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« Gold Drivers Competition: 5th Place | Main | FRONTEER: from Hold to Buy »

URANIUM: Never mind the width feel the thinness!

The thinness of the uranium market has been clearly demonstrated by the volatility of the uranium stock prices recently.

If we take Santoy Resources as example, we posted when the stock was $0.81 it quickly rocketed to over a $1.00 and back to around $0.87. Another example of this volatility is Crosshair, which went from $1.86 to $4.00 and back to $3.00 in what seems like no time at all.

This tells us that with a small handful of dollars it is possible to move a uranium stock in any direction you wish. By small we mean a million dollars or so, which could easily represent a days trading for some of the stocks in this sector.

This brings us to ponder what will happen when the less sleepy fund managers start to feel a little cavalier and leave the safe heaven of giant industrials to steel a march on their rivals or maybe they just want something different to chat about! Yes, the uranium sector, they’ll muse, their must plenty of large caps there that I could invest a few billion dollars in to. Before we know it they will have a seat on the board of Santoy, which after all has a market cap of approximately $70.0 million. Whoops our pension fund now owns the company. How do financial advisors explain to their fund managers that by putting a billon dollar in to this sector you could well become the front-runners for uranium investments? Funds don’t like to be out there at the front it is not their scene. They are happier when someone else has taken the all the risks and made the running and they can slowly latch on to the idea towards the end when they think it is risk free. By then we could be long gone. Have you ever wondered why final salary pension schemes never seem to work out, why investment funds managed by the big names just don’t deliver when you hit sixty-five? Well, unfortunately we will be reading a lot of headlines about failing funds in the near future so take real good care of your financial health because you are the only person who can.

Back to the present, in our opinion we are at the start of the second phase of this Bull Market. A time when some funds will put a toe in the water and private investors will ramp up. This action we believe will drive uranium to the $150.0 level, after that when the real estate brigade spot the opportunity uranium will go up like a flag pole at hit $200.0

So, spend a few quid on your favourite uranium stocks as and when you can. Follow your favourite newsletter writer and always get a reality check from your financial advisor.

May good fortune be with you.

11 January 2007


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