Nick Hodge,
Publisher
Sept. 16, 2021
Publisher’s Note: Gerardo and I remain long uranium stocks and explain why in the dialogue below. He has several recommendations you can take advantage of now. Enjoy.
Call it like you see it,
Nick Hodge
Publisher, Resource Stock Digest
Gerardo: Sometimes it's luck, sometimes it's hard work, sometimes it's a little bit of both. Let's get into the uranium space. We could pound our chest and say, "Hey, we told you all to get ready. We told you to get positioned." We could do that all day and night. There's timestamps on all our stuff. You can go look at the research. Nick's had presentations from a year ago, two years ago. I've written to you in the last several weeks, months, and years about getting positioned ahead of time and making sure that you're early, not late because these uranium bull cycles are violent and you could miss out on 200% gains if you're waiting on the sidelines for CNBC to tell you to get in the game and the WallStreetBets Redditors come running. That is the point that I want to drive home.
The resource space is highly cyclical. You have to know that bear markets naturally produce that kind of slingshot effect that we're seeing in the uranium space. And I have news for everybody that thinks that these uranium prices are getting ahead of themselves with their technical analysis and fundamental research and price targets. All of that is fine and dandy. Throw that out of the window for a little bit, because yes there are going to be 40 and 50% pullbacks in this uranium run. But this is going to go on for a little bit. It's not going to be weeks. It's going to be months. I sent a note out to subscribers about how long I thought this would last and where it would get to. And I won't say it here yet because it's not fair to paying subscribers that have waited for this market to turn. But I think we're in for a hell of a ride with the uranium stocks. Any thoughts? I know you have some Nick.
Nick: You mentioned a year ago I was giving a presentation. That was in February of 2020. And the title of the talk was Urani-when? — with a question mark. And basically I was wondering when this uranium bull market was going to happen. And I was saying that, and I won't recap the whole past 10 years because we did that in the last podcast. But what I will say is that the sector was down 90%. We knew that it was a ‘when’ not an ‘if’. We know that it's a large part of the globe's clean energy, baseload power. But then over the past year, you had really a bottoming process where companies like Energy Fuels were laying off people at the White Mesa mill, for example. One of the only companies that was producing uranium in the US was laying off people.
And then you had uranium companies changing their names. Like you said, the resource space is cyclical. So for a while, gold companies were becoming cannabis companies and then becoming crypto companies. That's a trope in the sector. We laugh about that. How there's these trend-chasing, lifestyle companies. But you had the opposite of that in uranium last year, where companies were taking uranium out of their name. And so I was highlighting that as a true bottom marker of the sector anecdotally. Of course the price had been below the cost of production for a long time and that had to change. And that brings us up into modern times and what you are writing about today. Because like you say, it's cyclical and you can own a name for a long time and be buried in it and wake up one day and be up on your money.
Gerardo: And be smart again.
Nick: The things that we said about the uranium market are true:
The bulk of the big gains come in the beginning.
You've got to be in when the sector turns.
And then let's talk about where we are now, because that's important. The price of uranium still isn't at a cost of production level. We know it takes $50 or $60 a pound for many uranium companies to take it out of the ground. And we're only at $45 a pound.
You mentioned WallStreetBets. What I would have to say is that the uranium space is so small, there's only a couple of dozen companies in the space. If these WallStreetBets folks want to come, that's fine and dandy. They had a lot of fun with their short interest positions. But NYSE-listed short interest positions are not uranium stocks. And so I think it's going to be interesting if outside buying comes in and then you're going to have all these ETFs that are going to have to buy these stocks for momentum trades or for whatever it is because people are piling into the sector. And you can talk more about that with money coming into the Sprott Physical Uranium Trust (TSX: U.UN)(OTC: SRUUF) physical trust. All that to say I think there is still upside. And this is one of those things where everyone's going to be a uranium expert now, is the last thing I wanted to mention. Just like everyone was a cannabis expert and everyone was a crypto expert.
Gerardo: We have timestamps.
Nick: Yeah and it's sort of like we're Wayne Gretzky. Which is something I brought up recently. Everybody always talks about being where the puck is going. And we've been just sitting here waiting for the puck because we knew that uranium had to go up. Just like we knew that copper prices had to go up. And we knew that there was no way the US was producing enough lithium for its goals.
Gerardo: There are things in the world that are so obvious that you can get rich if you actually have some conviction about you. And let me tell you what is abundantly obvious. Sugar Daddy Sprott just upped it's $300 million ATM basket of money that it's going to use to gobble up uranium pounds to $1.3 billion. This is continued buying in the spot market at whatever pace they deem appropriate for them. Which will translate into a ton of spot uranium getting taken out of the market. There's a billion or so left. They're not hiding the strategy. They're not being quiet. They're telegraphing it and letting everybody know. It's not a coincidence that the uranium spot price has gone from $30 when Sprott got involved to $45. We know that the spot price has to get to at least $55 or $60 a pound before any of these producers seriously decide to invest in their infrastructure and personnel to bring operations back online.
I'm talking about in-situ uranium (ISR) producers that can produce cheaply and quickly. And there's companies in the portfolio… I’ve been able to position subscribers, although it's taken some patience, in a way where you have exposure to ISR producers as well as companies that have high grade pounds in the Athabasca basin. There's a good basket of exposure to the different types of uranium companies. Because not all of them are alike, but the price is going higher. The move is just starting. I'm actually delighted because I'm on Twitter and I'm seeing a couple of long term uranium bulls that are saying "Sold out of this, sold out of that or sold half today and riding out the rest."
I'm telling you, this is just the beginning. Get my uranium stock recommendations here.
Call it like you see it,
Nick Hodge
Publisher, Resource Stock Digest
Nick Hodge is the co-owner and publisher of Resource Stock Digest. He's also the founder and editor of Foundational Profits, Family Office Advantage, and Hodge Family Office . 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.
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