Uranium is a non-renewable natural resource that is utilized as a substitute for traditional fossil fuels like coal and natural gas. It’s a highly unstable element that’s employed in nuclear reactors all around the world. Uranium, despite being a commodity, cannot be exchanged directly due to its radioactivity. Rather, investors can obtain exposure to uranium through equities and exchange-traded funds (ETFs) that represent uranium mining and production firms. Join us as we rank the top uranium companies according on market capitalization, growth prospects, and investor interest right now.
Is it possible to trade uranium futures online?
The uranium futures contract is traded on the CME Globex exchange and cleared through CME ClearPort. Each contract weighs 250 pounds. Prices are given in dollars and cents in the United States.
How can I go about purchasing uranium commodities?
If you’re willing to take a chance in exchange for a higher return, uranium-focused mining firms like Cameco Corp. (ticker: CCJ) and Kazatomprom are good places to start (KAP). Energy Fuels Inc. (UUUU) and Ur-Energy Inc. are two smaller uranium producers.
Is it possible to buy uranium stock?
ETFs that invest in uranium These financial products, like stocks, are traded on exchanges as shares. VanEck Vectors Uranium + Nuclear Energy ETF (NYSEARCA: NLR) also invests in uranium mining and nuclear energy firms.
Commodities Futures
Buying and selling contracts on a futures exchange is the most common way to trade commodities. The way it works is that you engage into a contract with another investor depending on the price of a commodity in the future.
For example, you might commit to buy 10,000 barrels of oil at $45 a barrel in 30 days under a commodity future contract. You don’t transmit the physical items at the end of the contract; instead, you close it out by taking an opposing position on the spot trading market. When the futures contract expires, you would close the position by entering another contract to sell 10,000 barrels of oil at the current market price.
You will earn if the spot price is greater than your contract price of $45 per barrel, and you will lose money if it is lower. If you had entered a futures contract to sell oil, on the other hand, you would profit when the spot price fell and lose money when the spot price rose. You have the option to close out your position before the contract expires at any time.
To invest in futures trading, you’ll need to open an account with a speciality brokerage firm that specializes in these transactions.
“Traders who have an account with a brokerage business that offers futures and options can access these markets,” says Craig Turner, senior commodities broker at Daniels Trading in Chicago. Each time you start or end a position in commodity futures, you will owe a commission.
Physical Commodity Purchases
You are not purchasing or selling the physical commodity when you trade futures contracts. Futures traders do not take delivery of millions of barrels of oil or herds of live cattlefutures are solely based on price fluctuations. Individual investors, on the other hand, can and do take actual custody of precious metals like gold and silver, such as gold bars, coins, or jewelry.
These investments expose you to commodity gold, silver, and other precious metals while also allowing you to feel the weight of your money. However, transaction costs for precious metals are higher than for other assets.
“This method is only viable for value-dense commodities like gold, silver, or platinum,” adds Giannotto, “and even then, investors will pay hefty markups over spot pricing on the retail market.”
Commodities Stocks
Another alternative is to purchase the stock of a commodity-related company. If you want to invest in oil, you could buy stock in an oil refining or drilling company; if you want to invest in grain, you could buy stock in a huge agriculture company or one that distributes seeds.
The price of the underlying commodity is tracked by these types of stock investments. If oil prices rise, an oil business should become more profitable, causing its stock price to rise as well.
Because you aren’t wagering on the commodity price, investing in commodity stocks is less risky than investing directly in commodities. Even if the commodity’s value falls, a well-run business can still generate money. However, this is true in both directions. While increased oil prices may improve an oil company’s stock price, other factors such as management and overall market share also have a role. If you’re searching for an investment that closely matches the price of a commodity, buying stocks isn’t the best option.
Commodities ETFs, Mutual Funds and ETNs
Commodity-based mutual funds, exchange-traded funds (ETFs), and exchange-traded notes (ETNs) are also available. These funds pool money from a large number of small investors to create a huge portfolio that attempts to track the price of a commodity or a basket of commoditiesfor example, an energy mutual fund that invests in a variety of energy commodities. The fund may purchase futures contracts to monitor the price, or it may invest in the stock of various commodity-exposed companies.
“Commodity ETFs have genuinely democratized commodities trading for all investors,” adds Giannotto. “They are low priced, easily accessible, and very liquid.”
You can acquire access to a much wider choice of commodities with a minimal investment than if you tried to establish your own portfolio. Plus, the portfolio will be managed by a professional investor. However, you’ll have to pay the commodity fund a higher management charge than you would if you made the investments yourself. Furthermore, depending on the fund’s strategy, the commodity price may not be accurately tracked.
Commodity Pools and Managed Futures
Private funds that invest in commodities include commodity pools and managed futures. They’re similar to mutual funds, except that many of them aren’t publicly traded, so you have to get permission to invest in them.
These funds can employ more advanced trading methods than ETFs and mutual funds, resulting in larger returns. In exchange, managerial costs may be increased.
Commodity vs Stock Trading
Leverage is far more widespread in commodity dealing than in stock trading. This means you only put down a portion of the investment’s total cost. Instead of putting down the entire $75,000 for the full value of an oil futures contract, you might put down 10%, or $7,500.
According to the contract, you must maintain a minimum balance based on the estimated value of the trade. If the market price begins to move in a direction where you are more likely to lose money, you will be subject to a margin call and will be asked to deposit additional funds to bring the trade back to the required minimum value.
“Trading on margin can result in higher profits than the stock market, but due to the leverage used, it can also result in higher losses,” Turner explains. Small price changes can have a large impact on your investment return, so there’s a lot of room for profit in the commodity market, but there’s also a lot of room for loss.
Commodities are also a short-term investment, particularly if you enter a futures contract with a specified expiration date. This is in contrast to stocks and other market assets, where it is more typical to buy and hold assets for a long time.
Furthermore, because commodities markets are open nearly 24 hours a day, you have greater time to make deals. When trading stocks, you should do so during regular business hours, when the stock exchanges are open. Although premarket futures provide some early access, most stock trading takes place during regular business hours.
Overall, commodity trading is riskier and more speculative than stock trading, but it can also result in faster and higher rewards if your positions succeed.
What is the uranium market like?
Uranium, unlike other metals like copper or nickel, is not traded on a centralized platform like the London Metal Exchange. Instead, it is most commonly transferred through direct contracts established between a buyer and a seller. The New York Mercantile Exchange, on the other hand, recently announced a 10-year deal to allow for the trading of uranium futures contracts both on and off the exchange.
Contracts for uranium delivery come in a variety of shapes and sizes. Pricing might be as straightforward as a single fixed price, or it can be based on a number of different reference values with economic corrections built in. Contracts typically include a base price, such as the current uranium market price, as well as escalation rules. In base-escalated contracts, the buyer and seller agree on a starting price that rises over time according to an agreed-upon formula that may include economic indices like GDP or inflation components.
A spot market contract normally has only one delivery and is priced at or close to the published spot market price at the time of purchase. However, 85 percent of all uranium has been sold under multi-year, long-term contracts, with delivery beginning one to three years after the contract is signed. Long-term contracts can last anywhere from two to ten years, although most are three to five years long, with the first delivery taking place within 24 months of the contract being awarded. They may also contain a condition allowing the customer to alter the size of each delivery within certain parameters. For example, delivery quantities may differ by up to 15% from the prescribed annual volume.
The method utilities with nuclear power plants buy their fuel is one of the unique aspects of the nuclear fuel cycle. Rather of buying fuel bundles from the fabricator, most people acquire uranium in all of its intermediary forms. A fuel buyer from a power utility will typically deal with suppliers separately at each stage of the process. Occasionally, the fuel buyer will acquire enriched uranium product, which is the end product of the first three stages, and then contract separately for fabrication, which is the fourth step, to receive the fuel in a form that can be loaded into the reactor. The utilities think that these options provide them with the best pricing and service, whether they are correct or not. For each stage of the fuel cycle, they will normally maintain two or three suppliers who will compete for their business via tender. In each of the four stages, sellers include suppliers, brokers, and traders. In the Western world, there are only about 100 companies that buy and sell uranium.
Uranium markets are differentiated by region in addition to being sold in various forms. Historical and political forces have structured the global uranium industry into two different marketplaces. The Americas, Western Europe, and Australia make up the first market, the Western World Marketplace. Countries from the former Soviet Union, often known as the Commonwealth of Independent States (CIS), Eastern Europe, and China, have their own market. The majority of the fuel for nuclear power reactors in the CIS comes from the country’s own reserves. CIS producers frequently export uranium and fuel products to the western world, resulting in increased competition.
Will the price of uranium climb in 2021?
Prices for the energy source rose 45 percent following 2020’s increase, from US$29.63 per pound in January to US$50.63 in September, a nine-year high and a significant milestone for explorers, developers, and producers.
Despite the fact that prices were unable to maintain that level, values have remained above US$40 in the months thereafter. Many analysts believe that rising uranium prices are here to stay as one of the only commodities to post two consecutive years of rises during the pandemic.
Why Uranium Stock Is Going Up:
- The United States now imports around 90% of its uranium. Demand for nuclear power is increasing, placing pressure on the government to produce more of its own uranium.
- Because he emphasizes alternate energy, Joe Biden’s presidential victory in the 2020 election boosted uranium stock prices.
- The demand for uranium would be high even if Biden did not win. Because energy is such a basic necessity, the demand for uranium cuts across political lines.
- Because of the numerous shutdowns caused by the COVID-19 outbreak and the necessity for medical applications to help combat it, uranium demand grew quickly last year and continues to grow. Governments are under pressure to subsidize uranium mining as a result of this. It also puts the miners under pressure to produce enough to meet demand.
- Significant fresh investment has come from the new Sprott Physical Uranium Trust commodity exchange-traded fund and uranium producer Kazatomprom, which indicated that rather than increasing production to match demand, it will buy uranium from the spot market until 2023.
What are my options for investing in Sprott uranium?
Financial advisors, full-service brokers, and discount brokers can buy and sell trust units just like any other equity security. The third-party financial professional will hold your units in your name. Sprott financial specialists can help you buy or sell units: Sprott Global Resource Investments in the United States
What country produces the most uranium?
In 2019, mines produced 53,656 tons of uranium. Kazakhstan, Canada, and Australia produce more than two-thirds of the world’s uranium. In 2019, Kazakhstan produced roughly 43% of the world’s uranium supply, while Canada produced 13% and Australia produced 12%. According to 2019 data, the following countries are the top uranium producers: