The world of commodity investing is a difficult one, for a number of obvious reasons. While predicting which commodities are likely to suffer from supply/demand imbalances in the future may seem easy to most, as we have seen with the price of crude oil in recent years, getting such a bet right can be a very difficult task, particularly as supplies of most global commodities become cheaper to mine over time.
The uranium space, however, is one commodity sub-sector which has appealed to me for some time due to what I perceive to be pent up demand within the nuclear power generation market.
While lithium and other rare earth metals are currently getting much of the attention at the moment due to technological revolutions involving electric vehicles and the internet of things, the reality is that for the EV market to really take off, power generation is going to have to move from more costly forms (coal and gas power plants) to cleaner forms of electricity generation such as nuclear and hydro.
Nexgen Energy Ltd. (TSX:NXE) is one Canadian company which is sitting on what has been estimated to be one of the largest and highest quality uranium reserves in North America. While the firm is still exploring strategic options, and the price of uranium remains muted, an increase in interest from governments around the world (particularly in China and India) are likely to drive this story over the long-term, with or without North America.
Invest wisely, my friends.
