Aside from VUL raising a whopping $200M and then trading $72M of...

Aside from VUL raising a whopping $200M and then trading $72M of volume on Friday before its entry to the ASX 300 next week... uranium continues to be the story of the moment.

The uranium price is up 60% in the last two weeks in what has been dubbed by many as the “uranium squeeze” led by the Sprott physical uranium trust, an investment fund that is buying up and holding physical uranium in anticipation of growing demand, driving up the price.

The uranium squeeze appears to be contagious with hedge funds and family offices said to be joining in buying physical uranium, and a lot of financial players are increasingly interested in uranium, from the Middle East to Singapore and Hong Kong.

As Bloomberg reported this morning, the world’s biggest uranium miner, Kazakhstan’s Kazatomprom, is in talks to directly supply the Sprott Physical Uranium Trust, according to its chief commercial officer, Askar Batyrbayev. He added that in addition to Sprott, there’s further competition for the Kazahk producer’s supplies, with Kazatomprom also in talks with China to help build the country’s strategic stockpiles -- designed to hold 23,000 tons by 2026.

(Side note: start doing some reading on the resources potential in Kazakhstan. We are working on a new investment in that country for later this year/early next year… is nice!)

We think the sudden interest to corner the physical uranium market is because uranium is starting to become widely accepted as a potential fuel for clean energy COMBINED with years of chronic under investment in exploration and development while nobody cared about uranium over the last 10 years.

Again a huge congratulations to those that were invested in and long term holding uranium stocks while they were out of favour - hats off to you and well done, especially to those out there sharing their research in their high conviction investments (CP, MC).

Our little uranium explorer GTR has been lifted in the uranium excitement like a kite in a hurricane. GTR expects to be drilling before Christmas so the next few months will be interesting to watch, especially if the uranium bull run has legs. GTR just released the prospectus for their rights issue - details here.

What we are investing in

The USA has a $1.5 billion strategic stockpile of uranium and China is rapidly building theirs.

COVID made all countries realise how flimsy global supply chains are in a crisis. Remember how hard it was for countries to get COVID medical supplies when there was a demand surge? We now also have critical shortages in semiconductors and chips which are stoking global tensions.

Uranium aside, we believe most countries are going to want to build and maintain their own stockpiles of all key commodities needed over the next decade, just in case there is another crisis that disrupts global supply chains again. Countries building their own stockpiles will further drive up commodity prices.

This new desire of countries to secure local stockpiles of key commodities, coming off the back of years of under investment, is why we believe the world is currently in a commodities super cycle.

Other investment themes that we believe in are cybersecurity, health tech, green energy (but also traditional energy which we don’t think will go away as quickly as expected). We also love early stage metals exploration which can be pretty “dynamic” in a hot commodity market (be careful with these they are very risky).

Here is a reminder of all our high conviction investment thematics and which stocks we are invested in for each theme: https://www.nextinvestors.com/features/what-happened-week-sep-11th-2021/