Goldman, hedge funds eye uranium profits

Goldman Sachs and Macquarie, two investment banks, and some hedge funds are getting ready to profit from a rising uranium sector as the nuclear fuel component’s prices soar, Reuters reported on Tuesday.

Goldman and Macquarie are increasing physical uranium and options trading, while many other investment banks avoid it, according to five sources from the industry and the hedge funds who know the deals. Utilities are looking for new supplies as prices reach 16-year highs due to shortages.

Some hedge funds are also increasing their participation in equities and uranium, showing that the metal is attracting more financial institutions after ten years of stagnation since the Fukushima nuclear accident.

Bram Vanderelst from Curzon Uranium, a trading firm, said that hedge funds and other commodity investors returned to the uranium sector because of the positive nuclear news and momentum. They mostly used physical funds, the simplest way to access uranium prices.

Investors are interested in the metal as its prices soared to $102 a pound in a year due to production cuts by top producers Kazatomprom and Cameco. Their reopened mines had trouble increasing production to meet the growing demand.

The metal also benefits from the nuclear energy revival, which aims to reduce carbon emissions, supported by a declaration from the G7 countries in December 2023 that aimed to increase nuclear energy output by three times from 2020 to 2050

Goldman Sachs, which started writing options on uranium for hedge funds as a new derivative, increased their visibility and book steadily without disclosing the secret transaction details, according to a source from the bank.

Goldman mostly worked with hedge funds and other financial clients, while Macquarie focused on increasing trading and marketing for miners, another source who worked with both banks said, but did not give more details because the data was secret.