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U3O8 Price Update: Q2 2021 in Review

The uranium spot price experienced momentum in the second quarter of 2021, but can it continue moving forward?
The post U3O8 Price Update: Q2 2021 in Review appeared first on Investing News Network.

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Click here to read the previous U3O8 price update.

Uranium’s price performance has left some investors disappointed in recent years, but overall many sector participants remain optimistic about its prospects.

In the second quarter of the year the outlook for uranium continued to improve, with a number of key developments helping to set the stage for a better future.

Read on to learn what market watchers see ahead for the industry.

 

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U3O8 price update: Price breaches US$30 mark

So far 2021 has been a year of ups and downs for the U3O8 spot price, but by the end of Q2 it was higher compared to where it started the year and where it closed the first quarter.

Uranium opened 2021 near the US$31 per pound level, but sank below US$28 in early March. After picking back up in late March to breach the US$31 level again, uranium sank below US$29 in May. By the end of the second quarter it had more than rebounded to pass US$32.

Even after this year’s small increase, the commodity remains well below the level needed to incentivize new production — the US$50 mark often used to be cited, but now US$60 is becoming more common.

u3o8 price chart, august 2020 to august 2021

U3O8 price chart, August 2020 to August 2021. Chart via Trading Economics.

The last time uranium was at that level was prior to the Fukushima nuclear disaster in 2011. Prices took a major hit after the accident, and despite strengthening demand and tightening supply they have largely failed to recover. The consensus is that eventually prices will rise, with stocks gaining in tandem — but for years the question has been when exactly that will happen. Now experts are becoming more emphatic that a turnaround really could be in store in the not-too-far-off future.

In an early May note to investors, Red Cloud Securities analyst David Talbot said his firm’s belief is that a “new uranium bull market” is on the way, and he pointed to a slew of factors that support this idea.

Examining the supply side, Talbot said that about 35 percent of global output came offline in 2020. While some of that was due to COVID-19-related shutdowns, there were also some noteworthy permanent mine closures. Ultimately output of uranium came in at just 123 million pounds last year, leaving a gap of 54 million pounds between supply and demand.

Talbot noted that the current supply/demand gap is being filled by secondary production, but said this source is on the decline and in a few years may only supply 15 to 20 million pounds annually.

 

Uranium Soared Last Year While Other Resources Tumbled

 
What's In Store For Uranium This Year? Find Out In Our Exclusive FREE 2021 Uranium Outlook Report featuring trends, forecasts, expert interviews and more!
 

Looking at demand, analysts at Canaccord Genuity said in a mid-May update that macro policies are helping to build demand for uranium, including China’s 14th Five-Year Plan and more constructive views on uranium in North America and Europe. In their own publication, released at the end of May, Haywood Securities analysts focused on the US side of demand, noting that nuclear power wasn’t forgotten in President Joe Biden’s budget proposal, which recognizes nuclear’s role in clean energy.

Opinions are split on what final pieces need to fall into place to spark a uranium price run, but buying from utilities and Japanese reactor restarts are two factors that are often cited — Talbot mentioned the former in his update, while veteran investor and speculator Rick Rule has discussed the latter.

U3O8 price update: Potential catalysts ahead

The supply and demand dynamics mentioned above give a general idea of the state of the uranium market, but the second quarter brought a couple other noteworthy events, including the continuation of a trend that began in the first three months of the year. Back in March, several uranium companies, including Denison Mines (TSX:DML,NYSEAMERICAN:DNN) and US-based UEC (NYSEAMERICAN:UEC), announced plans to buy physical uranium on the spot market.

Commenting on this development, Justin Huhn, founder and publisher of Uranium Insider, told the Investing News Network (INN) in April that although major miner Cameco (TSX:CCO,NYSE:CCJ) has been buying physical uranium for several years, it’s new to see non-producers enter the market.

“It’s been a pretty big development in the space, and I can only imagine it’s gotten the attention of the utilities,” he said, adding that more buying on the spot market could occur.

Watch the full interview with Huhn above.

Lobo Tiggre, founder and CEO of IndependentSpeculator.com, said at the end of June that he had hoped to see companies’ spot market purchases of physical uranium have more of an effect.

“I wish it had had a bigger impact than it did. The big hope I think when that started was that (the purchases would) soak up all the easy uranium out there … and then you would have much more real negotiations between buyers and sellers, setting more realistic prices — and that could really unleash the spot price,” he told INN in an interview at the end of June.

Tiggre expressed a similar view on the Sprott Physical Uranium Trust (TSX:U.UN), which launched to much fanfare in mid-July after a transaction with Uranium Participation. While he believes it’s positive for the market, he doesn’t see it as a game changer — he noted that while the debut of the trust could ultimately spur more uranium purchases, immediate fireworks are unlikely.

“It should have a beneficial effect, but it could take months, maybe even years to trickle through to really have an effect where it changes materially how much uranium Sprott would be taking off the market.”

Watch the full interview with Tiggre above.

Rule has a more optimistic outlook on the trust’s potential impact on physical buying, although he admitted that his longtime connection to Sprott (TSX:SII,NYSE:SII) likely makes him biased.

“My suspicion is that Sprott will almost by itself be able to tighten up the physical market,” he said. “I believe that the catalyst is in place over the next six months to mop up any surplus uranium in the spot market, which will drive consumers of uranium into the term market, and the strength in the term market will be what allows the fortunes of the larger producers to increase.”

Rule added that Sprott intends to list the trust on the NYSE, and said that will be an important factor in its success since it will provide access to a wider range of investors.

 

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U3O8 price update: Opportunity in stocks

As mentioned, uranium is often described as a “when” not “if” story, and many market participants are keen to get positioned in stocks with potential. So where should they start?

Rule has long been a proponent of uranium, but he cautioned that the juniors have gotten ahead of themselves and are no longer the bargain they once were — some have doubled and tripled in the last few years. His favorite uranium companies at the moment are Kazatomprom (LSE:KAP), China General Nuclear (SZSE:003816) and Cameco.

“I think the juniors are substantially ahead of themselves,” he explained. “This doesn’t mean that they don’t have upside — when the price of uranium crests through US$50 or US$60, which I suspect it will. I’m just suggesting that among the juniors there’s downside as well as upside now.”

Watch the full interview with Rule above.

It’s true that smaller-scale uranium stocks have been on the move — this year’s five top gainers on the TSX and TSXV as of the end of July were all up more than 65 percent since the start of 2021, with the biggest riser up over 230 percent. None of the companies are producing yet.

Tiggre expressed a similar sentiment to Rule, noting that some companies have risen too far.

“The problem is that the stocks have gotten ahead of uranium prices. Uranium prices still are way below where they need to be for these guys to make money, and the stocks are up 100, 200, 300 hundred percent,” he said to INN. “It’s hard to buy when the stocks are up and the commodity isn’t much. So when you see the stocks correct … well that addresses that imbalance, and that’s a source of opportunity.”

It’s worth noting that not all market participants agree. In a Twitter poll conducted by INN, close to 70 percent of respondents said they still see more potential in uranium juniors than in producers. That said, the upshot from at least some experts seems to be that while investors and speculators can certainly still make money in uranium, it will be important to examine closely which stocks have the most room to run.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

 

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United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

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United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

More Travel:

"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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Walmart launches clever answer to Target’s new membership program

The retail superstore is adding a new feature to its Walmart+ plan — and customers will be happy.

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It's just been a few days since Target  (TGT)  launched its new Target Circle 360 paid membership plan. 

The plan offers free and fast shipping on many products to customers, initially for $49 a year and then $99 after the initial promotional signup period. It promises to be a success, since many Target customers are loyal to the brand and will go out of their way to shop at one instead of at its two larger peers, Walmart and Amazon.

Related: Walmart makes a major price cut that will delight customers

And stop us if this sounds familiar: Target will rely on its more than 2,000 stores to act as fulfillment hubs. 

This model is a proven winner; Walmart also uses its more than 4,600 stores as fulfillment and shipping locations to get orders to customers as soon as possible.

Sometimes, this means shipping goods from the nearest warehouse. But if a desired product is in-store and closer to a customer, it reduces miles on the road and delivery time. It's a kind of logistical magic that makes any efficiency lover's (or retail nerd's) heart go pitter patter. 

Walmart rolls out answer to Target's new membership tier

Walmart has certainly had more time than Target to develop and work out the kinks in Walmart+. It first launched the paid membership in 2020 during the height of the pandemic, when many shoppers sheltered at home but still required many staples they might ordinarily pick up at a Walmart, like cleaning supplies, personal-care products, pantry goods and, of course, toilet paper. 

It also undercut Amazon  (AMZN)  Prime, which costs customers $139 a year for free and fast shipping (plus several other benefits including access to its streaming service, Amazon Prime Video). 

Walmart+ costs $98 a year, which also gets you free and speedy delivery, plus access to a Paramount+ streaming subscription, fuel savings, and more. 

An employee at a Merida, Mexico, Walmart. (Photo by Jeffrey Greenberg/Universal Images Group via Getty Images)

Jeff Greenberg/Getty Images

If that's not enough to tempt you, however, Walmart+ just added a new benefit to its membership program, ostensibly to compete directly with something Target now has: ultrafast delivery. 

Target Circle 360 particularly attracts customers with free same-day delivery for select orders over $35 and as little as one-hour delivery on select items. Target executes this through its Shipt subsidiary.

We've seen this lightning-fast delivery speed only in snippets from Amazon, the king of delivery efficiency. Who better to take on Target, though, than Walmart, which is using a similar store-as-fulfillment-center model? 

"Walmart is stepping up to save our customers even more time with our latest delivery offering: Express On-Demand Early Morning Delivery," Walmart said in a statement, just a day after Target Circle 360 launched. "Starting at 6 a.m., earlier than ever before, customers can enjoy the convenience of On-Demand delivery."

Walmart  (WMT)  clearly sees consumers' desire for near-instant delivery, which obviously saves time and trips to the store. Rather than waiting a day for your order to show up, it might be on your doorstep when you wake up. 

Consumers also tend to spend more money when they shop online, and they remain stickier as paying annual members. So, to a growing number of retail giants, almost instant gratification like this seems like something worth striving for.

Related: Veteran fund manager picks favorite stocks for 2024

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President Biden Delivers The “Darkest, Most Un-American Speech Given By A President”

President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through…

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President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through the State of The Union, President Biden can go back to his crypt now.

Whatever 'they' gave Biden, every American man, woman, and the other should be allowed to take it - though it seems the cocktail brings out 'dark Brandon'?

Tl;dw: Biden's Speech tonight ...

  • Fund Ukraine.

  • Trump is threat to democracy and America itself.

  • Abortion is good.

  • American Economy is stronger than ever.

  • Inflation wasn't Biden's fault.

  • Illegals are Americans too.

  • Republicans are responsible for the border crisis.

  • Trump is bad.

  • Biden stands with trans-children.

  • J6 was the worst insurrection since the Civil War.

(h/t @TCDMS99)

Tucker Carlson's response sums it all up perfectly:

"that was possibly the darkest, most un-American speech given by an American president. It wasn't a speech, it was a rant..."

Carlson continued: "The true measure of a nation's greatness lies within its capacity to control borders, yet Bid refuses to do it."

"In a fair election, Joe Biden cannot win"

And concluded:

“There was not a meaningful word for the entire duration about the things that actually matter to people who live here.”

Victor Davis Hanson added some excellent color, but this was probably the best line on Biden:

"he doesn't care... he lives in an alternative reality."

*  *  *

Watch SOTU Live here...

*   *   *

Mises' Connor O'Keeffe, warns: "Be on the Lookout for These Lies in Biden's State of the Union Address." 

On Thursday evening, President Joe Biden is set to give his third State of the Union address. The political press has been buzzing with speculation over what the president will say. That speculation, however, is focused more on how Biden will perform, and which issues he will prioritize. Much of the speech is expected to be familiar.

The story Biden will tell about what he has done as president and where the country finds itself as a result will be the same dishonest story he's been telling since at least the summer.

He'll cite government statistics to say the economy is growing, unemployment is low, and inflation is down.

Something that has been frustrating Biden, his team, and his allies in the media is that the American people do not feel as economically well off as the official data says they are. Despite what the White House and establishment-friendly journalists say, the problem lies with the data, not the American people's ability to perceive their own well-being.

As I wrote back in January, the reason for the discrepancy is the lack of distinction made between private economic activity and government spending in the most frequently cited economic indicators. There is an important difference between the two:

  • Government, unlike any other entity in the economy, can simply take money and resources from others to spend on things and hire people. Whether or not the spending brings people value is irrelevant

  • It's the private sector that's responsible for producing goods and services that actually meet people's needs and wants. So, the private components of the economy have the most significant effect on people's economic well-being.

Recently, government spending and hiring has accounted for a larger than normal share of both economic activity and employment. This means the government is propping up these traditional measures, making the economy appear better than it actually is. Also, many of the jobs Biden and his allies take credit for creating will quickly go away once it becomes clear that consumers don't actually want whatever the government encouraged these companies to produce.

On top of all that, the administration is dealing with the consequences of their chosen inflation rhetoric.

Since its peak in the summer of 2022, the president's team has talked about inflation "coming back down," which can easily give the impression that it's prices that will eventually come back down.

But that's not what that phrase means. It would be more honest to say that price increases are slowing down.

Americans are finally waking up to the fact that the cost of living will not return to prepandemic levels, and they're not happy about it.

The president has made some clumsy attempts at damage control, such as a Super Bowl Sunday video attacking food companies for "shrinkflation"—selling smaller portions at the same price instead of simply raising prices.

In his speech Thursday, Biden is expected to play up his desire to crack down on the "corporate greed" he's blaming for high prices.

In the name of "bringing down costs for Americans," the administration wants to implement targeted price ceilings - something anyone who has taken even a single economics class could tell you does more harm than good. Biden would never place the blame for the dramatic price increases we've experienced during his term where it actually belongs—on all the government spending that he and President Donald Trump oversaw during the pandemic, funded by the creation of $6 trillion out of thin air - because that kind of spending is precisely what he hopes to kick back up in a second term.

If reelected, the president wants to "revive" parts of his so-called Build Back Better agenda, which he tried and failed to pass in his first year. That would bring a significant expansion of domestic spending. And Biden remains committed to the idea that Americans must be forced to continue funding the war in Ukraine. That's another topic Biden is expected to highlight in the State of the Union, likely accompanied by the lie that Ukraine spending is good for the American economy. It isn't.

It's not possible to predict all the ways President Biden will exaggerate, mislead, and outright lie in his speech on Thursday. But we can be sure of two things. The "state of the Union" is not as strong as Biden will say it is. And his policy ambitions risk making it much worse.

*  *  *

The American people will be tuning in on their smartphones, laptops, and televisions on Thursday evening to see if 'sloppy joe' 81-year-old President Joe Biden can coherently put together more than two sentences (even with a teleprompter) as he gives his third State of the Union in front of a divided Congress. 

President Biden will speak on various topics to convince voters why he shouldn't be sent to a retirement home.

According to CNN sources, here are some of the topics Biden will discuss tonight:

  • Economic issues: Biden and his team have been drafting a speech heavy on economic populism, aides said, with calls for higher taxes on corporations and the wealthy – an attempt to draw a sharp contrast with Republicans and their likely presidential nominee, Donald Trump.

  • Health care expenses: Biden will also push for lowering health care costs and discuss his efforts to go after drug manufacturers to lower the cost of prescription medications — all issues his advisers believe can help buoy what have been sagging economic approval ratings.

  • Israel's war with Hamas: Also looming large over Biden's primetime address is the ongoing Israel-Hamas war, which has consumed much of the president's time and attention over the past few months. The president's top national security advisers have been working around the clock to try to finalize a ceasefire-hostages release deal by Ramadan, the Muslim holy month that begins next week.

  • An argument for reelection: Aides view Thursday's speech as a critical opportunity for the president to tout his accomplishments in office and lay out his plans for another four years in the nation's top job. Even though viewership has declined over the years, the yearly speech reliably draws tens of millions of households.

Sources provided more color on Biden's SOTU address: 

The speech is expected to be heavy on economic populism. The president will talk about raising taxes on corporations and the wealthy. He'll highlight efforts to cut costs for the American people, including pushing Congress to help make prescription drugs more affordable.

Biden will talk about the need to preserve democracy and freedom, a cornerstone of his re-election bid. That includes protecting and bolstering reproductive rights, an issue Democrats believe will energize voters in November. Biden is also expected to promote his unity agenda, a key feature of each of his addresses to Congress while in office.

Biden is also expected to give remarks on border security while the invasion of illegals has become one of the most heated topics among American voters. A majority of voters are frustrated with radical progressives in the White House facilitating the illegal migrant invasion. 

It is probable that the president will attribute the failure of the Senate border bill to the Republicans, a claim many voters view as unfounded. This is because the White House has the option to issue an executive order to restore border security, yet opts not to do so

Maybe this is why? 

While Biden addresses the nation, the Biden administration will be armed with a social media team to pump propaganda to at least 100 million Americans. 

"The White House hosted about 70 creators, digital publishers, and influencers across three separate events" on Wednesday and Thursday, a White House official told CNN. 

Not a very capable social media team... 

The administration's move to ramp up social media operations comes as users on X are mostly free from government censorship with Elon Musk at the helm. This infuriates Democrats, who can no longer censor their political enemies on X. 

Meanwhile, Democratic lawmakers tell Axios that the president's SOTU performance will be critical as he tries to dispel voter concerns about his elderly age. The address reached as many as 27 million people in 2023. 

"We are all nervous," said one House Democrat, citing concerns about the president's "ability to speak without blowing things."

The SOTU address comes as Biden's polling data is in the dumps

BetOnline has created several money-making opportunities for gamblers tonight, such as betting on what word Biden mentions the most. 

As well as...

We will update you when Tucker Carlson's live feed of SOTU is published. 

Tyler Durden Fri, 03/08/2024 - 07:44

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