Trader’s Narrative

For the past 3 years, there has been an explosive bull market in uranium (and uranium stocks). But it has been almost totally ignored by the media and the average trader. Especially when compared to coverage of the bull market in oil, gold and silver. If you want to take advantage of the uranium bull market, you could of course go long uranium mining stocks. But thanks to a security traded on the Toronto Stock Exchange, you can buy the actual commodity:

Uranium Participation Corporation is an investment holding company created to invest substantially all of its assets in uranium, either in the form of uranium oxide in concentrates (”U₃O₈“) or uranium hexafluoride (”UF₆“), with the primary investment objective of achieving appreciation in the value of its uranium holdings. The objective of the Corporation is to provide an investment alternative for investors interested in holding uranium.

But I would think twice before buying it here because it is trading at a whopping 50% premium to NAV (latest NAV released by the company was for March 31st at $6). Granted, since its IPO, U has always traded at a premium. Probably because it is the only way to invest in the commodity itself. But a 50% premium is ridiculous. I would patiently watch for an orderly pullback (with low volume) and allow for a more palatable entry.

Here’s a historical chart of U₃O₈ prices to give you the bigger picture:

Source: UxConsulting