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« Khan Resources: Up 44% in 6 weeks | Main | RPT Uranium Gains 4.88% in a day »
Wednesday
Apr112007

Uranium Sealed Bids Result: A staggering $113/lb!

Despite our bold prediction that uranium would rise from $95/lb to $110/lb we fell short, as the winning bid was $113/lb.

Our role play in the board room of the fictional but life like Gigantum Power corporation did help us to come up with what we thought was a bold prediction of $110/lb, which would have been a price increase of 15%. However someone very keen indeed to ensure that they were the winners piped us to it. This price increase equates to 18.9% or 57% for the year so far.

We have had to stop and consider what this means to our target of $200/lb?
Well it raises our comfort level in that we will indeed get there but it also raises the question of when? We don’t see any new hurdles in our path and the fundamentals just seem to glow ever brighter on a daily basis as more nuclear power plants are announced. There is no doubt that we are ahead of schedule at this point with each uranium price increment seemingly getting larger.

We are trying not to get overly confident at this stage but we cannot see a why uranium could not hit and surpass $200/lb this year. Our very own Gigantum Power Corporation has a bare cupboard at the moment despite their valiant efforts to score a victory at these auctions. This raises the question of just how many other utilities are in the same boat? TradeTech tells us that the auction received a strong response form producers, traders, investors and utilities. Well there’s a surprise! Can you feel the tension mounting in this pressure cooker of a market place? In these auctions there can only be one winner so all the other players have to be losers. Those utilities that have failed to add to their supply are now entering the ‘frantic’ stage, as their operation could come to a sudden halt if their fortunes do not change. And what of the entrepreneurial predators armed with cash circling around the hottest game in town and unable to get a seat at the table? How long before they lose their patients and give the order to get some uranium at all costs?

You will have noticed that when the news of the latest price rise came out the uranium stocks initially jumped and then spent the rest of day heading lower. The “Buy the rumour and sell the news” brigade did just that. However they are now sitting on the sidelines wondering when they should jump back in? It is almost certain that they will jump back in thus adding to the demand for uranium stocks and we suspect it will be sooner rather than later.

This is shaping up to be a hot summer for uranium stocks as the value of their underlying asset continues to rocket so they will look and be more under valued than ever. This presents us with a fabulous buying opportunity and we intend to grab it wholeheartedly.

We will conclude with a wonderful chart:
Uranium Chart at $113/lb

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Reader Comments (2)

Great website, I look forward to your e-mails every week. I have been riding the bull since Jan'06 hoping it continues. Do you believe were in early innings for this bull. I am getting short-term cautious with the media including NY Times, 60 minutes and Bloomberg making some noise in the space. your comments would be appreciated. Also, how many stocks do you believe would make proper diversification. thanks in advance.

April 12, 2007 | Unregistered CommenterJon

Please remember that we are not financial advisors and please consult with your own financial advisor before making any trades or investment decisions.

As for diversification, this depends of how much capital you have to invest. If you only have $100 then you cant really afford to buy more than 1 or 2 stocks. However if you have more, then you can buy a wider range of stocks.

I would say a minimum of ten stocks, but more would be preferable, but please remember that we are not financial advisors.

April 14, 2007 | Unregistered CommenterUranium Stocks

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