Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Uranium Stocks
Uranium Price
Our RSS Feed

Uranium Updates

Enter your email address:

Follow Us on Twitter
« Uranium Auctions: The Pace Quickens! | Main | Mega Uranium eyes more Australian acquisitions »
Saturday
Jun092007

Uranium Stocks: Hit by a sell off!

A few days back one of our readers sent us this missive message regarding the sell off of uranium stocks at a time when the underlying asset has almost doubled in price this year. Since then most of these stocks have continued to go down.

I looked on the tsx.com this morning and did some quick math.
Even though this is all CAD and rough %
the theme is the same - Down - Down roughly 7% to 42%
Most hit their high in April - May
even though Uranium is up @ 13% since then
looks like sell in May and go away has been proven again

What great news do you have to change this over sold trend around?

Even if the Uranium price gets to 150.00 by the end of the year
that is only @ 8% higher than today

Looking forward to your comments.

I just picked a few of the larger Uranium Companies.

Powertech Uranium Corp. (PWE) 4.50 High
Current 2.90 down 35% from high

Denison Mines Corp. (DML) 16.57 High
Current 13.90 down 16% from high

UraMin Inc. (UMN) 7.39 High
Current 6.86 down 7% from high

Strathmore Minerals Corp. (STM) 5.50 High
Current 4.59 down 16% from high

Mega Uranium Ltd. (MGA) 8.98 High
Current 6.19 down 31% from high

Laramide Resources Ltd. (LAM) 16.70 High
Current 10.72 down 35% from high

Ur-Energy Inc. (URE) 5.45 High
Current 4.33 down 20% from high

Forsys Metals Corp. (FSY) 10.20 High
Current 5.91 down 42% from high

SXR Uranium One Inc. (SXR) 18.65 High
Current 15.54 down 16% from high

Aurora Energy Resources Inc. (AXU) 20.09 High
Current 18.30 down 8% from high


The reader raises the question about what good news we might have to reverse this over sold trend. The truth is that we have no secret, inside or magical information that we can bring to this party and reverse the current trend. We hear a lot about the negative sentiment that is currently rampant in the gold market with all but a few dumping their gold stocks. Has this negativity transcended market sectors and landed in our little corner of the market? It certainly looks as though the summer selling is being applied across the board regardless of Net Asset Values, future potential or the underlying of value of a companies asset. This is a tough time to be holding uranium stocks especially if you have recently entered this sector only to see your stocks get cheaper by the day. Those with stocks showing a profit may want to lock those profits in and those showing a loss may want to cut their losses, both situations are understandable.

Crystall Balls 08jun07

In any Bull Market there is always a wall of worry to climb and this is no different in that respect and we are faced with it right now. However we tend to think of this way for better or for worse. Firstly the people who have sold now have to decide when to re-enter this market and re-enter they will as the vast majority of them have made a profit out of their recent skirmishes. Secondly, with the price of uranium at these levels the companies who have discovered uranium are now looking at fabulous profits bearing in mind that it costs some of them around $20/lb to $30/lb to recover it. As the uncovering of this sector continues more new players will be attracted to it bringing new money to a still small investment arena. Throw in some merger activity and a few hostile takeovers to attract the spot light and we will be back in business. Not to mention a disruption of the oil supplies either by terrorist activity or by those that have it using it as a weapon for economic or political leverage.

Finally our intention for what it is worth is sit through this period and sell none of our uranium stocks even if these clouds persist for most of the summer as sooner or later the value of these stocks will be recognised and this sector will move very quickly indeed.

If you have an opinion on this issue then please send it in, as we will print it even if it is directly opposite to what we think, your insights will add balance to the debate and be of value to all of our readers. Incidentally our readership is growing every day along with the number of subscribers to our newsletter. If you have not subscribed to our letter please do so, it is free of charge and you will be alerted whenever we post a new article on our web site.

Be brave today.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (19)

Hello fellow investors. Like you I have lost partial paper profits from February to June '07 on the balance of issues I hold. I have exercised discipline however and sold incrementally into every rally and keep a cash reserve. I find that as of today my portfolio balance has been knocked back to January '07 with all considered. Cash on cash, from Jan '06 to today, the account is still in the black. So, ask yourself, " Are you down from the peak, or up from the bottom?"

It is my opinion, based on recent trading activity that the fundamental values of uranium juniors are being manipulated by institutional investors as is evidenced in the hundreds of 100 and 200 share cross trades I observe every day in every issue by individual houses. This is what is called
" walking a stock down", or "capping a stock", an old game of brokerages. These institutions, including those in the nuclear industry have been caught with thier pants down as they sat in stunned disbelief watching while failing to act as uranium prices accelerated over the past two years.

It is my contention that these investment houses are using tried and proven techniques to 'turn the clock back', which they can do easily by capping share prices, flooding the markets with shorts, warrants and management incentives. Individual company managers are also playing the game. For those who think that company managers hold the best intrests of the shareholders to heart should cash in today and run, you really don't belong here.

Many company managers and directors have also been caught by surprise and are greedily desperate to gain control over more shares and in particular low priced options. All these people need to bring share prices down to do the dirty work effectivly. This buisness is mostly sleaze and very little heart.

Why the Securities and Exchange commissions of the US of A and Canada put up with this blatant manipulation is another story. But these people have decided to own the uranium industry and will use any means to take it over. The concept of Blitzkrieg should contextualize this for many investors unaccustomed to the black side of stock exchange dealers , managers of individual companies and brokerage houses who benefit while turning a blind eye to a bending of rules and skirting of regulation.

I do believe though that a public outcry cannot be diregarded forever and it is in your best intrest to complain in every way to your securities and exchange commissions. Complain to your attorneys general and local politicians. Shine some light on these cockroaches in the brokerage houses; they will back off when any political heat that may curtail the future raids they have planned is hinted by the regulatory insiders and leaked through press contacts.

This process can take months in the private sector, sometimes more as if government intrests are involved as is the case in gold. However, fundamentals always reassert themselves. Uranium fundamentals cannot be massaged until supply and production develop to bring prices down. There simply isn't enough production forecast to meet demand; projected to remain unfilled by 2012 to 2015. The production forecasts are already proving to be 'optimistic' at best.

The battle we face with the institutional manipulators is not over. I believe the 200 day moving averages will be breached soon and this false signal will shock the small investor to panic sell into what seems to be a black hole of continual losses. The final capitulation selling will be brutal. But those who know what is going on behind the scenes know that this is nothing more than an institutional head fake and that the best buying opportunity of the past two to three years is ahead.

Keep your eyes open and learn

June 10, 2007 | Unregistered Commenterwayne

Regarding the lower prices of uranium stocks (as we call as short term correction), my opinion is buy companies which are nearing production. This will reduce the average costing of the stocks already bought earlier. In the uranium sector, the fundamentals not yet changed. As an investor active in this sector more than a year, I can say this is a buying opportunity

June 10, 2007 | Unregistered CommenterShiras

I think a lot of stocks with enormous potential are simply being overlooked. What can you do? Understand why you, yourself, are in a sector. Understand the general, overall economy. Markets move fast. When these stocks become fashionable, you'll see crowds trying to pour into them. The market is small and demand will be high. Prices will push up. Diversify within the resources sector and hold on.

June 10, 2007 | Unregistered CommenterGMiki

Maybe we are overly optimistic with our view of this market but this down turn in uranium stocks has not dampened our enthusiasm, in fact we are looking for bargain buys in this sector.

June 10, 2007 | Unregistered CommenterUranium Stocks

Wayne,
Could you give a specific example (using a uranium company) for those of us who don't know how to look for the actions you are talking about. HOw do we detect this and what are we looking for?
Regards,
Koss

June 10, 2007 | Unregistered Commenterkoss

Koss, why not start following the action in STOCKHOUSE BULLBOARDS. There is a lot of good information there and a lot of very savvy guys posting smart info on juniors. It's a very active forum for uranium speculators. Many of these guys have been around the block and follow the insiders with a microscope and know where to find the dungpiles. Some of them I suspect are insiders themselves. Beware of pumpers and spammers as always but the info is generally good.

June 10, 2007 | Unregistered Commenterwayne

Your site is great, and you have excellent insight into the market for uranium and precious metals. Now a suggestion to help those of us regularly peruse your site: please add a date to each of the articles you post in the "Related Articles" section of your site.

Many thanks, Don Babinchak

June 10, 2007 | Unregistered CommenterDon Babinchak

In the 2006 selloff, using Paladin (PDN.TO)as an example, it reached a high of 4.45 of 4/21/06 and hit a low of 2.92 on 6/13/06 for a decline of 34%. This year it reached a high of 9.90 on 4/09/07 and a low so far of 7.57 on 5/24/07 for a loss of 24%. Last year a lot of stocks reached their lows on June 13, which would be this week. Given that I'm seeing a lot of fear expressed in recent posts on this forum and others, I would guess that we're nearing the bottom. There could be more a little more to go, but Paladin's low this year is 169% higher than its low at this point last year. Nothing has changed in the supply/demand fundamentals during this decline. In fact, the price of uranium has risen. This won't last. These stocks are headed higher soon.

June 10, 2007 | Unregistered CommenterJason

Hi Don,

All of our articles have the date printed on them at the top, just under the title.

June 10, 2007 | Unregistered CommenterUranium Stocks

Wayne... The recent pullback in the uraniums should be viewed as a gift and taken advantage of as much as possible....Mega, Paladin, Laramide are all going to go 10 for 1 IMO within two years....think long term, folks, long term...remember the iternet boom of the late 90's??? the uranium boom of the 2000's will easily eclipse this by a factor of 10 IMO....very few people are aware of the explosive nature of the great uranium stocks, but they will in the final up leg and THAT is when you should be selling, not now...
BTW..great website with some good stock picks...I would add a few others, like URZ, URRE, and UEXCF, but it hard to include them all.....
WAP

June 10, 2007 | Unregistered Commenterwilliam

I really enjoyed David Galland's comment in Casey Research's June 8th edition of "The Room":

"It all comes down to ignoring the chatter and focusing on the big picture. The analogy in weather would be that we know that there will be monster hurricanes in the Gulf. Maybe this year, maybe not. But definitely at some point in the future. With that view, the odds of us being right are high indeed. Which is simply saying that there is only one way to be absolutely right when forecasting outcomes for complex systems: stick with an outcome that history has shown is all but inevitable, over some period of time."

I think his comment was directed primarily towards precious metals, but I think the overall principle applies to Uranium stocks. We understand the strong fundamentals surrounding Uranium. My strategy is to buy stocks at bargain prices, and then not worry about them. If I do, then it means that either I'm not confident in the Uranium bull market, or I'm being influenced by greed.

If you want to be happy, my advice is to buy great stocks at low prices (now's a great time, with U having almost doubled against stock prices!) and then hang on for the ride. (It also helps if you're not margined.) If you let fear or greed take over, you may find yourself short on Uranium stocks while missing an uptrend far greater than anything we've seen so far.

June 10, 2007 | Unregistered CommenterDaniel R

What about Uranerz Energy Corp [URZ]? How do I find out about it? Also I noticed sometimes you post a uranium portfolio? Where is the latest one updated?

Thank you.

June 11, 2007 | Unregistered CommenterLaurel

Laurel.

The latest portfolio update is at: http://www.uranium-stocks.net/uranium-stocks-portfolio-update-29-may-2007/

You could also visit URZ site: http://www.uranerz.com/s/Home.asp

Also try Kitcometals, NorthernMiner, Uranium Miner, other metals forums, Google Finance etc.

June 11, 2007 | Unregistered CommenterUranium Stocks

I'd like to see more bearish opinions on Uranium. Just to see both sides of the coin.

Steve

June 18, 2007 | Unregistered CommenterSteve

Sir,

That uranium prices will skyrocket in the near term is obvious at the supply/demand glance; However, with abundant ressources and a new rush to mine, supply will increase exponentially. Where can one find estimates of global supply growth? I would like to hear from anyone who has a good informed opinion.

June 29, 2007 | Unregistered CommenterMiguel Pereira

I appreciate Wayne's comments even more now, almost a month later from when he posted. I can see what he is talking about, the manipulation of prices by constant selling of 100 and 200 share lots. When you look at available buy/sell lists for each stock and see multiple 100 lots for sale at every penny increment, you get the full picture of what Wayne is saying. The ordinary investor can't do that because the cost of selling small 100 share lots still costs a minimum of 9.95 per trade, but I perceive that brokerages and investment houses and their big customers have set fees and unlimited trading is easy for them. We are lucky to have intelligent, knowledgeable people like Wayne to share their knowledge. Hopefully, most readers can grasp what he is saying. Personally, I follow a newsletter writer who has worked on Wall Street and he "suggests" where prices are headed. It is rare that he is wrong and I have learned to heed his advice. The cost of the subscription is paltry in comparison with my profits, and even more importantly, with the money I have saved by being prepared for these down-turns. I also do my own technical analysis in conjunction with the newsletter advice so I can learn for myself. Making profits is exciting, but it requires study and a serious and thoughtful attitude. Thanks, Wayne, some things can't be learned in the classroom.
Bob

July 4, 2007 | Unregistered Commenterstoneygulch

To Stoneygulch, we would all like to know which newsletter writer he follows................

July 6, 2007 | Unregistered CommenterDon Babinchak

Don, We really can't promote or comment on other letter writers for the following reasons:

Generally we do not publish other newsletter writer’s data as it can land us in trouble.
If it is a 'paid for' letter then we have problems with confidentiality as well as copyright issues
So it’s something that we do not do.

There is also another problem in that we dont know if you or anyone else is quoting the writer correctly. There are 5000/6000 letters out there and we are unable to validate what you might say about them. Assuming that your words were of a positive nature, the next guy may send us a negative comment about the same writer and so the our site gets involved in things of an unsavoury type that we wish to have no part of.

Sorry but we cant help you this time.

July 9, 2007 | Unregistered CommenterUranium Stocks

Uranium Stocks,

I fully understand your position and fully concur, but asking an individual who has commented on your site the name of a particular writer doesn't seem to be breach of your ethics.

However, sorry I asked, Don

July 9, 2007 | Unregistered CommenterDon Babinchak

PostPost a New Comment

Enter your information below to add a new comment.
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>