Proactive Investors - As the curtain draws on 2023, Sprott Asset Management (TSX:SII)'s CEO John Ciampaglia shared some insights into the standout performer of the year—uranium.
Amidst the roller coaster ride of global investments, uranium's meteoric 70% surge demands attention, fueled by a resurgence of interest and governmental backing for nuclear energy.
In an interview with Proactive, Ciampaglia delves into the unforeseen implications of this surge against the backdrop of COP 28 commitments and a shifting public sentiment towards nuclear power.
Beyond uranium, he provides a comprehensive outlook on gold's resilience, driven by global economic factors, and the escalating demand for copper, painting a vivid picture of the complex challenges and opportunities shaping the investment landscape in 2024.
Uranium's meteoric ascent: unraveling the shocking surge in 2023
"I would use colorful words to describe the world of investing in 2023 because it has been a very roller coaster-type year, but uranium has turned out to be the real star.
"With the price of uranium, shockingly, up 70% year to date, it's had a huge run against the backdrop where many other commodity prices have struggled. It's on the back of renewed interest, especially thanks to government support for nuclear energy as we try to really solve three key issues: energy transition, energy security, and finally, reliable baseload power, which is very important as we add more renewables."
A sea change in energy policy at COP 28
"In the last few days at COP 28, 22 countries made a pledge to triple nuclear capacity out to 2050. This is something that nobody would have ever predicted at one of the COP events, even two years ago. It represents a real sea change in energy policy and commitment.
"If you're going to build additional capacity, where are you going to find uranium? This hunt for uranium is definitely helping the price of the commodity, as well as the uranium stocks, which are up anywhere from 50% or more so far this year."
A growing understanding: public sentiment surrounding nuclear energy
"Public sentiment and support for nuclear energy has increased dramatically around the world, even in countries that are trying to phase it out. Public support has been very high.
"People have a better understanding of the role it plays in terms of producing no greenhouse gases, that it provides very reliable power, which was not subject to the kind of shocks that we saw in 2022 (when) the price of oil, coal, and natural gas all went crazy in Europe and Asia. Public sentiment is important – it helps galvanize political will and energy policy."
Gold's resilience
"Gold was very frustrating last year to us and many other investors when it was struggling. It has been more resilient this year, even in light of all the interest rate increases we had around the world.
"We're finally seeing the last market to produce all-time highs in gold. This is being driven by a few things: one, expectations that central banks around the world are done their tightening cycle have been very beneficial.
"Secondly, central banks have been buying huge amounts of gold around the world, diversifying their foreign reserves away from the US dollar.
"Finally, we’ve also seen enormous buying by China, which continues to have a voracious appetite for gold."
Meeting the growing demand for copper
"If the world wants to move to this state of increased electrification, these technologies (will) require much more copper.
"There is going to be an enormous amount of copper demand in the next 20 or 30 years, but all the easy stuff has been found. Add to that the fact that some of the biggest copper mines in the world today have been operating for decades and are starting to come to end of life, mining lower grades. And then obviously, we've had a situation of Panama in the last few months, where one of the world's largest copper mines (First Quantum’s Cobre Panama) has been closed because of government action and protests. It highlights how challenging it will be to find this mineral.
"At the end of the day, you're not going to get a supply response until the price of copper goes up, which it eventually will."