A uranium bull market has been on the horizon for years.
I've written countless articles and given many talks and interviews saying as much.
That horizon may not be that far off in the distance as the bottoming process of a typically cyclical commodity has now mostly played out.
Uranium prices have bounced along all-time lows near or below $20 per pound for the past two years. No uranium company makes money at that price.
And that's why major suppliers have been making production cuts. First from Kazakhstan, the world's largest producer. Then from Cameco (NYSE: CCJ)(TSX: CCO), the world's largest publicly traded producer.
Together, they're taking tens of millions of pounds of uranium off the market.
A new uranium fund expected to list soon - the Yellow Cake fund - is expected to buy up another eight million pounds. (Not to mention the formation of a new uranium fund is bullish by itself.)
In the global economic balancing act of supply and demand... supply just tipped the scales.
As such, uranium prices are up as much as 20% this year. And you can bet that's a small-caliber warning shot to typically lethargic utilities that need to start signing new uranium supply contracts to fuel their reactors.
Utilities can afford higher prices because uranium is a small part of the overall cost of operating a reactor, but 20% is sure to get their attention and perhaps hurry them along a bit.
Not only that, but utilities coming back into the market would add demand pressure at a time when supply is already being cut off.
And because uranium has been in a bear market for so long, it will take time for capital investment to happen to bring new supply online. It's not like you can flip a switch.
It's that window that makes mining bull markets like uranium so exciting. The price explodes higher, taking share prices with it, to incentivize new supply to come online.
With 55 new reactors coming online globally (don't let anyone tell you nuclear is dead) between 2015 and 2019... things are about to get interesting.
Other pieces are falling into place as well, especially in the United States, where the Department of Energy has stopped selling excess uranium into the market, further tightening supply and showing the administration's sympathy for the industry.
Uranium production in the U.S. is currently near a 70-year low, yet it's the largest nuclear nation, leaving it reliant on foreign imports for more than 95% of its uranium needs.
The U.S. has 100 reactors but only produces enough uranium to supply one.
This is unsustainable and dangerous. And Trump is likely going to change it.