Uranium by Swissquote — TradingView

The interesting thing about long-term uptrends is that they can resume multiple times, so short-term correction periods can be used to build investment positions.

But the main challenge remains finding assets with strong current and future fundamentals. Among these attractive fundamental strategies, there is one with a strong case: the fundamental imbalance strategy.

What is the fundamental imbalance in financial markets?

• There is a structural gap between supply and demand for the relevant financial assets
• Long-term constraints on the supply side and continued growth in demand

The diagram below illustrates the fundamentals of structural imbalances in financial markets.

Today, uranium is one of the most interesting examples of this fundamental imbalance. The global uranium market has suffered from a chronic lack of investment for many years. After the Fukushima disaster in 2011, many mines were closed or put on maintenance due to poor profitability and a lack of understanding of future demand. Prolonged low prices have discouraged producers from investing heavily in new mining capacity.

At the same time, global demand is gradually starting to rise again. Many countries are reviving nuclear programs to address energy and climate challenges. Nuclear energy has once again become a strategic pillar of low-carbon, stable and controllable electricity. Many European countries, including China, India, the United States and France, are investing in new reactors and working to extend the lives of existing nuclear power plants.

The chart below explains the reasons for the imbalance between uranium supply and demand.

This dynamic therefore creates a potential long-term tension between limited supply and growing demand. Unlike many other commodities, rapidly increasing uranium production is an extremely complex process. Developing a new mine typically takes more than a decade from exploration, obtaining regulatory licenses, and starting production.

This is exactly the kind of environment that can drive a long-term bull market cycle. Therefore, periods of market correction may provide opportunities for investors who believe in this basic premise to strengthen their positions. Therefore, uranium is not just a cyclical commodity, it could represent a real strategic disruption in the coming years, resulting in a strong long-term upward trend.

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