Many believe the Bitcoin bull market that peaked in 2017 was a once-in-a-lifetime phenomenon. But an undercurrent of crypto millionaires, influencers and traders are beginning to turn to a relatively unloved and controversial commodity they believe is on the cusp of an explosive bull market. One that could be bigger than Bitcoin.
It’s rare to find cryptocurrency colloquialisms such ‘HODL’ and ‘MOON’ on traditional stock market forums, but anyone following online conversations around stocks linked to this commodity will have seen these appearing over the past few months.
Crypto social media stars, with hundreds of thousands of followers, have started talking about it – they’ve been analysing charts and assessing fundamentals.
Even some experienced traditional investors and institutions believe in this emerging bull market.
So Micky reached out to those in the know, for an insight into the compelling narrative surrounding the sector.
Volatility has Bitcoin bulls going nuclear
Bitcoin and uranium are worlds apart, so it might come as surprise to discover that Bitcoin millionaires are getting excited about the volatile uranium sector.
But perhaps it’s the volatility attracting the Bitcoin bulls to Uranium.
Since the 1940’s uranium prices have cycled through three explosive bull markets.
The ‘uranium rush’
In the 40’s and 50’s the global nuclear arms race created a ‘uranium rush’ that can be compared to historical gold rushes.
The price of uranium spiked so high, people actually began prospecting for uranium.
Images from magazines published in the 1950’s (Source: national-radiation-instrument-catalog.com).
The uranium rush lasted for more than a decade, before government stockpiling and global anti-nuclear sentiment ended the bull market and ushered in what would be a 20-year bear market.
1970’s bull market
The bear market that followed the ‘uranium rush’ ended in the 1970’s.
The 1970’s uranium bull market was driven by the adoption of nuclear power.
During this cycle uranium prices increased tenfold while many uranium stocks returned 100x, but an eventual oversupply and then the Three Mile Island meltdown and the Chernobyl disaster would end the bull market and bring about another 20-year bear market.
The ‘uranium bubble’
Uranium prices bottomed at US$8 a pound in 2001. The price was far below the cost of production and there was barely a mining operation viable.
But in the early 2000’s further supply cuts, coupled with an expansion of nuclear power generation programs in developing countries created the perfect conditions for a huge bull market that proved life-changing for many investors.
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Uranium prices exploded, trading at US$130 a pound in 2007 and uranium stocks again provided gigantic returns.
This third bull market was so explosive, it’s been labelled by some commentators as the ‘Uranium Bubble‘.
The global financial crisis would eventually end the parabolic growth, but like the 1970’s bull market, a nuclear disaster was the final catalyst for yet another bear market.
When a tidal wave caused the meltdown of Japan’s Fukushima nuclear power plant, 54 power plants across the country were shut down and other countries also shelved nuclear power expansion plans.
The uranium price crashed and continued to slide and slide, hitting a low of US$18 a pound in 2016. Once again uranium traded below the cost of production.
Cameco’s uranium spot price chart (https://www.cameco.com/invest/markets/uranium-price).
2019: The ‘perfect storm’ for a fourth uranium bull market.
The uranium spot price is currently trading just below US$30 a pound, rising by almost 60% since the 2016 low, but still the current spot price falls far below the cost of production.
Over the past 2 years the world’s two largest producers, Kazakhstan’s state-owned Kazatomprom and Canadian company Cameco have announce major production cuts.
Australian miner, Paladin Energy also placed its massive Langer Heinrich uranium mine into care and maintenance.
At the same time nuclear power generation is increasing rapidly.
Since the Fukushima disaster, Japan has restarted 9 reactors and according to Cameco, the world’s largest publicly traded uranium company, eight brand new reactors began operating across the globe in 2018, while more than 50 are currently under construction.
The Langer Heinrich uranium mine in Namibia. Australian company Paladin Energy will restart operations at the site if uranium prices rise.
Current operating nuclear reactors are relying mainly on the sale of existing uranium stock piles to continuing operating, but those stock piles are disappearing quickly.
Micky spoke to John Quakes, a retired earth sciences researcher and college professor who now he spends his days analysing the Uranium sector and sharing his thoughts with…