Hey There Income Hunter,

It’s about time President Biden put his money where his mouth is …

Pounding the table about green energy is one thing, but actually investing in it is another and Joe is planning to buy $4.3 billion of enriched uranium from US producers – yes, US producers 

And that’s not all. He also wants to expand sanctions to include a full ban on Russian uranium imports, which currently fuel 20%+ of US nuclear reactors. 

There will be a couple of big winners in the near-term and more importantly this move provides real fuel for higher uranium prices.

Today, I’ll lay-out the details and share a couple of must-own stocks so you can participate in one of the most bullish long-term trends over the next few years. 

The administration has been pushing for a buildup of uranium reserves, which was initially a Trump policy objective. And in the big picture, $4.3 billion is pocket change compared to funds we have spent on the pandemic and the war in Ukraine. 

Now, the most efficient way to get this done is to include it in the National Defense Authorization Act (NDAA) later this year. Uranium certainly falls under national security but passage may not come until December.

The Uranium Tailwinds Are Blowing

The US has the potential to be self-sufficient in the nuclear fuel cycle. During the Cold War, the US was nearly producing all the Uranium they needed domestically.

There is enough production capacity to get the US going and a little help from Canada and Australia would bridge the gap. Plus with the outlook for nuclear power and uranium mining improving, the price should begin rallying ands, which will fire up more mines and add capacity. 

US Uranium is certainly needed by its western allies because the disconnect between where it’s made and consumed means big shortages in the west … Any government support is icing on the cake. 

Market forces and market economics make the backdrop for uranium extremely strong.

Enrichment of the Uranium is Critical 

This ties into the uranium producer that is key to this buildout … Cameco Corp. (CCJ) brings laser enrichment technology to the table here. 

Enrichment is important for all nuclear applications and the US was letting Russia do our civil nuclear enrichment for us. That has to stop because importing Russian produced and enriched uranium is not what US miners want. 

This new push from the government is about getting our enrichment capacity back in shape and providing the economic incentive to do that. CCJ is in position to get a big contract to make this happen sooner rather than later. 

CCJ Technical Patterns

You can see how the CCJ price spiked higher on Tuesday on massive volume. It blasted through the 50 DMA. 

This creates a good low risk/high reward trade. We should get a back test of the 50 DMA  at 26.25, which would be a good place to put on a bullish option strategy.

If traders want to limit the loss on capital on the trade, they can stop themselves out on a close below the 200 DMA at $24.

I think there’s a high probability for CCJ to rise above the old high at $32 by the end of the year

Sprott Uranium Miners ETF (URNM)

URNM is an excellent way to get exposure to quality uranium miners. This ETF provides company and geographical diversification, which protects you from risk associated with owning  a single name stock. 

Similar to CCJ you had this spike higher on much higher than normal volume on Tuesday with a slight correction yesterday.’

Since you are below the moving averages the play here is to put on a bullish option strategy just above the $70 level with a stop loss triggered on a close below $67. 

I have a long-term URNM 75/100 call spread on because I am very bullish on the uranium story and I’d rather just give it the time to play out. 

Bring It Home

This week’s announcement on the US stockpiling, simply highlights that the US nuclear fleet (along with its Western allies) has problems that can only be solved through higher prices to incentivize production along with its services (conversion and enrichment). 

What needs to happen next is that utilities will need to sign much higher-priced uranium contracts in order to get the capacity that is required. Higher prices will incent the miners to increase capacity and deliver a finished product to the market.

Ultimately, this opportunity from a trading standpoint is massive because there is a structural shortage of supply that can only be fixed through higher prices … 

What adds to this incredible fundamental backdrop is that the Fed is tightening into a global growth slowdown, which is holding back commodity prices … This gives you a chance to accumulate a position at discounted prices. 

Just keep reminding yourself that central banks will be forced to go back to QE in the months ahead. You want to be in these great commodity play’s before that happens and as always …

Live and Trade With Passion My Friend,

Griff