Gerardo Del Real: We gotta talk about the uranium squeeze. For all the hashtag silver squeeze stuff that lasted a whole day, there's been a squeeze in the uranium space and you know what? The juniors are responding beautifully. You have Fission Uranium (TSX: FCU)(OTC: FCUUF) at C$0.60. You have Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF) at 52-week highs.. You had Uranium Energy Corp (NYSE: UEC) last week hit a 52-week high at US$3.67.
A large part of that is being influenced by the fact that a lot of these companies, — Denison (NYSE: DNN)(TSX: DML) raised C$75 million, UEC raised $30 million — and they're doing it to buy and establish a physical inventory of uranium.
They're going to sit on the pounds. They're going to buy them cheap. They're going to wait for them to go higher because supply and demand fundamentals say it will. And then they're going to sell it into the market, which I think is common sense. It's brilliant in its simplicity, right? It's forcing the hands of the utilities that have yet to step off the sidelines. And we both understand that them paying $60 or $100 or $30 a pound for uranium is very inconsequential to the bottom line for the utilities. But, it makes a big difference for the companies that are sitting on some of it. And so I'd love to hear your thoughts on the move to start stacking uranium pounds at the company level.
Nick Hodge: I mean, I think it's a pretty brilliant strategy because everyone — and I include myself in everyone — had come to the realization that this bull market, which is a “when” not an “if” — the “when” wasn't going to come until the utilities got off the sidelines and they're seemingly content to stay on the sidelines probably until next year, as they work through secondary supplies and stockpiles and up fueling or upcycling, et cetera.
And we know the strategy has been good from an investment perspective. If you just go back to the last bull market and look at Uranium Participation Corp (TSX: U)(OTC: URPTF), for example. And then over the past couple of months, and we've been talking about this, we've seen the equities start to move. And Istarted to say that they might be getting a bit ahead of themselves, given that the uranium spot price hadn't yet moved.
In fact, the spot price in the past couple of months started to go the wrong direction. It was up around $30 per pound, but then started to go back down to $29, to $28... You don't need me to tell you that the strategy is a good one if you can just look at the spot price going back up closer to $30 a pound this week since these deals were announced.
I can't tell you what the utilities are going to do, of course, but we know that the market has liked the Yellow Cake (OTC: YLLXF) story. And that’s been sort of the new Uranium Participation Corp. We knew that the market liked the URC, the Uranium Royalty Corp (TSX-V: URC)(OTC: URCCF) story, which had, let's call it a tangential relationship to the physical uranium story with its own relationship with Yellow Cake.
I don't know when utilities are going to get off the sideline, but the market appreciates this strategy.
And I also think that uranium has done well as a sector to position itself more as a clean metal of late, and I think that is also going to be important here going forward.
This and other content that Gerardo and I produce is now being published and distributed by Daily Profit Cycle.
Nick Hodge is the co-owner and publisher of Resource Stock Digest. He's also the founder and editor of Hodge Family Office, Family Office Advantage, and Foundational Profits . He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.