Interview with John Ciampaglia, CEO of Sprott Asset Management
Our previous interview: https://www.cruxinvestor.com/posts/uraniums-bull-run-pauses-but-why-bigger-gains-lie-ahead-5083
Recording date: 12th June 2024
John Ciampaglia, CEO of Sprott Asset Management, provided an update on the outlook for uranium, copper, gold, and silver. He noted that lithium has struggled this year as new supply comes online and EV sales slow in some markets. Many countries are implementing tariffs on low-cost Chinese EVs to protect their domestic industries.
For silver, Ciampaglia sees strong fundamentals despite the metal still trading well below its 2010 highs near $50/oz. Solar demand is a key driver as solar panels incorporate increasing amounts of silver. Indian investors are also buying silver as a cheaper alternative to gold. However, silver lacks the central bank buying that provides price support for gold. Pure-play silver companies are becoming scarce.
Turning to gold, Ciampaglia expressed relief to finally see gold break to new all-time highs in US dollar terms, though it had already done so in most other currencies. While Western ETF outflows have been confounding, strong buying continues from central banks, especially in China and other Eastern countries looking to diversify reserves away from US Treasuries. China has been much more transparent about its monthly gold purchases recently. Retail demand in China has also picked up as real estate and equities struggle and cryptos are restricted.
On uranium, Ciampaglia believes the market is consolidating its large gains from 2022 when prices ran from the $50s to over $100/lb. The recent $83-93 trading range is seen as a healthy breather. He expects a continued stair-step higher price path, not a spike and collapse. The market is awaiting an update from Kazatomprom on their 2025 production plans, with the Kazakhs appearing to shift to a "value over volume" strategy of no longer flooding the market. This could support higher prices for longer, as needed for the industry to boost production.
The US has ambitions to triple nuclear capacity, but this would require a massive amount of new uranium supply. While idled capacity is restarting, the market remains in structural deficit with demand of 180M lbs well outpacing the 150M lbs of annual supply. Greenfield development is key.
Governments are funding downstream infrastructure like enrichment to lessen dependance on Russia, but upstream miners need more help with permitting and financing. Companies seem more focused on M&A than building new mines, suggesting incentive prices are still not quite high enough yet - which Ciampaglia sees as bullish. He feels we are in a summer lull with the market awaiting new catalysts.
Overall, investors are showing renewed interest in the commodity space, especially energy transition metals like uranium and copper, after a long period of being underweight the sector. However, precious metals are lagging that institutional flow as gold is not yet seen as an urgent portfolio holding for Western investors. Ciampaglia remains very constructive on commodities and sees the potential for much more upside once broader investor participation returns.
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Learn more: https://cruxinvestor.com/categories/commodities/uranium
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