It might be time to give your portfolio a white-hot glow. I’m talking about the incredible potential that uranium miners offer.
We’re at a momentous time for uranium stocks. This month, the Commerce Department will decide whether to recommend trade relief for the domestic uranium mining industry.
This is in response to a petition filed by two U.S. uranium miners (the LAST two U.S. uranium miners) under Section 232 of the “Trade Expansion Act of 1962.”
If Commerce rules in favor of U.S. miners, those stocks could head higher in a hurry. And no matter what, the price of uranium itself is coiled up, and looks ready to rocket higher.
I’ll show you why. And I’ll show you the two U.S. miners on the launch pad.
Reason #1: National Security
Nuclear power supplies about one-fifth of total electricity generation in America. The U.S. gets 40% of the uranium used in its nuclear reactors from “unfriendly” countries: primarily Russia, Kazakhstan and Uzbekistan.
Meanwhile, U.S. law requires that any uranium used for national defense purposes — including in nuclear-powered naval vessels — be mined, refined and processed domestically.
The market for uranium in the defense industry isn’t big. So, U.S. producers need commercial customers, too. The two U.S. uranium producers say they need commercial customers to survive.
And so, they did something about it.
Which brings us to point No. 2 …
Reason #2: Section 232
In January of last year, Energy Fuels Inc. (NYSE: UUUU) and Ur-Energy (NYSE: URG) filed a petition with the Commerce Department. They stated that foreign, state-owned and subsidized companies in Russia, Kazakhstan and Uzbekistan were dumping uranium on the U.S. market, making it impossible for honest U.S. miners to compete.
Commerce announced a study of the petition, and it should deliver its findings this week.
To be sure, utilities don’t want ANY change to the uranium market. They like cheap fuel. They also point out that UUUU and URG, together, supply just 2% of the uranium needed by U.S. electric utilities. In other words, they say it’s not feasible.
The miners say a phased-in quota system that gives them time to ramp-up production — or something else — would be the way to go.
We should know the Commerce Department’s ruling sometime this month, perhaps even this week. Meanwhile …
Reason #3: The Cure for Low Prices is Low Prices
Uranium prices have suffered a brutal bear market since 2011. I just grabbed this chart off my Bloomberg terminal to show you …
You can see that uranium fell hard and fast from the high of $73 per pound it hit in early 2011. Now, though, the trend has shifted. It’s getting stronger, and this was happening even BEFORE those two miners filed their Section 232 petition.
Why? Well, long years of a bear market saw 14 major uranium mines shut down. Meanwhile, utilities got fat and lazy, and they fell into the habit of pushing off their uranium purchases as far as possible.
After all, they learned they could always buy it cheaper.
This brings me to my next point …
Reason #4: Supply Squeeze Looms
This chart from Cameco shows how much of their uranium requirements utilities have left uncovered …
Via Cameco, we learn that UxC, which publishes nuclear fuel prices and tracks the market, said at the end of last year that utilities’ cumulative uncovered uranium requirements are about 1.9 billion pounds to the end of 2035. Wow!
And that was before China announced this month that it was going to accelerate the number of reactors it is adding to its fleet.
This sure looks like a supply/demand squeeze in the making, no matter what happens with Section 232.
And now for one final chart …
Reason #5: The Smart Money is Already Buying
Look at what’s happened in the market in the past month …
You can see that URG is up 33.95%. UUUU is up 27.3%. These both blow away the 6.95% gains made by Global X Uranium ETF (NYSE: URA), or the 5.16% gains made by the S&P 500.
I need to tell you that I own both of these miners. And I have recommended one of them to my Supercycle Investor subscribers. You can do your own research. Be aware that the Commerce Department could rule against these miners, and send them plunging.
But there’s also the potential that this is just the start of something big — for uranium stocks in general, and these two U.S. uranium miners in particular.
They are hot. They could get a lot hotter.
All the best,
Sean Brodrick
