Goldman Sachs and Macquarie, along with several hedge funds, are gearing up to capitalize on the upward trajectory of the uranium sector as prices for the nuclear fuel component experience a significant surge, as reported by Reuters on Tuesday.
Goldman Sachs and Macquarie are reportedly expanding their involvement in both physical uranium and options trading, a move that sets them apart from many other investment banks that are currently steering clear of such activities. This information comes from five industry sources and hedge funds familiar with the transactions. Utilities, seeking new supplies amid a shortage-driven spike in prices to 16-year highs, are contributing to this growing trend.
Hedge funds are also increasing their engagement with equities and uranium, signaling a renewed interest from financial institutions after a decade of stagnation post the Fukushima nuclear accident. According to Bram Vanderelst from Curzon Uranium, hedge funds and commodity investors are returning to the uranium sector, driven by positive nuclear developments and growing momentum. Physical funds remain the preferred avenue for investors looking to access uranium prices.
Investors are drawn to the metal as prices skyrocketed to $102 per pound within a year, primarily due to production cuts by major producers Kazatomprom and Cameco. The challenge faced by these producers in increasing production to meet rising demand further contributes to the metal’s appeal.
The nuclear energy revival, aimed at reducing carbon emissions, also plays a role in boosting uranium prices. This is supported by a declaration from the G7 countries in December 2023, aiming to triple nuclear energy output from 2020 to 2050.
Goldman Sachs, in particular, has reportedly been actively writing options on uranium for hedge funds, introducing a new derivative to its offerings. The bank has steadily increased its visibility and book in this sector, maintaining secrecy around transaction details. While Goldman primarily collaborates with hedge funds and financial clients, Macquarie is said to be focused on expanding its trading and marketing efforts for miners, according to a source familiar with both banks. Specific details remain undisclosed due to the confidential nature of the data.
