Local Uranium stock – Paladin Energy (PDN), has been trending up since November 2020, rising from .12c to a recent high of $1.00.
The price of Uranium really took off in August when respected global asset manager, Sprott Global Asset Management launched the Sprott Physical Uranium Trust. Sprott specialize in physical gold, silver, and commodity trusts. Sprott are well respected in the industry since their trusts are structured to hold physical assets.
Investors have been wary of investment trusts that do not own the physical asset, but rather own a paper claim of the underlying asset. For example, your gold or silver investment could only be backed against a futures derivative contract or an unsecured claim against a bank. These types of investments have generically been called “unallocated accounts”.
A theme (meme) in the investment communities, especially Reddit, is that it is much more secure to physically hold gold or silver than be party to the unsecured risk of a third party. It is probably not wise to give a Christmas gift of a pound of Uranium, unless it is your favourite in-law.
Sprott has tapped into this mood by offering investments in trusts that are audited and guaranteed to be holding identifiable physical assets.
Sprott’s Physical Uranium Trust (U-U.TO), listed on the Toronto and NASDAQ Exchanges, has proven so popular that currently the share price is trading at 28.5% above the Net Asset Value (NAV).
The success of the fund has contributed to the bullish move in the price of Uranium, since Sprott is physically buying large volumes of Uranium in a tightly supplied market. The current spot price is around US$40 per pound, having been above $125 in 2007. Breakeven production costs are around $60 per pound and, to encourage supply, the price is expected to rise that level.
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