Is Europe Changing Its Tune on Nuclear Power?

Winter is coming for Europe, and energy prices are soaring as international sanctions on Russia curb the supply of natural gas, on which many European Union (EU) countries have increasingly become dependent. Continental gas spot prices and futures have already hit record highs, and this week, the massive Russian gas provider Gazprom warned that prices could surge a further 60% by the chilly winter months.

Natural Gas Prices in Europe Have Surged to Record Highs

As I’ve pointed out before, this is a short-term crisis exasperated by Europe’s long-term climate agenda.

Similar to investing, diversity is key, and I believe nuclear should be part of the mix along with renewables and traditional sources of electricity.

Fortunately, some European governments are coming around to the same realization. Germany had plans to close its three remaining nuclear reactors by the end of this year, but due to the anticipated winter energy crisis, the country now allegedly will keep them operating. France, where nuclear already provides 70% of electricity generation, will build six more reactors and extend the lifetime of some existing plants. The United Kingdom wishes to boost its nuclear power from 16% of all electricity generation to 25% by 2050.

European Wind and Solar Replacing Nuclear Capacity, Not Fossil Fuels

This would mark a welcome reversal of current trends. Globally, nuclear energy as a share of total global electricity production has been steadily declining for close to 30 years, from a high of 17.44% in 1996 to under 10% today.

Take a look at the chart below, courtesy of Ember, a London-based energy think tank. New wind and solar capacity in Europe has expanded rapidly, and is forecast to continue doing so, to the detriment of nuclear power. According to Ember, “over 75% of the growth in wind and solar power output in 2022 will replace nuclear output, not fossil fuels,” which is clearly counterproductive to the EU’s mission of achieving net zero carbon emissions.

Structural Decline of European Nuclear Power as Wind and Solar Projects Advance

Among the Safest Sources of Energy

To be clear, nuclear power emits zero greenhouse gases. In fact, according to numerous studies, nuclear ranks somewhere in between wind and solar in terms of its safety to not just workers but also surrounding communities. Even when you factor in the tragic disasters at Chernobyl in 1986 and Fukushima in 2011, nuclear causes an estimated 0.03 deaths per terawatt hour (TWh). That’s 94 times fewer deaths than what natural gas is estimated to cause due to accidents and emissions and over 1,000 times fewer deaths than what is believed to be caused by lignite, or “brown coal,” the lowest grade of coal.

Nuclear Among the Safest Sources of Energy

This is where nuclear power is very much like commercial flying. Public opinion of both industries is often influenced by high-profile, though exceedingly rare, accidents, even though flying is statistically the safest form of long-distance travel.

That’s not to say nuclear is risk-free, of course. There’s mounting fear right now that Europe’s largest reactor, in Zaporizhzhia, Ukraine, could be damaged in the ongoing conflict between the country and Russia, which would result in a “technological disaster,” warns Russia’s Security Council secretary.

Hotter-than-average temperatures this summer have also been a challenge for some European power plants. This week in France, electricity output had to be reduced at a number of facilities because the temperatures of the Rhône and Garonne rivers are too high to sufficiently cool the reactors.

A Crisis Full of Opportunities

I don’t speak Japanese, but I’ve read before that the word crisis is written by combining the symbols for danger and opportunity.

This is certainly a precarious situation for Europe. Germany, its largest economy and the most dependent on Russian gas, faces a potential recession if supply continues to drop. An economic pullback of this magnitude could spread across the continent and even hop the Atlantic to North America.

At the same time, this could be a major opportunity for both sides of the ocean. The U.S. is now exporting more gas to Western Europe than to Russia, with a single shipment reportedly managing to net as much as $200 million in profit.

As for Europe, I believe this crisis could be an opportunity to rethink and retool its energy strategy. A net zero carbon goal is admirable, but real people and families are feeling the pinch of higher energy costs, which, sadly, may have further to climb before this year is out.

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25 Surprising Facts about Gold - Slideshow

Index Summary

  • The major market indices finished down this week. The Dow Jones Industrial Average lost 0.16%. The S&P 500 Stock Index fell 1.21%, while the Nasdaq Composite fell 2.62%. The Russell 2000 small capitalization index lost 2.94% this week.
  • The Hang Seng Composite lost 2.00% this week; while Taiwan was up 0.78% and the KOSPI fell 1.39%.
  • The 10-year Treasury bond yield rose 13 basis points to 2.973%.

Airlines and Shipping


  • The best performing airline stock for the week was Turkish Air, up 9.8%. Brazilian carrier Azul released its second quarter results with operating income of BRL136 million, beating consensus estimates of BRL51 million, leading to a 3.5% operating margin. Record revenue came in at BRL3.9 billion (up 131% year-over-year, beating consensus by 2%) on the back of much higher capacity and a remarkable 53% increase in yield, reflecting higher fuel cost per liter (up 81% year-over-year).
Azul's Share Price Is Trending Positively
  • Shipping giants Maersk and Hapag-Lloyd AG suggest the compliance to new environmental regulations through “slow steaming” (i.e., lower operating speed) could reduce effective capacity by 5-15% in 2023-2024, to offset new vessel delivery during the same two-year period.
  • As seen throughout the summer, there has been a big share shift from domestic to international travel, with international sales nearly fully recovered, down only 3.8% versus 2019 (compared to domestic net sales down 14.3%). This week, international volumes improved to -11.3% versus 2019 (and versus -13.3% last week) while pricing stepped up 8.4% versus 2019 (versus up 6.8% last week). 


  • The worst performing airline stock for the week was Mesa Air, down 13.9%. Airfares were down sharply in July, an indication that inflation has taken its toll on flight demand. According to CPI data released Wednesday by the Bureau of Labor Statistics, July airfares dropped 9.6% from June. The seasonally adjusted month-over-month drop, which accounts for the fact that airline tickets are usually slightly cheaper in July than June, was 7.8%. Still, the average airfare in July was 27.7% above the 2021 level, reflecting a massive surge in flight demand as Covid-19 restrictions disappeared.
  • Spot freight rates, including the Shanghai Container Freight Index (SCFI), have been on a decline for nine consecutive weeks, altogether down 15% including last Friday’s 5% drop. The soft pricing trend has captured investor attention and reignited interest in shorting this space, in light of sluggish Transpacific peak-season demand so far.
  • Among the major U.S. airlines, American Airlines and Southwest Airlines have had the highest percentage of cancellations occurring over the past week (for the second consecutive week), at 5% and 3% of captured flights, respectively (versus 4% the previous week for both airlines).


  • JPMorgan retains its conviction that Qantas Airways will outperform based on continued strong recovery in domestic air travel and a gradual return to international travel. The bank also points to the airlines’ ability to recoup higher operating costs through a mix of higher ticket prices and capacity adjustments, along with de-leveraging of the company’s balance sheet resulting in net debt at A$4 billion as factors that look promising.
  • A Regional Airline Association (RAA) report cites that new pilot certificates averaged 6,335 per year for the decade prior to 2020, with new certificates issued falling to 4,000 in 2020 and under 5,000 in 2021. The industry is on track to produce nearly 10,000 newly certified pilots in 2022, but still not sufficiently making up for the gap lost during the pandemic.
  • Besides recent comments made by global transport and logistics company Kuehne + Nagel (K&N), A.P. Moeller Maersk CFO Patrick Jany recently indicated spot freight rates could eventually stabilize at a higher level above pre-COVID-19, and higher than the cost levels (in contrast to views for a return to loss-making for liners).


  • Pilots at Breeze Airways, the startup led by David Neeleman, have voted for union representation. Breeze, which launched service in May 2021, plans to file a legal challenge to the election. It is unusual for an airline at this early stage to be unionized. The biggest negative impact of unionization is the loss of nimbleness, which is particularly important for start-ups still trying to establish a niche and foothold.
  • According to Delta Airlines, as labor contracts delayed by the pandemic are finally amended, there will be significant inflation felt across the industry, requiring offsets from operating improvements and high fares.
  • About 16,000 workers at British Airways are to receive a pay raise worth as much as 13%, reversing cuts imposed during the Covid pandemic. Union leaders said the deal arose after the threat of strike action earlier this summer by check-in staff, which resulted in a pay agreement that is being extended across the workforce. It is understood that the deal will apply to about 16,000 non-management workers across the company.


Energy and Natural Resources


  • The best performing commodity for the week was cotton, up 6.83%, as severe droughts and heat has scorched the crop in the U.S. With America being the largest exporter of cotton, there could be further gains in the price, however analysts are seeing cooling demand for new clothing in the face of a recession. U.S. natural gas consumption was up 9% (up 6.6 billion cubic feet per day (Bfc/day) year-over-year this past week on the back of higher power demand. On a week-over-week basis, total demand was 1.8 Bcf/day higher, also driven by an increase in power demand.
  • Asian liquefied natural gas (LNG) prices extended a rally to the highest level in five months as a global supply crunch shows no sign of easing. The Asian benchmark spot LNG price jumped above $52 per million British thermal units on Monday, the highest level since early March when Russia’s invasion of Ukraine upended energy markets. 
  • Base metals prices have markedly improved since the early July lows, an average of 20%, with zinc leading the way, up 26% on tightening supply and refining challenges in Europe. Copper is up 15% as inflation and recession fears wane and the strong fundamental outlook for the metals complex regains investor focus. There has been improving Chinese data, with PMI entering expansionary territory after the government approved a massive $223 billion stimulus package.


  • The worst performing commodity for the week was lumber, down 11.47%, potentially reflective of the sales of existing homes in July on Thursday, as the selloff began and continued through Friday. Potash NOLA barge prices are lower this week to $685 per ton, reflecting import tons prices ($50 per ton) lower versus the recently concluded summer fill program price of $735 per ton. In Brazil, potash prices are lower this week, averaging $900 per ton, and down from $1,000 per ton a month ago. Domestic prices in Brazil are closer to $820 per ton. In China, potash inventories at the port are holding around 1.85 million tons compared to 2 million tons one year ago.
  • Oil extended losses at the start of the week as traders weighed concerns about Chinese demand and the prospect for more Iranian supply. West Texas Intermediate dropped near $88 a barrel, falling as much as 4.3%, with markets selling off as China’s surprise cut in key interest rates boosts support for an economy hit by virus lockdowns and property woes. The nation’s apparent oil
    demand last month was about 10% lower year-on-year.
  • China’s steel output is likely to remain low for the rest of 2022, even as mills ramp up production in August following a drop in July, because of weak demand in the country’s property sector, market sources said. China’s pig iron output dropped 3.6% year-on-year to 70.49 million tons in July, while crude steel output fell 6.4% year-on-year to 81.43 million tons, data from the National Bureau of Statistics showed. The volumes declined for the second straight month amid sluggish demand and poor steel profit margins.


  • According to ISI, few of the drivers of the first-half rally in energy have dissipated and the group argues the outlook for crude for the remainder of the year is particularly positive from here. Geopolitical risk has certainly not abated as Europe is entering a season of extreme energy insecurity and the challenges of the supply side remain. OPEC+ raising the quota was a nice idea but spare capacity is fixed and dwindling, Russia sanctions across the EU will take some bite in the first half of next year, and it’s hard to fathom a lower China demand quote for 2023 versus the extended lockdowns of 2022.
  • Spanish energy and environment minister Teresa Ribera said that a new gas pipeline to France could be ready within nine months. Her comments follow discussions earlier in the week between Germany, France, Spain, and Portugal over a new pipeline linking the Iberian Peninsula to Germany. Spain has significant spare LNG regasification capacity but limited pipeline capacity to export gas to France currently.
  • The EIA forecasts average U.S. LNG exports of 10.0 billion cubic feet per day (Bcf/day) in the third quarter of 2022, 11.2 Bcf/day for 2022 (up 14% year-over-year), and 12.7 Bcf/day in 2023 (up 13% year-over-year). Increased exports are driven by new export capacity and anticipated resumption of service on Freeport LNG. In the first half of this year, the U.S. became the largest LNG exporter in the world.
U.S. LNG Exports Continue To Grow


  • Leading indicators signal moderated U.S. long steel demand growth. Non-residential construction represents the largest U.S. consumer of steel, where “project starts” drive construction spending and steel production/demand. On a national basis, U.S. non-residential building construction starts were down 5% year-over-year in June after 14 consecutive months of growth, while U.S. infrastructure construction starts were down 30% year-over-year.
  • According to JPMorgan, for refining, while hurricane season is off to a slow start, the NOAA still expects an above average activity level this season, which could impact utilizations if a major storm makes landfall along the Gulf Coast. Of course, weather is unpredictable by nature and could ultimately be a non-factor this year, but the bank does think the potential for hurricanes could pull down the risk-weighted third quarter utilization expectation relative to guided levels.
  • Copper has rallied with macro risk-on sentiment, but disruptions are also tightening supply. During second quarter results season, an analysis of 16 companies covering 39% of global mined copper shows a 2.4% cut to fiscal year 2022 guidance. If one dives further into the numbers, every company except Freeport implies stronger output in the second half of the year, suggesting downgrades could be more of a mark-to-market. In fact, collectively, second quarter output is expected to be a large 16% or 625,000 tons higher than the first half of the year.  


Blockchain and Digital Currencies


  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Chilz CHZ, rising 21.88%.
  • said it received approval from the U.K.’s Financial Conduct Authority to be registered as a crypto-asset service provided in the country, a key step to expanding operations there. The CEO of Kris Marszalek said that “the U.K. has become a strategic, important market for the firm and one of the most important markets globally for crypt0,” according to Bloomberg. 
  • Kansas City Chiefs’ quarterback Patrick Mahomes is getting behind NFT firm Dapper labs, making him one of the first major celebrities to endorse a crypto company after the industry’s dramatic crash. The company hopes Mahomes will drive fan engagement with in-product features and events, among other things, writes Bloomberg.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Convex Finance CVX, down 28.24%.
  • Coinbase shares fell as much as 7% upon announcing in a blog post that it will temporarily pause new Ethereum and ERC-20 token deposits during the Merge. Deposit and withdrawal pause is a temporary precautionary measure, according to Bloomberg.
  • Ether, which led gains amid optimism over the blockchain software update known as the Merge, was down almost 2% to $1,904. It touched $2,000 last Saturday and has surged about 75% since mid-June. The token has dropped after reaching $2,000, cooling the crypto markets.
Ethereums pullback cools cryptocurrency markets


  • The core developers working on the much-anticipated software upgrade of the Ethereum blockchain, firmed up September 15 as the likely official date of the so-called Merge. This is possibly the final forecast for the timing of the upgrade, which will make the network more energy efficient, according to a developer’s conference call Thursday, writes Bloomberg.
  • CME Group, a derivatives marketplace, plans to launch options on Ether futures tied to the dollar on September 12. These new contracts deliver one ether futures, sized at 50 ether per contract and based on the CME CF Ether-Dollar Reference Rate. The new contracts will also expand CME Group’s existing suite of crypto options contracts, which include Bitcoin options as well as micro-sized Bitcoin and Ether options, writes Bloomberg.  
  • BKCoin Capital, a digital assets hedge fund, is planning to expand into ETF trading and move transactions to traditional exchanges, where crypto-tracker products are listed. The fund’s strategy will be able to capture the differences in prices of passive ETFs that track crypto and the spot market, writes Bloomberg. 


  • The value of funds lost to cryptocurrency hacks has soared this year as decentralized-finance protocols have become an easy target for attackers, a report from blockchain analysis firm Chainalysis show. Around $1.9 billion worth of digital tokens has been stolen in hacks this year through July, up 58% from the same period of 2021, Bloomberg reports. 
  • Regulators at the Federal Reserve have a blunt warning for banks looking to take advantage of new opportunities that involve cryptocurrencies: make sure they’re legal first. As reported by Bloomberg, the central bank on Tuesday released a supervisory letter that recommended steps that lenders overseen by the Fed should take before getting involved in the digital asset industry.
  • Cryptocurrencies suffered a sharp selloff as global markets retreated on the back of growing uncertainty about the direction of monetary policy. Bitcoin tumbled as much as 8.3% reaching the lowest level since late July. Ether and smaller virtual coins saw sharper declines. Avalanche, Cardano, and Solana fell more than 10% at one point, writes Bloomberg.
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Gold Market

This week gold futures closed at $1,760, down $55.10 per ounce, or 3.03%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 6.40%. The S&P/TSX Venture Index came in off 4.49%. The U.S. Trade-Weighted Dollar soared 2.32%

Date Event Survey Actual Prior
Aug-14 Retail Sales YoY 4.9% 2.7% 3.1%
Aug-16 Germany ZEW Survey Expectaions -52.7 -55.3 -53.8
Aug-16 Germany ZEW Survey Current Situation -49.0 -47.6 -45.8
Aug-16 Housing Starts 1,527k 1,446k 1,599k
Aug-18 Eurozone CPI Core YoY 4.0% 4.0% 4.0%
Aug-18 Initial Jobless Claims 264k 250k 252k
Aug-23 New Home Sales 575k 590k
Aug-24 Durable Goods Orders 0.8% 2.0%
Aug-25 Hong Kong Exports YoY -6.4%
Aug-26 Initial Jobless Claims 252k 250k
Aug-26 GDP Annualized QoQ -0.8% -0.9%


  • The best performing precious metal for the week was gold, but still off 3.03%, with the strong surge in the U.S. dollar. Aya Gold & Silver released its first quarter production and financials this week. Production came in higher than expected at 459,000 ounces to consensus of 389,000 ounces, due to higher head grade from mine development work completed in the first quarter and additional equipment onsite. Financials also beat with adjusted earnings per share (EPS) of $0.02 versus consensus of ($0.01); operating cash flow was $0.04, above consensus of $0.01.
  • K92 Mining reported second quarter 2022 earnings with AISC of $893 per ounce, 26% below consensus of $1,207 per ounce, once again, showcasing the increasing economies of scale, which may continue in the future. Importantly, the strengthening balance sheet ($82 million cash at quarter-end, with no debt), ideally positions K92 to invest in its planned growth.
  • Centerra Gold announced the appointment of Paul Chawrun as its new COO, effective September 6. Mr. Chawrun was most recently COO of Teranga Gold, and Credit Suisse views his technical expertise as positive for advancing Centerra’s Goldfield project.


  • The worst performing precious metal for the week was silver, down 8.47%, moving with the drop in gold. Gold fell this week, following four straight weeks of gains, as investors assessed signs that China’s economy is struggling to recover ahead of minutes from the Federal Reserve later in the week. Bullion fell as much as 1.1% on Monday, after the longest run of weekly gains in almost a year, as it came under pressure from the stronger dollar. The precious metal has gained amid cooling inflation in the U.S., which backs the case for the Fed to be less aggressive in raising borrowing costs.
  • Orla Mining reported strong second quarter numbers, with record production and lower-than-expected costs. Earnings, however, were a miss. In a quarter that saw consumable costs spike for many industry peers, Orla was able to reassuringly maintain its 2022 cost and production guidance.
  • Steppe Gold reported its second quarter financials after pre-reporting production of 10,300 ounces last month. Adjusted EPS was $0.05 versus consensus of $0.07; operating cash flow was $0.06 per share versus consensus of $0.11 per share. The miss was driven by timing of sales and higher processing costs, somewhat offset by lower taxes and depreciation along with a higher realized gold price.


  • RBC anticipates incremental addition of larger-cap names back into the GDXJ ETF in part driven by 1) greater investor interest in larger, more liquid names and 2) continued industry consolidation, particularly within the Intermediate space. The appetite for acquisitions to gain significant market presence appears to be back on the menu.
  • Millennium Precious Metals published the first drill results from its Wildcat property that returned good grades, with mineralization confirming strong continuity, no overburden, and rock competency. While continuity should support a high degree of resource conversion from inferred low overburden results in a low strip ratio, which in conjunction with favorable pit angles arising from rock competency, ultimately highlights the potential for low mine operating costs.
  • Gold Road Resources acquired another 4.67% of De Grey Mining, bringing its ownership stake to 19.99%. Gold Road noted it does not intend to make a takeover bid for De Grey. It’s an interesting situation. Gold Road can continue to creep up in ownership, in limited steps over time, without making a compulsory offer. The company may, in some way, be competing with the royalty companies in that it could offer cash for just an equity share in the project’s future gold production. De Grey likely has no interest in such a deal structure as this has been one of the most significant gold discoveries in recent years.


  • Zimbabwe’s gold miners say they can only invest the $1 billion required for development over the next five years if they can retain a greater share of their foreign exchange earnings. In January 2021, Zimbabwe’s central bank announced that exporters must hand over 40% of their foreign currency earnings, which is then paid out in the local currency. Isaac Kwesu, CEO of the Chamber of Mines of Zimbabwe, said the government should ease those rules as local financial markets have limited capacity to finance such large capital requirements. 
  • Gold pared gains as the dollar advanced after latest data pointed to a still-healthy U.S. labor market, reports Bloomberg, potentially leaving the door open for the Federal Reserve to continue carrying out an aggressive path of interest rate hikes. Applications for U.S. unemployment insurance fell for the first time in three weeks. Gold’s main headwind “has been continued dollar strength only being partly offset by softer yields,” said Ole Hansen, Saxo Bank head of commodity strategy. “The claims support the strong job market view, giving the Fed room for more aggressive rate hikes.”
Gold Pares Gains With Stronger Dollar After Data Point to a Strong U.S. Economy
  • Pure Gold Mining’s gold production dropped 42% to 3,509 ounces following disruptions linked to “significant cash preservation measures” Pure Gold introduced while it negotiated financing agreements in May. The company reported second quarter revenue of $8.53 million, which is down 43.5% year-over-year.

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Author: Frank Holmes
Date Posted: August 19, 2022