The uranium market doesn’t need any more catalysts right now, with a supply gap of 30 million to 50 million pounds over the next five years that will drive prices higher, said Justin Huhn, founder of Uranium Insider, in an interview with Investing News Network recently.
At the end of 2023, the price of uranium soared to $100 per pound, making it the most watched commodity. Beginning this year, most analysts turn bullish on uranium. So where exactly will uranium prices go in 2024?
Outlining the current supply and demand dynamics in the uranium market, Huhn said that the uranium market has a huge shortfall of nearly 40 million pounds in 2023, and although it is expected to narrow in 2024, the huge shortfall will continue for several years, a situation that will push up the price of uranium considerably.
If the price of uranium rises another $20, it will incentivise every uranium project in the world to be profitable. But that doesn’t mean the market will be oversupplied either, for the simple reason that demand is growing much faster than supply.
Huhn points out that small- and mid-cap companies in the uranium market have been outperforming the big ones since December of last year. Uranium Insider is watching closely Sprott Junior Uranium Miners ETF (NASDAQ:URNJ), which holds a basket of small- and mid-cap uranium stocks, and the industry’s leading company, Cameco ( TSX:CCO,NYSE:CCJ) to track market movements.
As a green-energy metal, uranium is attracting a lot of investors in 2024. Huhn believes the uranium market will attract more retail investors in the future, who typically prefer to buy shares of smaller companies because the prices are cheaper and more upside ahead. Unfortunately, the risk of investing in junior uranium stocks usually increases exponentially when risk rises.
Rick Rule, a veteran resource industry expert and founder of Rule Investment Media, told the New Orleans Investment Conference last November that investors should focus on companies that actually do something.
Companies like NexGen Energy (TSX:NXE,NYSE:NXE) and Fission Uranium (TSX:FCU,OTCQX:FCUUF) are likely to be acquired. And companies like Boss Energy (ASX:BOE,OTCQX:BQSSF), which is already in production, will have a share price that is much higher than expected in the feasibility study.
