The big news this week is that Japan’s Prime Minister Fumio Kishida said the nation would restart idled nuclear plants and focus on developing next-generation reactors to tackle energy costs that have soared during the Ukraine crisis.
It could be an inflection point for uranium stocks that have been in correction mode for the past eight months.
As I’m sure you know, uranium has been in steady decline since the Fukushima crisis in 2011 but has turned a corner and staged an impressive rally over the past couple of years. As I show you in the ‘Closing Bell’ video today, that rally looks like it is still in the early stages of recovery after the immense collapse since Fukushima.
After 10 years of an oversupplied market, many uranium mines were mothballed, and the big players have left the industry with little money going into exploration. The excess inventory is being worked through, and the expectation is that uranium will flip into an undersupplied situation by the middle of the decade.
It is a classic commodity setup for an extended period of high prices, as new supply needs to be enticed into the market.
The Japanese announcement could be the necessary catalyst to make investors realise that nuclear will be part of the solution as we head towards net-zero by 2050.
In today’s ‘Closing Bell’ video, I show you a monthly chart of the Global X Uranium ETF [NYSE:URA] and outline the many technical reasons why I believe we are about to see a resumption of the uptrend in uranium and uranium stocks.
Until next week,
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Murray Dawes,
Editor, Money Weekend
