

Without the backup power, cooling water couldn’t get into the plant. That caused a runaway reaction, a meltdown — the greatest fear for all nuclear power plant operators.

A series of human errors compounded the damage. The operator, Tokyo Electric Power Company, was completely unprepared for the situation.

The result killed the nuclear power industry.

Fukushima turned the world against nuclear power. Germany shut down all its reactors in response. Demand for uranium fell, and the uranium price collapsed.

This finally led major uranium producer Cameco Corp. (NYSE: CCJ) to cut production in early November 2017. The company’s earnings fell and fell. It struggled to maintain profitability. It finally announced that it would suspend operations at its flagship McArthur River mine for 10 months.

Cameco’s decision cut the surplus to just 5 million pounds … and then the unthinkable happened: The world’s largest uranium producer followed suit. Kazakhstan’s state-owned uranium miner Kazatomprom cut production by 20% for the next three years.

The result could be a massive bull market in uranium.

The Uranium Price and a Windfall for Uranium Producers

Shares of Uranium Participation Corp. (Toronto: U), which hold physical uranium for investment, soared in response. As you can see from the chart below, shares are up 30% in just a month and a half.

Kazakhstan’s state-owned uranium miner Kazatomprom cut production by 20% for the next three years.The result could be a massive boom for the uranium price.

Shares of uranium companies surged too. However, this is just the beginning. Analysts that cover the uranium sector believe these cuts could add $30 per pound to the price of uranium. That’s more than double the current spot price.

For uranium producers, this will be a windfall. Companies like Cameco and Ur-Energy Inc. (Toronto: URE) will see revenue and earnings rocket higher.

This appears to be great news for the uranium sector. It’s a story we’ll continue to watch in 2018.

Good investing,

Matt Badiali

Editor, Real Wealth Strategist

9 comments

I enjoy reading your articles. Very informative. Just would be nice if this type information was available prior to the 30% jump in one month. Something was brewing before it jumped up. I read a lot of your articles and the information is sometimes after the fact. On the other hand – good to know what will likely happen in 2018 as you state. But, why? Why is it jumping up? Pent up demand? New projects? War? More nuclear power plants opening? Good info. More please.

US is shutting down reactors and killing projects. However, UAE is finishing up its purchase and buildout of 4 large reactors. Also, Vietnam has signed contractors for at least 2 reactors. China is building. There is growth, but mostly Asia and not North America or a good bit of Europe. Dave

Agree with the thesis in a big way. I’m an Investment Advisor (RIA).

We’re (my clients and I) are already heavy invested in 7 Uranium companies. I’m up 30-65% just in the last 6 weeks as Cameco, and Kazatomprom shut in production which created the recent move. Kazatomprom is going IPO sometime in 2018, and of course they want Uranium at some higher P(x) than it is now…even after this latest move off the bottom.

I’m expecting my Uranium investments to create a “Generational Type Wealth” event.

I must tell you that Uranium Participation Corp is not a great way to play the move in Uranium. There are only a handful of companies with proper Balance Sheets still left in the industry that are worthy of investment.

U.TOR is not really a great leveraged play. If you like to correspond then let me know, I’d be happy to share my knowledge of the industry.

Good Luck

Todd Morgan
Tahoe Capital Markets LLC
310.966.0375

“Fusion is coming on stream in another five years.” is a wishful thinking and had been repeated for the last 50 years! It seems so close yet too far to achieve fusion in a demonstration. It would take at least another five years to build a commercial plant.

See the light with delight my friend who recycles old conditioned perceptions as reality—https://www.livescience.com/61132-first-fusion-plant-plasma-core-half-completed.html

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