Interactive Investor

Chart of the week: are uranium shares about to go nuclear?

13th September 2021 11:42

John Burford from interactive investor

With China expected to ramp up its nuclear energy programme we take a look at the chart for a firm set to benefit.

Not only has sentiment cooled for wind and solar in the West, but China appears on the verge of ramping up its dependence on nuclear by building more reactors. 

There is great pressure on them to cut their dependence on coal – and they can earn Brownie points galore in the West by cutting their CO2 emissions – and going nuclear.

I well remember the first Uranium Rush in the 1960s led by Canada. Canadian uranium penny shares were the meme stocks of their day. 

Then, the infant nuclear energy industry was said to promise unlimited free energy! Of course the hype was not matched by reality and a Uranium Bust ensued. 

With accidents like Three Mile Island cooling the nuclear frenzy, and an abundance of 'cheap' oil and gas, nuclear went into hibernation for many years.

But with fossil fuels now considered evil (and expensive), we are seeing a switch back to nuclear as safer reactors have been developed. The price of uranium is now advancing strongly, and so are the shares of companies in the uranium industry.

Yellow Cake (LSE:YCA) is a UK-based operation on AIM that launched in 2018 at the initial public offering (IPO) price of £2 a share.  Since then, it has been under the radar – until this month when the shares have started a major thrust into new highs.

I had a bullish chart of the week on Yellow Cake on 7 June when the shares were trading at £2.70.

Past performance is not a guide to future performance.

The shares briefly dipped under the IPO price during the Corona Crash last March but have been in accumulation mode, and this month have surged to the current £3.60. This certainly looks like the start of something big.

And another investment vehicle just launched is the Sprott Physical Uranium Trust Fund that buys physical uranium and stores it.

The background for uranium is certainly favourable since there has been little effort in exploring for new deposits by the miners with prices and demand low in recent years. 

And uranium demand is very likely to ramp up with a greater reliance on nuclear globally to meet our expanding energy needs.

I see the downside for the sector as low with the proliferation of companies that are standing ready to buy all of the output from mining – and sitting on it. 

The upward pressure on prices could be immense with little prospect for an immediate increase in supply.

In fact, it is possible prices could skyrocket if old-fashioned 'corners' appear, much like the infamous Hunt brother's attempt to corner the silver market in the late 1970s forcing prices to the skies.

John Burford is the author of the definitive text on his trading method, Tramline Trading. He is also a freelance contributor and not a direct employee of interactive investor.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.


We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.

Please note that our article on this investment should not be considered to be a regular publication.

Details of all recommendations issued by ii during the previous 12-month period can be found here.

ii adheres to a strict code of conduct.  Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.

In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.