Sprott is a Toronto-headquartered asset manager specializing in precious metals and critical materials (NYSE/TSX: SII), tracing its roots to Sprott Securities founded by Eric Sprott in 1981 and now led by CEO Whitney George. It runs physical gold, silver and uranium trusts, ETFs, active strategies and resource lending, with about $65bn in AUM. The Insights column carries monthly commentaries and white papers on uranium, gold, silver, copper and critical materials by Paul Wong, Jacob White and John Hathaway (ex-Tocqueville gold manager) — note the house's structurally bullish commodity stance, as it sells the corresponding trusts and ETFs.
This report is about uranium (a fuel for nuclear power). In November 2022, uranium prices didn't rise much, but the author thinks that's temporary. Nuclear energy is gaining acceptance (for example, the UN climate conference had a nuclear pavilion for the first time), and uranium supply is tight because big mines just restarted and haven't ramped up yet. For regular investors, this means uranium prices could go up in the future, though there may be short-term bumps. It's worth reading because it explains why uranium stocks and physical uranium prices are out of sync, and how the Fed's slower rate hikes might affect things.
Sprott’s November 2022 report indicates that the uranium market showed moderate performance, with the spot price of U3O8 falling from $52.27 per pound to $49.43 per pound, a monthly decline of 5.42%, though it still rose 17.40% year-to-date. Uranium mining stocks (Northshore Global Uranium Mining In
This chapter focuses on the performance of the uranium market in November 2022, when most asset classes (stocks, bonds, commodities) experienced a modest rebound, but physical uranium (U3O8) lagged behind. The backdrop is that expectations of a slowdown in Federal Reserve rate hikes improved market sentiment, while COP27, for the first time, featured a dedicated nuclear energy pavilion, signaling that nuclear power is returning to the center of international energy and climate dialogue.
The author argues that despite the lackluster performance of uranium prices and uranium mining stocks in November, the fundamentals of the new uranium bull market remain intact. The counterintuitive judgment is that uranium prices have lagged since May 2022, while conversion and enrichment prices have continued to rise; this divergence is unsustainable, and a uranium price increase is only a matter of time. Another contrarian view: nuclear energy is shifting from being "overlooked" to "recognized," as the COP27 agreement language changed from supporting only "renewable energy" to supporting "low-emission" energy, benefiting nuclear power.
1. November Asset Performance Comparison: The U3O8 spot price fell from $52.27 per pound to $49.43 per pound, a monthly decline of 5.42%; uranium mining stocks (Northshore Global Uranium Mining Index) were roughly flat for the month (-0.46%), down 6.84% year-to-date. In contrast, commodities (BCOM Index) rose 2.38% for the month, and U.S. stocks (S&P 500) gained 5.59%.
| Asset Class | 1 Month | 3 Months | Year-to-Date | 1 Year |
|---|---|---|---|---|
| U3O8 Spot | -5.42% | -6.42% | 17.40% | 7.51% |
| Uranium Mining Stocks (Northshore Index) | -0.46% | -13.98% | -6.84% | -13.73% |
| Commodities (BCOM) | 2.38% | -4.59% | 17.02% | 21.14% |
| U.S. Stocks (S&P 500) | 5.59% | 3.63% | -13.10% | -9.21% |
| U.S. Bonds | 3.68% | -2.09% | -12.62% | -12.84% |
2. Federal Reserve Signals: On November 30, Powell indicated that "the time to moderate the pace of rate increases may come as early as the December meeting." Following this news, most assets (including uranium mining stocks) rose, but physical uranium prices did not react positively.
3. COP27 Nuclear Energy Progress: A dedicated nuclear energy pavilion was established for the first time (led by the IAEA), and the agreement language shifted from "renewable energy" to "low-emission" energy. Nuclear energy has the highest capacity factor (Figure 2 shows nuclear >90%, natural gas ~55%, coal ~50%, wind ~35%, solar ~25%), which can compensate for the intermittency of renewable energy.
4. Uranium Mine Restart Dynamics:
5. Supply-Demand Contradiction: Uranium prices have lagged since May 2022, but conversion and enrichment prices have continued to rise. Russia's dominance in conversion and enrichment is stronger than in uranium mining. Western enrichment plants will shift from "underfeeding" to "overfeeding," which will catalyze the U3O8 spot market in the short term. The author judges that "available for sale" uranium inventories are largely sold out.
This chapter focuses on the historical patterns of long-term uranium price trends, using price data from 1968 to 2022 to argue that the current uranium bull market remains in its early stages. The report compares uranium's performance against other asset classes and analyzes the impact of macro factors such as Federal Reserve policy expectations and the shift in nuclear energy's status at COP27 on the uranium market.
The author's core judgment is that the uranium bull cycle is still ongoing, and current price levels are far from historical peaks. The report argues that despite a 5.42% month-over-month decline in spot uranium prices to $49.43 per pound in November 2022, prices are still up 17.40% year-to-date, and historically, uranium bull markets typically last for several years (e.g., the 2003-2007 cycle saw gains of over 10x). Counterintuitive observation: when expectations of a slowdown in Fed rate hikes improved overall market sentiment, physical uranium did not react as positively as other commodities or equities, indicating that uranium market pricing logic relies more on supply-demand fundamentals than macro liquidity.
1. Historical Price Cycle Comparison: From 1968 to 2022, uranium prices experienced three major bull markets (1970s, 2003-2007, and 2020 to present). The current price ($49.43) is only 36% of the 2007 peak (~$136) and below pre-Fukushima 2011 levels (~$70).
2. Asset Performance Divergence: Uranium mining stocks (URNMX index) are down 6.84% year-to-date, while spot uranium is up 17.40%, showing a disconnect between physical uranium and equity pricing.
| Asset Class | November 2022 Change | Year-to-Date Change |
|---|---|---|
| Spot Uranium (U3O8) | -5.42% | +17.40% |
| Uranium Mining Stocks (URNMX) | Roughly flat | -6.84% |
| Commodities (BCOM) | Not disclosed | +17.02% |
| S&P 500 | Not disclosed | -13.10% |
3. Policy Catalysts: COP27 featured the first-ever nuclear energy pavilion and revised protocol language to support "low-emission" energy (including nuclear); Fed Chair Powell hinted in November at a possible slowdown in rate hikes (NY Times report).
4. Supply-Side Restarts: Cameco's McArthur River/Key Lake mine has resumed production and produced its first packaged uranium (Source 11); Peninsula Energy plans to restart its Wyoming uranium mine (Source 12).
1. Go Long Physical Uranium: Current spot uranium prices ($49.43) are well below historical peaks, and supply-side restarts are slow (Cameco, Peninsula Energy still require time to ramp up production), suggesting the supply-demand gap may drive prices higher.
2. Monitor Convergence Between Uranium Stocks and Physical Uranium: Uranium mining stocks have underperformed spot uranium by 17.40% year-to-date; if the bull market persists, stocks may play catch-up.
3. Reduced Policy Risk: COP27's official recognition of nuclear energy as "low-emission" reduces long-term policy uncertainty, benefiting uranium demand expectations.
4. Beware of Short-Term Volatility: The Fed's rate hike path remains uncertain, and the uranium market's sensitivity to macro sentiment may increase (the 5.42% drop in spot uranium in November is a case in point).