Tax Loss Season Opportunities: Time to Build for 2022

Hey There Income Hunters,


The year is winding down and it’s been an awesome one for stock investors, as of yesterday the S&P 500 is up 25%+ for the year-to-date. 


Investors who have realized gains will be looking to take tax losses on their losing positions into the end of the year.


Everyone is waiting for the Santa Claus rally to sell at higher prices, however, this year is very different with the Fed pivoting to a bearish policy now that it admits inflation is much more sticky than they first thought.


Investors taking tax losses on large positions creates an excellent buying opportunity, especially in the uranium miners space … 


Plus, the all-time-highs on Wall Street increase the odds of investors with long-term gains taking tax losses on stocks that are down this year.


Today, I’ll share the one I am focused on. This will be a miner that makes a major move in 2022.


North Shore Global uranium Mining ETF (Ticker: URNM)


The North Shore Global Mining ETF is based off the index of the same name. It’s a weighted basket of 35 companies, 82.5% of which are involved in exploration, development, and/or mining of uranium. The other 17.5% hold physical uranium, uranium royalties, or other non-mining assets. The fund is 100% allocated to uranium.

 

URNM got a major boost in November when Sprott Asset Management moved to take it over. The transaction is expected to close in early 2022. The new fund would still trade under the same ticker, but would be renamed the Sprott Uranium Miners ETF

 

Fundamentals of Nuclear Energy


The world, especially the east, is building out its nuclear fleet.

 

China, India, and countries in the Middle East and Eastern Europe are building new reactors. 

Nuclear, powered by uranium, is a virtually carbon-free source of electrical power, and a nuclear facility can last as much as a century. 

 

Until now most of the supply came from old nuclear bonds, so prices remained below levels that made mining uranium economically viable. 

 

So, even if there is a uranium supply shortage, nuclear utilities are inflexible buyers, basically buying at whatever price is needed to get it in order to keep their multi-billion-dollar facility active. 

 

The supply situation, including mined uranium and old stockpiles, along with demand inflexibility,  and low volume makes uranium particularly extreme in terms of boom/bust cycles.

 

I believe we have entered a new boom because the world is committed to net-zero carbon emissions and this will never be accomplished without the use of nuclear power. 

 

Here is the new bull market that has emerged in the past year: 

 

 

Uranium Pricing Needed to Increase Supply

 

The price that Uranium would have to trade at in order to bring new mines on board is estimated to be $60. Currently uranium is less than $45. 

 

So, uranium production is not covering existing demand, and uranium trades at a price that is below the cost to profitably make more mines for it. 

 

So, the question is … how much secondary supply is there and how long can this weird situation last?

 

Utility Coverage Shrinking

 

Utilities sign long-term contracts to deliver nuclear power and they need to be replaced. 

 

As you can see from the graph below, utilities are running low on coverage for agreed deliveries, specially in the US. 

 

The fact remains that uranium mining as a whole is insolvent at current prices — and it will be years or decades before the world no longer needs uranium.

 

That means that uranium prices must go higher to attract more supply.


Now, in the short-term uranium is consolidating its first leg up in the new bull market and end-of- ear tax selling may knock it down a bit more …


Therein lies an awesome opportunity.


The Technical Setup Is Spicy


This is an excellent area for accumulating a position heading into next year. There is a decent chance we get a bit more of a back up and I will get long on a new low.


Bring It Home

There will be MANY good opportunities in the coming weeks.


If you would like to get alerts on the trades I am doing and learn how to get out ahead of the Fed and the banks so you can take advantage of their massive money flow, subscribe to Power Income Trader.


Because I say this with all seriousness … 2022 could be the year of your trading career.


Join our community of top-line traders interested in building generational wealth by beating the Fed and banks at their own game. 


Live and Trade With passion My Friends,


Griff

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