By Justin Spittler, editor, Casey Daily Dispatch
A major rally is underway…
And yet, practically no one is talking about it.
It’s not front-page news on Bloomberg, The Wall Street Journal, or Forbes. These mainstream media outlets have barely peeped about this.
But that could change in a heartbeat. I say that because one of the world’s most beaten-down assets is showing signs of life for the first time in years.
If this continues, we could soon have a massive rally on our hands. You could make life-changing gains in practically no time.
There’s one catch…
You need to own the right stocks to make the most of this incredible opportunity. I’ll tell you what those are in a minute.
But let’s first look at the rally that no one’s talking about.
• Uranium prices are surging…
The chart below says it all.
You can see that the spot price of uranium has jumped 43% since April 2018. It’s also up 63% since November 2016, and is now trading at its highest level in nearly three years.
For perspective, the Bloomberg Commodity Index (BCOM) – which tracks 23 different commodities – is up only 6% over the same period. So uranium is showing serious strength relative to other commodities.
Now, uranium did have two other big rallies in the last couple of years. The first was in early 2017. The second came in the back half of that year. Both were short lived… and never led to materially higher prices.
But the current rally has been different. It hasn’t been as explosive as either of those rallies. Instead, it’s been a slow and steady march higher.
That’s one reason why uranium has been flying under the radar. But it’s not the only reason…
• Uranium is coming out of a brutal bear market…
From June 2007 to November 2016, the price of uranium plunged 88%. That’s a staggering decline.
And uranium is still 81% off its all-time highs, even after its recent rally.
When an asset falls this much, many investors move on. But here at Casey Research, we’re not like most investors.
We like to buy cheap and hated assets. And uranium checks both of those boxes.
I’m not the only Casey analyst who’s bullish on “yellow cake,” either.
• International Speculator editor Dave Forest also likes uranium…
Dave’s our in-house commodities expert. He’s spent 20 years of his career as a professional geologist, and has extensive experience in the oil and gas, environmental, and mining sectors.
Dave’s also a world traveler. He’s visited more than 200 mines around the world in search of the best money-making opportunities.
In short, Dave is a true industry insider. And like me, he says uranium heads much higher from here for the simple reason that it’s dirt cheap…
Uranium is priced extremely low right now – well below the point that supports any investment in new supply.
The gulf between the cost of production and the market price of uranium meant that uranium producers were not making money. Uranium was costing about $90 per pound to produce. But producers were selling it for just $23 per pound. That’s just not sustainable over the long term.
Uranium prices are so low that it’s forcing major producers to drastically slash production. More from Dave:
Two of the world’s largest uranium producers slashed their uranium production as a result.
This is a sign that you’re near a bottom… if not at it. Basically, the price has to rise… or the world’s lights go off for a lot of people. After all, uranium used to generate about 10% of the world’s electricity.
In short, the uranium market looks like it’s about to turn in a big way.
• And that’s exactly why you should give uranium stocks a look…
These companies are leveraged to the price of uranium. In other words, a small increase in the price of uranium can cause their shares to soar. At least, that’s how it’s supposed to work…
I say this because uranium stocks have lost touch with the uranium price. In fact, many uranium stocks are still down more than 40% from their 2017 highs.
The good news is that uranium stocks have been showing signs of life lately.
You can see what I mean below. This chart shows the performance of the Global X Uranium ETF (URA), a fund that invests largely in uranium companies.
You can see that URA recently broke out of a downtrend that it’s been in since last June. That alone is bullish for uranium…
• URA is also now above its 200-day simple moving average (200-DMA)…
The 200-DMA is a key trend line used by many traders. It shows an asset’s average price over the last 200 trading days. URA’s 200-DMA is shown in green in the chart above.
Generally speaking, assets above their 200-DMA are considered to be in uptrends. Assets below their 200-DMA, on the other hand, are thought to be in downtrends.
You can see in the chart above that URA is now above its 200-DMA. That’s encouraging.
Of course, this doesn’t guarantee that uranium stocks will head higher. After all, URA has jumped above its 200-DMA several times last spring, and a couple times in the fall.
Still, it would be very bullish if URA holds above its 200-DMA, while edging higher. In fact, it could signal that the uranium market as a whole is about to turn the corner.
• You’ll want to position yourself before that happens...
If you haven’t already, considering adding uranium stocks to your portfolio today.
While URA is a good gauge to get a pulse on the uranium market, I don’t recommend buying it to take advantage of the coming rally. Not all of its holdings are “pure plays” on uranium.
For the “best of breed” uranium stocks, consider signing up for Dave’s International Speculator newsletter. He’s the expert in the space… and he currently recommends two uranium stocks that are poised to rip higher in the coming month. Both are still in buy range today. You can access these names, and all of Dave’s research, with a subscription to International Speculator.
Just remember that they’re some of the most volatile stocks on the planet. Don’t bet more money than you can afford to lose. And harvest profits when they come.
February 7, 2019
P.S. Uranium isn’t the only metal set to jump higher in the coming years. Read on for Strategic Investor editor E.B. Tucker’s take on another metal you should consider today. It’s set to soar in the coming years, thanks to the electric vehicle revolution…
By E.B. Tucker, editor, Strategic Investor
There’s one metal that makes life the way we know it possible. Without it, the world would come to a halt.
We’re talking about copper.
Copper is an important metal in world history. It helped propel the Industrial Revolution.
That’s because copper is a key component in producing electricity – it’s a conductive metal. It helps connect an electric current from source to user.
Think about battery maker Duracell. It’s called the “Coppertop” for a reason. Copper used in batteries helps the charge generated by the battery go from one place to another.
While copper is not the most conductive metal – that title belongs to silver – it is the most abundant. But we’re nearing a gap in the copper supply. Total global copper production from mines amounted to an estimated 22.5 million metric tons in 2016.
Global copper consumption is steadily increasing, and currently stands at some 23.9 million metric tons.
And it’s all thanks to the electric vehicle boom.
A conventional gasoline car today requires 49 pounds of copper.
A hybrid, on the other hand, requires 132 pounds. And a fully electric car requires 183 pounds.
The copper demand problem isn’t just limited to what goes inside of electric cars. We need a whole new type of infrastructure to service these cars. This includes everything from power generation to charging stations, and even the power grid itself.
That’s why research firm Wood Mackenzie believes that there will be a huge supply deficit in the coming decade. By 2028, the firm estimates that there will be a deficit of nearly 10 million metric tons of copper. To put that into perspective, that’s equal to nearly 10 times the annual production of mining giant BHP Billiton’s Escondida mine, the largest copper mine in the world.
At the same time, massive new copper discoveries haven’t materialized. New super-pits, like Escondida or Freeport-McMoRan’s Grasberg mine, aren’t on the development horizon. That’s a serious supply crunch.
It’s also a huge opportunity to profit. In the coming months and years, we expect copper prices to climb higher. With the supply crunch looming, copper could reach new all-time highs inside the next few years.
Consider betting on copper producers today.
Do you plan on buying uranium or copper stocks? If not, are there any other metals you’d like to hear more about? Let us know at [email protected].