Is It the Right Time to Buy an Uranium ETF?
There is momentum among uranium investors, with several well-known uranium investment vehicles already up more than 30% in 2023, on the belief that tight supply and strong demand will support the positive dynamics. The World Nuclear Association (WNA) said that tight supply in the uranium market further supported uranium bulls, and global production in 2022 was about 18% lower than in 2017, the last year of commodities’ markets being healthy, as relatively low uranium prices have led to a decline in mining activity back then. But now geopolitics is ruling the game, with Africa escalating export prices, and other major suppliers significantly lowering their deliveries as well.
Thus, Russia ranks sixth in terms of uranium production, producing 3,135 tons of uranium per year, or 5.26% of global production. The largest Russian uranium company, APM3-Uranium One, is one of the leaders in the world uranium market and produces 13.68% of all uranium in the world.
Nuclear energy provides low-cost, reliable, flexible and scalable baseload energy. So what are the major uranium ETFs to obtain a reliable exposure to this specific commodity?
One of them, cited relatively rarely, is URNM, which provides access to the U.S.-listed uranium mining companies, with a focus on Cameco, which accounts for 17% of its total weighting.
This ETF isn't the only one offering similar exposure as the more well-known URA. In fact, the Global X Uranium ETF (URA) is, for the most part, very similar. While URA may have more liquidity or a slightly lower expense ratio, it may be viewed as more expensive and "crowded" with speculators, meaning URNM may be slightly less volatile because it is less concentrated at the top.
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