Sprott Physical Uranium Trust (SRUUF) broke support at 18.50 and is now retracing to test the new resistance level. Respect is likely and would signal a bear market for uranium.
The bear market is related to short- to medium-term demand and supply. Long-term demand for U308 is projected to grow by more than 50% by 2040, whereas supply — including restarted idle capacity and new mines planned and under development — is forecast to shrink to less than 50% of supply over the same time frame.
Conclusion
Respect of resistance at 18.50 by the Sprott Physical Uranium Trust (SRUUF) would confirm a bear market for uranium.
As with copper, we are long-term bulls on uranium and other resources required for the transition to low CO2 energy. A bear market in uranium would provide an opportunity to build a long-term position at low prices.
Notes
- The Rook 1 Project is a proposed new uranium mine and mill development located in northwestern Saskatchewan, Canada.
Acknowledgements
- Prof. John Quakes/Cantor Fitzgerald: Uranium Demand & Supply Projections
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.