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- 🧠 Found a new major narrative (see below).
- 🧠 Explored systems for formalizing the narrative analysis.
- 🤝 Advised another project.
Nuclear energy — a major narrative
Nuclear energy is a great example of a new major narrative. It’s unfolding right now, as institutional investors pour money into uranium-related startups & established companies.
This narrative has been triggered by the sanctions that blocked access to Russian gas & oil. Without them, the European countries can’t power their plants & heat their homes. Nuclear energy is the answer to their problem.
Let’s analyze this narrative using our tools:
- Uranium supply is burnt in reactors to produce energy.
- Higher energy price -> Higher uranium supply usage.
- Higher uranium supply usage -> Higher uranium price.
- Higher uranium price -> Higher uranium miner margins.
- Higher uranium miner margins -> Higher uranium miner dividends.
- Higher uranium miner dividends -> Higher uranium miner share price.
We understand that this chain of thoughts has multiple additional assumptions. The notable ones are:
- “Higher energy price -> Higher uranium supply usage” — requires more nuclear reactors, which are slow to build.
- “Higher uranium miner margins -> Higher uranium miner dividends” — requires the miners to pay dividends instead of reinvesting.
However, it doesn’t matter, because most investment articles on this topic make the same assumptions. Therefore, the narrative is already spreading within the population of traders.
We think that uranium miner shares price will increase more than spot uranium price. The reason is that shares pay dividends, while spot uranium doesn’t.
We also think that this narrative has a lot of upcoming events that will reinforce it. For example, the opening of a new nuclear reactor will be seen as a confirmation of the narrative that uranium demand will increase.
The only problem is how to buy the uranium miner shares:
- The citizens of US or Canada have direct access to shares of Cameco, a Canadian miner, via NYSE and CSE.
- The citizens of other countries may have access to the shares of uranium-related ETFs.
- The crypto natives currently don’t have access to any uranium-related investment products (if you find a way — let us know).
If someone makes uranium-related products available to crypto natives, he/she can make good money on arbitrage (most likely, crypto natives will pay a premium). However, doing so requires being legally registered in US / Canada, and also having a license to hold the shares on behalf of other investors.
This analysis is incomplete, but we’ve decided to limit ourselves to the text above because there’s no way to invest in a uranium-related narrative using crypto. Hope it works for someone who has access to NYSE / CSE!
Next week’s focus
- 🤝 Advise current projects.
- 🤝 Publish about narrative analysis.
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