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Uranium Investing For Big Wins

uranium-investing-for-big-wins

Chasing 10x returns in trading and investing is egregiously stupid.

….unless you’re buying uranium mining stocks that is.

Then a 10x return is generally expected.

If you’re already well-versed in the world of uranium investing, you may not learn much here.  This is for No Nonsense Forex traders who are also interested in the more contrarian-type investments we occasionally talk about here on the channel and blog.

Feel free to read this blog post anyway however.  It’s nice to have you here.

If you are not too familiar with the different ways you can put your money behind the future of uranium and nuclear energy, and want to see why I think it’s a good idea, this blog post was made just for you!

I did make a YouTube video on almost everything I’m about to type.  You can watch it below, or simply continue on.

People think Uranium Mining stocks are “highly speculative”, which is another word for “probably going to wipe you out”.  I disagree.  It all depends.

As we say on the channel all the time, financial success is all about taking risks, then doing what you can to minimize those risks along the way.

If you do this in the right places, the odds will always be on your side.  Even when the potential returns are huge.

We here at No Nonsense Forex put the odds in our favor no matter where we put our money.  It’s the only sensible approach.  We obsess over our downside, and make sure we’re present for the upside as much as we can.

We also look for asymmetrical markets we can take advantage of.  There are not many.  But mining stocks, when done right, provide us with a better than average chance of multiplied returns.

I wasn’t aware of this until about 8 years ago, but there are hundred millionaires and billionaires who have made all of their money simply by buying metals and commodities mining stocks when nobody else was, and then selling them after they got popular.

On a smaller scale, this applies to us too.  If done right, there is a better than average chance you can make double, triple, 10x, or even more on your initial investment if you know where to look.

If anyone on social media is promising these types of returns on whatever nonsense they’re peddling, rest assured it’s a scam.  Because almost everywhere else, save mining stocks and crypto, the odds are stacked incredibly against you.  It’s unfortunate but true.

But not in mining stocks.  And uranium stocks may just have the highest upside out of any of them.

It’s time to learn more about them, and uranium in general, wouldn’t you say?

This is a long blog post.  Grab a coffee or a tea.

One thing however — you may be waiting years before your returns come in.  It could happen tomorrow, so don’t screw around here — but it could be years down the road before we see some real traction.

Now there is good news on that front, and we’ll talk about it soon.  But when investing in uranium stocks, you will need to allocate money you do not care about, and will not need to withdraw at any time.

Many of these stocks are very cheap however, and you don’t need a lot of disposable income to play.  One of the stocks mentioned in the video was 10 cents USD per share.  You can certainly afford it.

But as mentioned above, you need to move soon.  As I write this in November of 2020, we are living in a very good time when it comes to getting in cheap on uranium stocks in my opinion.

Buy When It’s Hated

Buying things when nobody else really wants them is one of the key, if not THE key strategies in metals and commodities investing.

I was buying gold at around $1200 an ounce a couple of years ago, and was getting laughed at for it.  I was called an old man, and people said if I was going to buy something like gold, why not just put it in bonds?

I was in fact buying it for safety and diversification purposes, but I was buying it when nobody else was talking about it.  Crypto had just crashed months prior, and stocks were red hot.  Nobody but the hardcores were talking about gold.

It wasn’t really hated, it was just highly ignored for what it was.

My “safety” investment is now up over 50% from where I bought it, and the mining stocks I bought soon after are up even more.  And in my opinion, the real run on gold and silver hasn’t even began.

Gold was ignored at the time.  Uranium is absolutely hated.

In the Western world, this symbol is anything but positive.

Uranium is the key component of nuclear energy, and the rare times a nuclear reactor completely crashes, the effects are tremendous, and can linger on for decades.

Couple this with the fact that the Western world is going through a green revolution.  A full-scale turn away from fossil fuels and into electrification is imminent regardless of who is in power.

Here is billionaire resource investor genius Canadian, Marin Katusa, to explain it a bit deeper.

Green energy is coming whether we like it or not.  Invest accordingly.  I prefer to put my money in the metals that go into it.  I feel like that’s where the value is.

The Western world is not only trying to make a move away from nuclear energy, it’s not even mentioning nuclear energy in the narrative.

Hatred AND apathy.  I love it!!

This makes uranium stocks ridiculously cheap, which is great news.  Another bit of great news, is how much of the time needed to pass before the next run up — has already passed us.

More on this in a moment.

No doubt the devastation which occurs during a nuclear accident is of incredible proportions.

…..but we kind of need it.  Not the accidents, but nuclear energy rather.

Nuclear energy is the cleanest energy on the planet.  It’s carbon-zero.  No other type of energy can say that.

Electrical grids by comparison, needs lots of oil, and even coal at times, to produce.  Funny how nobody mentions that.

And don’t even get me started on the amount of mining needed to produce and maintain solar panels and wind turbines.

It’s also the most efficient, by a very wide margin, which is paramount when you factor in how hundreds of millions of people who were in extreme poverty 20 years ago, now have the means to have things we take for granted — like electricity.

Green energy cannot keep up.  Green energy is improving year after year, but is still horribly inefficient, and because of government narratives, much of the Western world has overcompensated and made their country’s energy far less efficient than it was before, and is now prone to major shortages in the future.

Moving towards green energy is good and all, but governments are rushing the process, and the people are paying for it.  Literally.

Being a resource investor is great, because you get to see both sides of the issue.  Unlike some.

“HELL NO, WE WON’T RESEARCH BOTH SIDES OF THE ARGUMENT!!!”

Safety Does Matter Though

Would it be worth upping the world’s nuclear capacity if it meant cheap, efficient, clean energy for all?

And would it be worth it at the expense of another Fukushima, Chernobyl, or Three Mile Island?

For those who did not spend their entire lives with access to electricity, the answer is a resounding yes.

For those who have never known what it’s like to grow up in an area with no power, the sentiment is mixed.

Be honest, who fell for this shit?

We can sit here all day and argue what we SHOULD do, but that doesn’t get us anywhere, does it?

We’re resource investors, and we realize it’s not about what SHOULD be happening, but what IS going to happen.

And more nuclear is coming.  Demand is going to increase, protests and narratives be damned.

Nuclear energy is everywhere.  Even after Fukushima, most countries kept right along with their nuclear energy programs.  They simply couldn’t afford not to.

The United States is currently the #1 consumer of nuclear energy at about 15% of the US’s electricity is derived from nuclear plants.  Expect these levels to stay about the same for another decade or so.  Green energy takes time to enact, and we have had the chance to see just how inefficient it can be these part 20 years or so.

These green narratives can get by when the economy is amazing, and energy is abundant.  When shit hits the fan however, we will use what works best, which is nuclear, oil, natgas, and unfortunately coal.

Nuclear energy already accounts for about 10% of the world’s power, and we can certainly expect this number to grow.

Japan for example, panicked and shut off all 54 of its nuclear plants right after Fukushima.  Japan was a huge consumer of nuclear energy (if you understand its geography, it makes sense as to why), and has been slowly getting its nuclear reactors back online.  As of right now, I believe 9 of them are back up, with more scheduled.

When you are forced to import most of your energy, it gets really expensive over time.  Even Japan, who got the brunt of the Fukushima disaster, is slowly bringing their nuclear program back online.

Credit to statista.com

Oddly enough, Germany (top of the list) went all California and decided to make a wholesale move to solar and wind right after Fukushima.  How virtuous!

Problem was, Germany is neither a particular sunny or windy country.  Not only did they jack up energy bills for their citizens, they eventually had to turn to coal just to keep the lights on.  Whoopsie!

It really is ridiculous when you look at it.  Places like Germany and California are in such a hurry to be the first ones “on the right side of history” so they can all pat themselves on the back, but they don’t bother thinking it all the way through, and their citizens suffer.  Not cool.

Don’t get me wrong, I’m all for green energy.  But there’s a right was and a wrong way to do just about everything.  Timing matters.  It matters a lot.

So you have one of the largest consumers of nuclear energy (Japan) re-opening their reactors, and you also have a lot more reactors being built.

As many as 50 new nuclear reactors are under currently under construction worldwide, with the brunt of them being built in Russia, China, India, and the UAE.

These reactors cost billions to build.  They aren’t being built to sit there and do nothing.

They are going to run, and they are going to need lots of uranium.  Demand will rise.

So what about supply?

Yeeeahhhh, About That Supply….

Uranium is unique to where it gets used up almost immediately, then goes to Uranium Heaven.

Yes, the waste can be recycled, yadda yadda, but compare this to almost any other metal mined out of the ground.

Gold?  Only 10% of it gets used industrially, and you can salvage most of it when your done.

Silver?  About half of it gets used up for industrial purposes, and some of it can be reclaimed, but half still goes into jewelry and collectables.

Copper?  Mostly used industrially, but if you need to take it back and use it elsewhere, you often can.

Uranium?  Once it’s used, it’s gone, and you need more.  You constantly need it to produce energy — which means it constantly needs to be mined.

Credit to mining.com

Two things to note about the above chart:

  1. Supply is rising at about the same rate as demand.
  2. It’s actually not, because this chart is from 2018.  So before Covid-19.

The pandemic has set back production in a big way, dramatically lowering supply.  Rising prices in gold, silver, copper, and several other base metals have reflected this.

The largest producer of uranium in the world, Kazatomprom, is responsible for 40% of the world’s uranium.  They had to shut down for 4 months, and the effects have been disastrous, affecting their overall production well into 2022.

The world’s second largest uranium producer, and North America’s largest uranium mining operation, Cameco, shuttered their largest mine, and has no plans on reopening it until the spot price of uranium goes much higher and stays there.

There is a significant drop-off in production after Kazatomprom and Cameco.  They are #1 and #2 by a very wide margin.

So long story short, a LOT of uranium production, present and future, got destroyed by the pandemic.

Some mines were able to store more tonnage in above-ground reserves, but make no mistake, overall supply going forward has taken a nose-dive.

Increased demand, and lowered supply.  The world has yet to fully feel the effects of this just yet, which means we still have time to act.

What About The US?

The United States is still the #1 consumer of nuclear energy, and the uranium to fuel it has to come from somewhere.  Despite the push for more green energy, this demand isn’t going anywhere.

Billionaire natural resources investor Rick Rule explains it well at 3:58 in the video below.  He’s a great listen.  If you have time, watch it all.  I’ll be referencing some of the information given below later in the blog post.

Consider this as well…

Kazatomprom’s uranium (40% of the world’s output mind you) all pretty much goes to the Kazakhs and the Russians.

The US gets a lot of theirs from Cameco, which has taken a big hit in production.

This is good news for the future price of uranium overall, but in my opinion also opens the door for smaller companies around the world to either enter the US market, or increase their presences there.

And bear in mind, these mines had to shut down for awhile too.

I really do believe a supply crunch is coming.  And it won’t take much to finally get the spot price of uranium to a place where the future spot price could very well trampoline to levels we saw at the beginning of this century.

Then it’s party time.

The spot price of uranium is not at rock bottom.  But this is good.

I don’t like it when prices are at rock bottom.  Because you never know if it’s really the absolute bottom.

With uranium unfortunately, we No Nonsense Forex traders do not have the luxury of using our charts to determine the probability of whether we are or are not in fact at an overall bottom in the market.

So when prices are at cycle lows, there’s nothing out there telling me that the price can’t go even lower.

When entering a market for the first time in a Buy and Hold type of investment, I want prices to be cheap, but on the upswing.  If I had my druthers, I would also like to have a good crisis or two already behind me.

This is exactly what we have right now.

As I write this in mid-November 2020, the spot price of Uranium is right about at $30 USD.  The below chart only goes to October 2020, but the price has not changed much.

Credit: Business Insider

I actually don’t know what the percentages in the right margin represent, but pay attention to the left margin and how price has risen in the past three years.

Doesn’t look “cheap” on the surface, I know.

But let’s zoom out, because zooming out is usually where the magic unfolds….

Credit: Business Insider

Totally different story.  The data only goes back as far as mid 2010, but it’s enough to tell the tale.

Price was humming right along, then Fukushima happened in 2011 and the price gradually collapsed.  It didn’t happen right away because people still needed power, but alternatives were sought, the spot price dropped, and it no longer became feasible for a lot of smaller mines to produce.

But look what we have now as a result!  Cheap prices, which are on their way up.  I love it.

You’ll hear a lot of industry experts say that $50 USD is the magic price where a lot of production comes back online, meaning these companies start making money again, and the price of their shares start going up again in a hurry.

We’ll see.  If I’m the head of one of these companies, I don’t want price to just touch $50, I want to know it’s going to remain there and continue to rise.

The Question of “When?”

As I mentioned in the video, I hate when people ask “when” the market for _______ is going to take off.

It’s a stupid question, but a question all of the unsophisticated investors want to know.

“How much longer can I continue to take zero risk before I can invest at the exact moment before price goes berserk?”

Nobody knows the answer.  Like, nobody.

“C’mon VP, tell me exactly when to invest so I can flip out and call you names if you’re wrong.”

Nothing positive may happen in Uranium-Land for years, and you have to be okay with that.

The returns are worth it however, and if by now you agree with that, let’s begin to put all of this in motion.

If you watched the entire Rick Rule video above, you probably heard him say something very exciting.

During the last run-up in uranium prices, Rick was able to invest in all five junior uranium mining stocks that took off, and the LOWEST gainer rose by 22x (2200%).

I’m not saying we won’t see anything like that this time around, but I would be pretty surprised if we saw returns that high.  Three reasons…

  1. There are more producers now.  Producers who can be up and running when demand and price finally get to where they want it.
  2. The narrative for Green Energy is very real, and will continue to take market share in the Western world.
  3. Just like gold mining stocks have seen, there are uranium ETFs and uranium royalty companies in the mix this time around.  These are safer plays and they suck up a lot of the larger investments that would have gone into the juniors 20 years ago.

This is why I mentioned 10x gains instead of 22x or 100x gains at the beginning of my video and this blog post.  I feel like 10x is reasonable, but again, I’m not a professional mining stock price forecaster, so take it for what it’s worth.

I just don’t want anyone expecting 50x returns, only to be disappointed when they 10x their money on one investment, which is an extraordinary accomplishment.

To me, the only way this can really go sideways on us, is if we have another major meltdown in one of the current reactors.  Then it’s wipeout city.

I remain very optimistic here however.  Generation 3 and 4 reactors have been made to be almost impossible to have an accident, and safety standards are completely regenerated and improved upon after a major disaster.  Many Generation 2 reactors still exist, but have become readjusted and fortified in the past decade.

The odds IMO are heavily in our favor here.

However, if you don’t play this intelligently, you can be dead right about this market, and still walk away with nothing.  How bad would that suck?  Better have a real plan in place.

This is a Buy and Hold investment, which means my Buy and Hold video is required viewing.

Let’s break it down further.

Step One – Due Diligence

What a terrible thing it would be if you nailed this market but picked all the wrong horses.  Many people will do just that.  Regret is a wasted emotion, but man oh man, is this one going to eat at you for years if you don’t put in the work early on.

The good news is, there isn’t a big ocean to tread through here.  The gold mining sector for example, is considered to be a fraction of the size of the NYSE, making it easier to navigate.

The uranium mining sector is a small fraction the size of the gold mining sector.  It’s tiny.  You can get pretty acquainted with it in a much shorter amount of time.

Just like I recommended with gold mining stocks, I would not become a student of the game now, and try to figure out how to properly value a mining stock on your own.  For chrissakes, let somebody else do all the work.

There are free and paid versions of this information.  Given the upside these stocks give you, I would say paying for a newsletter from a pro is not a bad move at all here.

You can discover a lot of these top mining stock professionals on podcasts like Pallisades Gold Radio, and Mining Stock Education.  A small handful of them focus on Uranium, and some others still know a ton about it, but also provide picks in other sectors as well.

I found a really good free resource this past year as well.  The “Baby Farm” YouTube channel, which later rebranded into “B.A.B.Y” (Be A Better You), goes deep not only into uranium mining stocks, but other metals, commodities, and even big board stocks.

The host, Antonio, is out of Belgium I think and really knows his stuff for how young he is.  He has his own Discord forum with some very sharp people on it as well.  A really nice place to start.

Antonio, said something interesting at the beginning of the video.  YouTube doesn’t seem to like content about uranium.  I wonder why?  (I don’t really wonder why)

If you are looking for a channel who specializes only in uranium stocks, there is only one, Deep Value Co.  He does a good job, but his videos make No Nonsense Forex look like a Hollywood production.  If you can get past that, he’s a sharp guy with good info.

And then if you want to see if the CEO of the stock you are interested in is a genius or a total yutz, check out the CRUX Investor channel for deeper research.  This guy has interviewed just about everybody in the space.

Either way, the info I have provided, or a few quick google searches can provide you with enough info and pros to follow.  Now you need to know how you’re going to play it.

2 – Soccer Team

This is a recommendation, nothing more.  But a damn good recommendation if I say so.  Again, I did a video on this in the past as it pertained to different ways to invest in gold.

You want to put together a well-balanced team of lower risk investments (defense), an higher risk plays (offense).

So for gold, your team may look something like this…

Team Gold

Fwd – Junior Miners

Mids – Mid-tier producers

Defenders – Large producers, ETFs, Royalty companies

Goalie – Actual gold, paper gold

Now with uranium, it’s not as robust out there.  You don’t have as many options, and you sure as hell can’t hold physical uranium without getting a not-so-friendly knock on your door.  So your team is going to be much smaller.

Team Uranium

Fwd – Junior Miners

Defenders – ETFs, Royalties

I mentioned before how there are ETFs and royalty companies in the game now, and they are likely to suck up a portion of the capital when it’s finally time for these things to start taking off.

This is not a bad thing.  What it does, is exactly what we want it to do — Allows us to take risk, while minimizing that risk along the way.

To my knowledge, there are 4 uranium mining ETFs out there, the main two are URA and URNM.  Both give you plenty of exposure to Cameco and Kazatomprom, which is great.

Royalty companies are created to stifle a lot of the downside risk that comes with mining stock investment, and we can certainly get on board with that.  I am not disclosing any companies I own, but I do own stock in a royalty company here, and it’s up to you to discover them.

Sorry if I’m not being candid here, it’s a legality thing.  Somehow in crypto nobody cares, but in stocks you have to be more careful as to what you say.  Notice how Rick Rule artfully dodged the accusation by the host in the video when it came to what stocks his company owns.

Then, find the people who know what they’re talking about, and find the smaller companies you want to put your chips down on.

Once you know this, without hesitation, buy them.

Do NOT sit there and say dumb shit like “I’ll wait for it to get cheaper”.

Oh, so you’re a uranium stock valuator now?  That didn’t take long!  Your brain must be a quantum computer!

No, you’re just being a cheap-ass, and good things rarely come to cheap-asses.  Just buy it now.  Price will probably go down at some point, and we’ll go over that in a bit.

Hell, almost everything I invest in goes down immediately after I buy it.  Just how it goes.

My gold/silver mining stocks were bludgeoned during the crash of March 2020, but “Buy and Hold” means “Buy and Hold.”  Today, 7 out of 8 of those stocks are up, some are way up, and the eighth one is only down like 5%.  If you believe in the underlying asset, and you’re right, good things will happen eventually.

But look, you cannot afford to be one of the few people on Earth who are onto this whole market, then somehow find a way to miss out on it because you “wanted a cheaper price”.  Unacceptable.

Do not let this happen!  Just buy it.  They’re all cheap right now compared to what they’re likely going be once the spot price goes back up.

3 – Money Management

No money management — no money.

NNFX traders know just how critically important this is.

In the Rick Rule video posted earlier, he mentioned how some of the stocks which went up 22X+ in value, dropped by 90% at some point in his investment as well.

What did the billionaire resource investor do?  He bought more, of course.

When setting aside your investment capital for an endeavor such as this, you can opt to take what you would normally invest into a junior mining stock, and cut it in half.

One half for now, and another if the stock plummets and you want to average down.

I personally do not do this.  I will put a standard amount in, and if it drops hard, and I have made some extra money in that time, I may average down, or I may put that money elsewhere.  I picked my ponies for a reason, and I realize this is going to be a long race.

But no matter what you do, commit to it.

4 – Commit

This part is critical, because if your stock plummets or goes to the moon, emotions are going to enter the chat, and you cannot allow them to affect things here.

Take a google doc or something similar, and write these things down.

  1. Am I going to average down, and at exactly what price?
  2. When am I going to take my first profit?
  3. Will I be taking any additional profits off the table at any point, and where are those points?
  4. How am I going to exit?

And you MUST commit to the rules you set out, many moons ago when your emotions were at a rational level.

You’re not going to want to when the time comes, but this is the only way to truly max out your returns without getting hosed.

Now as far as when to exit altogether, I cannot offer a definitive here.  Remember, we don’t have the luxury of our charts for this.  There are two ways to approach this, and it’s your choice.

  1. See if whichever expert you chose to listen to mentions exiting out at some point in time.
  2. On your Google Doc, type in where you’re going to place a trailing stop, then maintain it until price finally hits it.

Option 2 is probably best, because your guru may not want to tell everybody when to exit, considering how small this market is, a mass exodus out of a stock can raise a few eyebrows, and not the kind you want.

Then you wait.  You wait for what may be a very long time.

But the good news is, a long time has already passed, the pandemic bought us a bit more time, and spot prices are climbing ever-so-gradually, which means the worst of times as far as uranium prices go, are likely behind us.

After all this, wouldn’t it suck if you were one of the few people who were tuned into this market, then the market took off without you?

Do not allow this to happen.  I’m not saying it is, but a lot of evidence points to this being a once in a generation type of opportunity.

Win or lose, I’m not going to look back on this time in my life, and say I didn’t play the odds, when those odds were so heavily skewed in my favor.

— VP

As always, read the site’s disclaimer.  This is one man’s opinion, nothing more.

What do you think?

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