Super cycle

It’s cold. As winter sets its stall up in Northern Europe the heating has been switched on. When it’s cold, nothing else really matters. Not the mortgage, not the rail strikes, not even how to stop Mbappe. What matters is getting warm. Ironic then, as the frigid arctic air has arrived, the oil price has turned negative for the year. Whilst pump prices have begrudgingly been easing on the forecourts, the wider energy ‘issue’ has not gone away. Storage tanks across Europe may be brimming, but will quickly get drawn. Demand is constant. Indeed, globally, set to rise. And tanks will need refilling. However well-argued the case is for renewable power like solar and wind, there are times when the sun doesn’t shine and the wind doesn’t blow. See much of Northern Europe for details where, in the likes of Germany, after decades and billions of euros of renewable investment the coal plants are turned up to the max. Hmm. Framed by the EU decision in the summer to classify new nuclear plants as ‘green’, thereby unlocking the gates for many investors, it is harder to find a sector that has seen more positive news flow in the past twelve months, than nuclear energy. Country after country has announced plans to build more reactors, big and small. Even in Japan, long scarred by the meltdown at the Fukushima Daiichi plant in 2011, is ramping facilities back up. Such is the need for reliable, baseload power. Where it gets interesting, is turning to the supply set up for uranium. Simply put, there is not enough to go round. And that’s now, today, before the industry doubles in size as per the forecasts of the IEA. Watch how utilities are set to scramble to lock in long term contracts before Sprott buys it all up. The word super cycle gets thrown around willy-nilly, but such is the size of the long-term supply deficit, if there is one market where it might well stick, it’s this one. Uranium – long shunned by financial investors – swaps mittened hands at a spot price of $50/ lbs. It is possibly going an awful lot higher.