Uranium prices continue to gain momentum, but exactly how high can they go?
‘I’m taking this thing one step and a time and looking at it in a very conservative manner just to make sure that my downside is protected,’ he explained. ‘But when looking at upside potential, throwing conservatism out the window, I think we still have a long way to go, and I think a parabolic price spike has become more likely than not given the prevailing circumstances.’
In Wolbert’s view, uranium’s current supply and demand dynamics are enough to cause a price spike. But when financial entities like the Sprott Physical Uranium Trust (TSX:U.U) are added to the picture its gains become potentially parabolic.
‘If (the trust sees) a lot more flows … they will be buying a lot more pounds, and they will be buying a lot more in a physical market that is increasingly getting tighter, and a lot more tight than it was at the time when they first started buying,’ he said.
‘But here is the catch — they won’t be alone. They will have the ANU fund that will also be looking for pounds, they will have Yellowcake (LSE:YCA) out of London. They will have PFYN Capital out of Singapore,’ Wolbert said, also mentioning Zuri-Invest and two or three more new financial entities that are expected to come online in the coming months.
‘If they deliver on their potential, or God forbid if they overperform their potential, there will really be a massive price spike. Because there is simply not enough supply available to really absorb these hundreds of millions — perhaps even billions of dollars if we really see capital flows coming in. So I think that is where you get the possibility of a parabolic price spike,’ he said.
Watch the interview above for more from Wolbert on uranium supply, demand and prices.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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