Uranium prices are soaring. Investors should be careful
The metal has a history of meltdowns
It is, by now, a familiar story. A metal previously only traded in a sleepy corner of commodity markets becomes vital for the energy transition. Constrained supply and geopolitical jockeying meet forecasts for ever-rising demand. Prices surge as investors foresee a crunch. The only wrinkle in the story is that this time the metal is not used in electric vehicles or solar panels; it is used in the decades-old technology of nuclear reactors. Uranium prices are blowing up.
Hoarding uranium oxide—which, once processed and enriched, is the main fuel for nuclear bombs and reactors—might seem like a strategy more suitable for supervillains than investors. But speculators now have a number of ways to gain exposure. Stockmarket darlings include Yellow Cake, a firm that buys and stores the stuff, whose share price is up by 160% over the past five years, and Sprott Physical Uranium Trust, a fund that does the same and has enjoyed returns of 119% since its launch in 2021. Hedge funds have got in on the action, too, reportedly stockpiling the metal and buying options on uranium from banks.
This article appeared in the Finance & economics section of the print edition under the headline "A history of meltdowns"
Finance & economics March 2nd 2024
- Stockmarkets are booming. But the good times are unlikely to last
- Are passive funds to blame for market mania?
- Activist investing is no longer the preserve of hedge-fund sharks
- How Trump and Biden have failed to cut ties with China
- Uranium prices are soaring. Investors should be careful
- What do you do with 191bn frozen euros owned by Russia?
More from Finance and economics
What campus protesters get wrong about divestment
Will withdrawing money hurt Israel?
Hedge funds make billions as India’s options market goes ballistic
The country’s retail investors are doing less well
Russia’s gas business will never recover from the war in Ukraine
Hopes of a Chinese rescue look increasingly vain