Risk Warning: Your Capital is at Risk.
In this guide to trading uranium, we’ll explain how and where you can trade this popular commodity, as well as its long term outlook and reasons why some traders choose to speculate on uranium’s value. We also list regulated brokers that are available in your country.
In a hurry? If you want to get started trading uranium, here are platforms available in to consider:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Contents
How To Trade Uranium
Uranium traders have several ways to speculate on the commodity:
| Method of Investing | Complexity Rating (1 = easy, 5=hard) | Security Costs? | Expiration Dates? | Mgmt Costs? | Leverage? | Regulated Exchange? |
|---|---|---|---|---|---|---|
| Uranium Futures | 5 | ❌ | ✅ | ❌ | ✅ | ✅ |
| Uranium ETFs | 2 | ❌ | ❌ | ✅ | ❌ | ✅ |
| Uranium Shares | 2 | ❌ | ❌ | ❌ | ✅ | ✅ |
| Uranium CFDs | 3 | ❌ | ❌ | ❌ | ✅ | ✅ |
Uranium Futures
The Chicago Mercantile Exchange (CME) offers a contract on U308 (triuranium octoxide), the form in which uranium is mostly found in nature. The contract settles into 250 pounds of U308.
The contract trades globally on the CME Globex platform and has various expiration months.
Futures are a derivative instrument through which traders make leveraged bets on commodity prices. If prices decline, traders must deposit additional margin in order to maintain their positions.
At expiration, all of these contracts are financially settled.
Trading in futures requires a high level of sophistication since factors such as storage costs and interest rates affect pricing.
Uranium ETFs
These financial instruments trade as shares on exchanges in the same way that stocks do.
In addition, VanEck Vectors Uranium + Nuclear Energy ETF (NYSEARCA: NLR) invests in both uranium mining and nuclear energy companies.
| Global X Uranium ETF | VanEck Vectors Uranium + Nuclear Energy ETF |
|---|---|
Shares of Uranium Companies
There are many publicly traded companies that mine, process and sell uranium.
| Company | Overview | Listings | Founded |
|---|---|---|---|
Cameco Co | Canadian company that is the second largest global producer and seller of uranium, | New York Stock Exchange (NYSE) | 1988 |
Uranium Energy Co | US-based uranium mining and exploration company operating in the southwest United States and Paraguay | New York Stock Exchange (NYSE) | 2003 |
UR-Energy Inc | US company that explores, develops and acquires uranium mineral properties. | New York Stock Exchange (NYSE) | 2004 |
Energy Fuels Inc | US company that engages in the extraction, recovery and sale of uranium and vanadium | New York Stock Exchange (NYSE) | 1987 |
While trading shares in companies can be a leveraged way to gain exposure to uranium prices, many of these companies can react to other factors such as demand for their particular products, competition, production costs and interest rates.
Factors such as company management and the overall stock market can affect these trades.
Contracts for Difference (CFDs)
Another way to trade on shares of uranium companies is through the use of a contract for difference (CFD) derivative instrument.
CFDs allow traders to speculate on the price of companies involved in the uranium industry.
The value of a CFD is the difference between the price of the shares at the time of purchase and their current price.
Some regulated brokers offer CFDs on shares of uranium companies. Customers deposit funds with the broker, which serve as margin. See our guide to finding a regulated CFD broker and how to avoid to scams.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Where Can I Trade Uranium?
Start your research with reviews of these regulated brokers available in that offer uranium mining company stocks, ETFs or derivatives to speculate on its price.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Reasons to Trade in Uranium
In general, the best reason for trading in uranium is to bet on the growing energy needs of the world.
Traders might consider a uranium trade for the following reasons:
- Increased Acceptance of Nuclear Energy as a Power Source
- Emerging Market Demand
- Portfolio Diversification
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Increased Acceptance of Nuclear Energy as a Power Source
Since nuclear power is used primarily to produce electricity, its increasing acceptance by the power generating industry is the main reason traders should consider the commodity.
More than 30 countries host about 450 commercial nuclear power reactors with an installed capacity of about 400,000 megawatts electric (mWe).
Sixteen countries depend on nuclear power for more than 25% of their electricity needs, and some countries such as France depend on nuclear power for about 75% of their needs.
The price of uranium is likely to be influenced heavily by trends in nuclear power usage for electricity generation. The World Nuclear Association projects a 30% increase in electricity generation from nuclear power by 2030 and a 35% increase by 2035. These trends bode well for uranium prices.
Emerging Market Energy Demand
According to the International Energy Agency, by 2035 more than 90% of net energy demand will derive from emerging economies.
Demographic trends across the globe show migration patterns from rural areas into cities. In places such as China, rising industrialization has accompanied these population shifts.
The United Nations forecasts that by 2030, there could be a 36% increase in the number of global cities with populations over 1 million people.
New cities will require increasing amounts of electricity to power businesses and homes. As more countries seek to curb pollution while meeting energy demand, nuclear power demand could grow.
Portfolio Diversification
Trading in a critical resource such as uranium is a way to add diversification to a portfolio. Many of the factors that move demand for nuclear power are different than the factors that affect stock and bond prices.
In fact, for many segments of the economy, demand for electricity is inelastic.
As long as this remains the case, demand for uranium in power generation should remain strong.
Reasons to Not Trade Uranium
Traders should also consider the risks of trading in uranium:
- A global recession could weaken power demand.
- Lower coal and natural gas prices could slow down the adoption of nuclear energy by power companies.
- Another nuclear reactor accident could be a serious setback to the uranium industry.
- Global economic or political turmoil could strengthen the US dollar and weaken demand for commodities.
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Long Term Outlook on Uranium
There are three commonly cited reasons uranium prices could perform well in the years ahead:
- Emerging Market Growth
- Environmental Concerns
- Global Growth
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Emerging Market Growth
China, India, Brazil, the Middle East and Africa are among the many fast-growing countries and regions that are becoming more industrial and urban.
As populations in these regions migrate from rural areas into cities, demand for power should soar.
Environmental Concerns
As the global economy expands, pollution is becoming a greater problem. This should benefit cleaner power sources such as nuclear energy.
Global Growth
Global growth is a positive catalyst for uranium prices. As the world economy expands, demand for power should grow, and uranium prices should respond favorably.
Further Reading
- Learn More About Uranium
- Learn to Trade Energy Commodities
- Find a Commodities Broker
- Learn About Crude Oil
Credits: Original article written by Lawrence Pines. Major updates and additions by Marko Csokasi with contributions from the Commodity.com editorial team.
