“Uranium's impressive uptick in August set it apart from many other commodities, which faced declines due to the strengthening USD and China's softening economy,” wrote Jacob White, ETF Product Manager at Sprott Asset Management. “Decade-high uranium contracting levels by utilities, coupled with supply disruptions and risks, are helping to create a robust demand market.”
“Year to date, as of August 31, 2023, spot uranium and uranium mining stocks have gained 25.49% and 21.52%, respectively, and have outperformed the frothy S&P 500 TR Index's YTD gain of 18.73%,” he said, noting that uranium’s performance is even more impressive when measured over longer timeframes. “For the five years ended August 31, 2023, U3O8 spot price appreciated a cumulative 132.39% compared to 26.62% for the BCOM.
The supply side of the equation, on the other hand, is already trailing this growing demand “with a cumulative forecasted supply shortfall of approximately 1.5 billion pounds by 2040,” and the gap is expected to widen in the coming years. Geopolitical challenges have also impacted uranium supplies, White said, pointing to the recent coup in Niger, which accounts for 4% of the world’s uranium production.
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