[This blog post is an excerpt from a recent commentary at www.speculative-investor.com]

In last week’s Interim Update we noted the speculation in uranium-related equities and listed seven reasons to expect a sufficient increase in the demand for uranium over the years ahead to cause the price of this commodity to move much higher. We then concluded: “Due to [these reasons] and that it would take several years to develop new sources of uranium supply, we don’t think it is unreasonable to expect the uranium price to double or even triple within the next three years. However, there’s a limit to how much higher the prices of uranium equities will be able to move without the support of an upward-trending uranium price. At the moment, what’s needed is a move above the May-2025 high (near US$73) to underpin the speculation.” Well, thanks to a 9% surge in the uranium price on Monday 16th June, the move above the May-2025 high has happened. Refer to the following daily chart for the details.

The uranium price is determined by the supply of and the demand for the physical commodity, so daily price moves such as the one that occurred on Monday of this week are rare. Monday’s unusual price increase was the result of this news:

The Sprott Physical Uranium Trust (U.U.TO), a daily chart of which is displayed below, announced on Monday 16th June that it is raising US$200M (initially the amount was $100M, but the financing was upsized to $200M due to strong investor demand) by issuing new trust units. Also, it announced that the “net proceeds per Unit to be received by the Trust will be not less than 100% of the most recently calculated net asset value of the Trust per Unit prior to the determination of the pricing of the Offering.”

This news was bullish for the uranium price, because the proceeds of the offering will be used to purchase physical uranium, thus reducing the supply of uranium available to meet the requirements of the nuclear power industry.

U.U is in a unique position in that the more new units it issues the higher its own net asset value (NAV) is likely to become, given that the money it raises is used to take uranium out of the market. However, it only makes sense for the Fund to issue new units when its market value is close to or above its NAV. At one point in early-April it was trading at a discount to NAV of around 20%, but the subsequent elimination of this discount opened the door to the current offering.

What happened on Monday of this week possibly will occur again and again, because every time U.U’s market price rises to its NAV or above it will make sense for the Fund to issue more units to buy more uranium, thus driving its own NAV upward.

[This blog post is an excerpt from a commentary posted last week at www.speculative-investor.com]

After a market has been trending strongly for a few months or longer, a piece of extremely bullish news (in the case of an upward trend) or bearish news (in the case of a downward trend) can be the catalyst that sets in motion a multi-day or multi-week blow-off move that at least temporarily marks the end of the trend. This appears to have been the case during April-2025 with the upward trend of the gold/SPX ratio (the US$ gold price relative to the S&P500 Index) and the corresponding downward trend of the SPX/gold ratio.

We remarked in the 21st April Weekly Update that the SPX’s sell-off in gold terms was much more severe than its sell-off in nominal currency terms, paving the way for the SPX to rebound in terms of gold as well as in nominal dollar terms over the ensuing weeks. It turned out that extremes for the SPX/gold ratio and the gold/SPX ratio were set on 21st April.

With reference to the following daily chart of the gold/SPX ratio, the news that appears to have set in motion a 2-3-week upside blow-off was Trump’s press conference regarding “reciprocal tariffs” after the close of trading on 2nd April. At this press conference Trump held up the now-infamous board showing the tariff rates that would be imposed on imports from every country. It quickly became apparent that these rates were based on a nonsensical formula and a nonsensical premise (the notion that if the US has a trade deficit with a country, then the US is being ‘ripped off’ by that country). This shattered any illusions that the Trump Administration was proceeding in a well-thought-out manner, prompting a panic out of US assets and a surge in the demand for gold.

As a result of the panic precipitated by the “reciprocal tariffs” announcement, the gold price gained about 20% relative to the SPX in only 12 trading days. Although this price move could be viewed as reasonable given what was happening in the world, it was so dramatic in one direction that it set the stage for a significant move in the opposite direction.

We expect that the gold/SPX ratio eventually will move a long way above its 21st April high, but this high probably will hold for at least 3 months and could hold for up to 6 months.