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« Indian opposition to uranium mining | Main | Shell blows away wind power project! »
Friday
May022008

Uranium: Are we there yet?

Uranium chart 02 May 2008
Chart courtesy of www.u3o8.biz

This is probably the most asked question that we get in our mail bag these days, uranium stocks looked like bottoming once or twice, which turned out to be a false dawn.

A while ago we wrote about Denison Mines when the stock was trading in the $6.00 range and we thought that this was as cheap as it could get. It did manage to rally up to the $9.50 mark only to fade out and slide back to close yesterday at $6.65. Short-term traders might have made a buck or two, but it wasn’t the bottom that we had hoped for. Since then we appear to have entered a period where everyone and his dog have suddenly discovered reasons not to allow uranium mining. NIMBYISM (Not In My Back Yard) has become fashionable once again. If this wasn’t bad enough we also have a bunch of politicians to contend with who will say and do whatever it takes to make themselves popular during their watch. In New Zealand the authorities are already warning of power shortages this winter and the need for the consumer to use less. This is the land of wave; wind, geothermal and hydropower servicing less than four million people. So just where were the politicians when hard decisions had to be made? A small percentage of the population said no to another dam in the south island and the politicians buckled. As New Zealand actively promotes immigration the population is rising with a corresponding increase in the demand for energy. We are using New Zealand as an example, but its not just here that weak politicians put their pensions first and the hard decisions on the back burner, you can see examples of it near you.

The bulk of uranium trades are executed based on the long-term price of $95/lb, which has remained steady for some months now. However the spot price of around $65/lb steals the headlines and is eagerly devoured by those who live by the next instant fix, even though the trade is wafer thin. Over at NYMEX the futures market, which is still in its embryonic phase, more or less reflects the spot market and again is thinly traded. We cannot dismiss either of these two vehicles, as their influence looms large despite the long-term price holding steady.

Taking a look at the stocks they have been battered almost into submission and once again they appear to us to be as cheap as they can possibly get. But we never thought that Crosshair for example would fall much below the $1.00 level and yesterday it closed at $0.65. At the other end of the scale we have the mighty Cameco Corporation trading at $35.67 and in-between we have Uranium Resources Incorporated trading at $5.81, a 50% discount from its previous highs of $12.00.

On the anecdotal side we have had readers tell us that they sold their uranium’s and have gone into gold stocks. Unfortunately some made the move when gold was peaking at $1000/oz so they have had to take it on the chin twice. We would not deter anybody from going into gold, as we own gold stocks too, but the old adage is to buy a stock when no one else wants it. Then you know that you have entered the market at close to the bottom.

In conclusion we are not selling our uranium stocks and we will continue to look for a signs that they have truly bottomed. When this point arrives we will use some of our ‘opportunity cash’ to pick up some of these unfashionable stocks and then wait for the rest of the world to see the light, if the lights are still on that is!

Try and stay calm for now we are nearly there!

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For those of you who are interested in a wider range of energy stocks you may want to take a look at Doug Casey’s Energy Speculator by clicking this link.

Have a good one.




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Reader Comments (3)

It would appear that once again the opening of the futures market for uranium, though overtly to simply trade U and make a profit, has actually been to control/manipulate the price of a commodity, ie, have the paper market control the physical market. That has ALWAYS been called "manipulation" and has always been illegal. That is why the CFTC supposedly existed/exists. Unfortunately now, the CFTC, as the SEC, are completely controlled by TPTB, ie, those who control the (paper, read fiat, read worthless) money supply and its "printing press"...(in quotes b/c now it's mainly just electrons in the ether).

Just as the gold and silver markets have been controlled by the PaperMonstrosity Masters, so they would control ALL commodities markets to prevent the people/world as long as possible from realizing what a told fraud is fiat currency and how they have been robbed blind.

Even now, we see the spot price of silver @16.36. Try to buy it ANYwhere near that price...go wherever. And I'm not talking about "pool" accts at Kitco...that ain't the real thing. That is UNALLOCATED silver. Just try to take delivery. First you'd have to convert it to real metal...so go to their Precious Metals "store" and pick out the cheapest bullion form...rounds, bars, Eagles, Maples, whatever. What do you find?

*Silver Eagle 1 oz (Currently out of Stock) $18.96

*Silver Maple 1 oz (Currently out of Stock) $18.71

Silver Bar 1000 oz $16,760.00

Silver Bar 100 oz $1,716.00

They won't even sell you simply bullion rounds, like, eg, bulliondirect.com. You can buy eagles or maples, but you're gonna have to wait. You can buy silver bars, but look at the premium!!...MUCH higher than I've seen since the gold/silver bull began. But NOW, try to get it shipped to yourself. Kitco charges:

"The cost to ship your order to destinations in the US and Canada is a flat rate of $30 plus insurance. Insurance charges are $4 per $1000 to insure gold, platinum and palladium and $24 per $1000 to insure silver."...!!!!!...$24/$1000!!! So you've spent another $270 there to ship $10K worth of silver...ie, another 2.7%...MUCH higher than ANYwhere else I've looked or done business.

Check out bulliondirect.com...try to buy ANY silver for anything less than a 10% premium over spot. You can't. Normally, prior to the takedown of gold and silver, you could find 1oz .9999 silver rounds/bars for 2-3% premium over spot. Not now. Why not?...b/c the paper market has taken control of the physical market, and the physical market is extremely tight for investment level silver. That was NEVER to happen. But most Americans and even most "analysts" just accept that these are normal "market forces." BullSHizzle!! Go read GATA's evidence. I didn't say "opinion"...I said EVIDENCE. The entire commodities complex is and has been being taken over by those who control the money supply. Give them whatever name you want: The anti-gold cartel/cabal, the PPT, the Fed and the Central Bankers and their lackies, esp such as GoldmanSuchs and JPMorgain4Elites, TPTB...these are those who now control our money supply and by it our markets. And almost NOONE outside of GATA and a few others are pointing it out and opposing it.

We still have to live and make decisions, but unless you're aware of the almost TOTAL manipulation of and intervention in the markets by these govt and pseudo-govt (Shadow Govt as John Williams calls them) forces, you are not going to have a CLUE what is hapening. jt

May 3, 2008 | Unregistered Commenterjt

I share your sentiments but further drops are likely to follow. The term price of U has dropped to $90/lb this week. Our "wait" now looks like it'll be at least 3-5 years until all the proposed and under-construction Nuclear plants are actually closer to coming online.

May 3, 2008 | Unregistered CommenterMarcos M.

As far as I am concerned, too much frustration to play the uranium, gold, silver sectors.

Agriculture and oil/gas sectors WERE easier places to make money as they were trending.

Not sure if now is a good time to switch as they have not corrected while gold, silver and uranium have.

May 3, 2008 | Unregistered CommenterSharp

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