Up 70% in September, why the Paladin Energy (ASX:PDN) share price keeps going up

The uranium market is booming, taking the Paladin Energy share price along with it.

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ASX uranium shares represented by yellow barrels of uranium

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The Paladin Energy Ltd (ASX: PDN) share price is booming in September, up 72% to an 8-year high of 86 cents.

The broad-based buying across the uranium sector has been underpinned by an uptick in uranium spot prices, running to a 6-year high of ~US$35/lb last week.

What’s driving uranium prices?

The uranium market can be difficult to get exposure to, with a limited number of listed uranium players to choose from and no official spot market for physical uranium.

The uranium landscape has evolved rapidly in this year, after the Sprott Physical Uranium Trust began trading on Canada’s Toronto exchange on 19 July.

The Sprott has been aggressively buying physical uranium off the spot market, driving demand and increased transparency in the sector.

Sprott’s Twitter highlighted the fund adding 3.45 million pounds of physical uranium in September alone. The aggressive buying of the spot market coincides with the recent strength behind the Paladin Energy share price.

According to Kitco, analysts believe Sprott is a “critical factor behind the recent push in the energy metal’s price. The Trust gives investors direct access to physical metal.”

Sprott CEO commentary

In an interview with Kitco News, Sprott CEO Peter Grosskopf said he saw the Uranium Trust as a “game-changer for the Uranium market” and expects “to see growing investment demand for the physical metal as industrial demand picks up”.

“We think uranium is entering a new bull market as the world looks for a mix of clean energy in the new green energy revolution,” he said. 

This could place the Paladin Energy share price in the spotlight, as the largest ASX-listed uranium player.

“If you want a low carbon grid, you can achieve it by spending an enormous amount of money and having a highly inefficient grid, which is inherently unstable, or you include nuclear as a core part of the power base. We think uranium has been underplayed for the last 15 years,” said Grosskopf.

Paladin Energy share price snapshot

The broader uranium sector from large cap players like Paladin Energy to small cap explorers like Deep Yellow Limited (ASX: DYL), Peninsula Energy Ltd (ASX: PEN) and Vimy Resources Ltd (ASX: VMY) have all emerged as some of the best performing ASX shares in the past few weeks.

The Paladin Energy share price has come to life this year after trading mostly sideways between 2015 and 2019.

Paladin Energy shares are up 230% year-to-date to 86 cents, but well off its 2011 highs of almost $5.

Should you invest $1,000 in Paladin Energy right now?

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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