While Uranium’s spot price was hovering above US$100 in January last year, this had fallen some 50 per cent between then and early March this year, finding a bottom in the low US$60s.
According to ETF Shares chief investment officer David Tuckwell, the uranium spot price bubble has officially burst, with financial speculators and uranium exchange-traded funds (ETF) to blame.
“Uranium is a small commodity, trading roughly US$10 billion a year. (For perspective: copper trades US$1 trillion plus). And uranium miners are smaller than other kinds of miner. As trading volumes of uranium and its miners are small, speculators and ETF flows can set prices more easily,” Tuckwell said in a recent market note.
According to Tuckwell, while speculators – the likes of hedge funds and other carry traders – can trade uranium on the spot market directly, therefore influencing prices, ETFs are too illiquid to do the same.
Instead, ETFs gain exposure via closed uranium trusts, which hold physical uranium and buy more pounds of the commodity to profit from ETF demand. Hence, ETF inflows influence prices on that end.
But in late May, US President Donald Trump signed an executive order aimed at promoting the building and operation of nuclear reactors to power AI data centres.
“The order directs the US Army and Department of Energy to build reactors at military and federal sites, with a focus on powering Microsoft, Google, Amazon, and Oracle’s AI data centres,” Tuckwell said.
“This move effectively aligns federal energy policy with big tech’s AI needs. In theory, this translates into state-backed demand for uranium, which could support prices and profits for uranium miners. However, the order also includes the release of 20 metric tonnes of enriched uranium from federal reserves, which increases short-term supply.”
Off the back of this news, locally listed uranium names, such as Boss Energy and Paladin, rallied at the same time that retail investors returned to the sector.
The CIO explained that, early last year, the uranium market was in a state of “backwardation”, characterised by spot prices exceeding future prices and usually signals tight near-term supply.
“Given uranium’s high storage costs and the high interest rate environment, backwardation was especially unexpected and killed off carry traders,” Tuckerwell said. “Now, the market has returned to contango, where future prices exceed spot prices. This shift suggests a cooling of speculative activity and a return to more normal market dynamics.”
And while uranium miners are indeed set to benefit, it’s big tech that is poised to be the greatest beneficiary.
“Trump’s executive order gives Microsoft, Amazon, Google, and Oracle preferential access to federal nuclear infrastructure. This includes the ability to build their AI data centres on federal land next to government-subsidised nuclear reactors,” Tuckwell said.
“Putting things bluntly: the executive order is a gift to big tech and constitutes federal subsidy.”
So while the speculative frenzy may have eased, the long-term structural case for uranium remains intact.
“With big tech investing directly in nuclear innovation, an investment in US technology companies now also offers optionality on nuclear energy growth. As the US government gets more directly involved, the sector is entering a new phase – one that could be less volatile, but far more transformative,” Tuckwell added.
