The Game of Investing, Vol. 37
- Real Vision
- June 18, 2024
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This Week…
We’re looking at a crucial topic with both financial and geopolitical implications: nuclear power.
Sprott Asset Management CEO John Ciampaglia joined Andreas in this conversation (paywalled) to share why he expects the coming energy transition to bring about an era of higher commodity prices, the potential for uranium to provide a sustainable solution, and how to invest in the nuclear option.
- Here’s a free snippet for those of you with commitment issues.
In this issue, we’ll cover 2 things:
- Why the green energy transition could be inflationary, and what that means for commodity prices.
- Why some experts believe that nuclear energy provides the best path forward.
Let’s get into it.
Welcome to the Game
Welcome to The Game of Investing, a bi-weekly newsletter bringing you “aha” moments and actionable lessons from Real Vision experts. No matter your level of expertise, markets are tough — which is why we all have to put in the work. Ultimately, the game of investing is a competition with yourself. Our mission is to help you navigate the path to success. Prepare to level up.
LEVEL 1 — Green Energy and Inflation
No matter what you believe the best path forward is for sustainable energy, it is generally accepted that — at least during the development phase — the green energy transition will be inflationary.
According to John, this is due to the significant capital investments required to move away from fossil fuels. John points out that an era of underinvestment in industries like mining has led to shortages of materials and labor, resulting in increased pressure on raw material prices and supply chains.
As the world shifts towards generating cleaner electricity and storing energy for electric vehicles and large-scale energy grids, the demand for critical minerals like copper, nickel, uranium, and cobalt will increase significantly — “leading to a commodity supercycle,” says John.
For investors, John believes your portfolio should have exposure to commodities and energy-related assets (i.e., ETFs) to capitalize on this trend in the near and long term.
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LEVEL 2 — The Nuclear Option
As we search for alternative energy sources that are both sustainable and can solve the inflationary pressures of the green energy shift, John says that nuclear power is the best path forward.
Already, some countries are reconsidering their stance on nuclear energy. For instance:
- Poland has begun the development of nuclear plants to address its reliance on the coal industry.
- In France, companies are exporting nuclear technology and bidding for business in the nuclear plant construction market. Development companies like this present interesting investment opportunities as the trend expands.
- South Korea is a leader in the space, and John also mentions a growing interest in small modular reactors in the U.S. and Canada, where early-stage progress is being made.
“The shift in sentiment is driven by rising electricity bills and energy costs,” says John. “Plus the realization that relying on natural gas and intermittent renewables can lead to instability in the power grid.”
As the technological revolution takes hold, the world is only going to need more electricity.
John believes nuclear provides reliable, clean energy that will stabilize the grid and improve energy security. But to get to a point where nuclear energy is readily available and widely used, governments must soon begin reversing the previous era of lawmakers’ decisions to decommission nuclear plants.
- We’ve started to see this happen in Europe and California, but much progress remains.
Uranium prices are volatile so direct uranium exposure won’t be right for every investor.
But with demand for nuclear power expected to continue rising, investors have other nuclear-related options: ETFs, plant producers, and the raw materials needed to support the nuclear option.
Next Time
Thanks for reading. In our next issue, we’ll take a look at why India could be a fascinating investment opportunity in the years to come.
See you then.
Have feedback on The Game of Investing? We’d love to hear it. Just email us at essential@realvision.com to share your thoughts.
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