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Tuesday
Dec182007

Uranium Stocks: Pause for Thought!

U3O8 Chart
There is an underlying expectancy among uranium bugs for the price of uranium to surge back to its old highs taking uranium stocks along for the ride. However, what we have now is uranium stabilising around the $93/lb which some bugs find disappointing, but not us, we find it quite encouraging. When we reflect on the excitement and euphoria of uranium rising from say, $40/lb to $45/lb, we should not be too disappointed with uranium at twice that price unless you bought at the very top. If that's the case then you can cut and run and suffer the loss or try and muster up some patience and stick with it.

The disappointment is not so much with uranium itself but with the performance of the uranium stocks. In general they are lagging behind the metal having been recently sold off over the month of November and then behaving in a sluggish manner ever since then. It could be that the stocks don't trust uranium at the moment and are telling us that a price reversal in the metal is on the way. We don't see it this way though, we believe that uranium is consolidating and building a base before attempting to climb its lofty heights once again. We could be camped at this juncture for some time which wont make the headlines but it is a healthy place to be if you have invested in quality uranium stocks as they will turn a handsome profit at these price levels and still be there tomorrow. However this does not explain the lacklustre performance of this market sector at the moment. We need to take into the consideration a number of other factors that conspire to buffet our stocks from pillar to post. The first that comes to mind is the size of this market which we have mentioned in the past, as it is extremely small and your stocks can gain or loose 10% in a single day. It is nice to report the gains and put a smile on someone's face but the losses have us digging around for that piece of negative news that caused the sell off. Most of the time you don't see that negative piece of data because it is not there. Instead a number of sell orders arrived at the same time and down you go. The larger companies with a market capitalisation of $1 billion plus can move dramatically on moderate volume, so the smaller fledgling companies can oscillate violently. All of these stocks are at the mercy of speculators, day traders, newsletter writers, the media, international and local politics, weather predictions, environmental issues, green campaigners, floods, et al. These variables should form a part of your 'risk register' as any one of them can knock your investment off course.

If this is all too much for you then the alternative is to place your hard earned money somewhere safe and be satisfied with a return of 5% or so. Can we suggest a 'safe' place? No we cant. Years of mickey mouse schemes, creative accounting, political intervention, smoke and mirrors have left us a little cynical. No matter how good an investment appears to be do not charge into it, go gently and build your portfolio slowly.

As for us we are currently observers of the whole energy scene at the moment. We may use this time to edit our portfolio for balancing purposes but we will, as always post any transaction here as we go forward. There are times when sitting tight with what you have is the best course to steer and we see this as one of them for us. Our strategy is not a one style fits all strategy and you may be in an acquisitive mood at the moment which is fine. However we would not advise anyone to sell at this point in time.

If you are new to this web site and would like to receive our free newsletter then please enter your email address by clicking on this LINK.

Have a good one.

Saturday
Dec012007

Uranium: Notes from across the pond!

Uranium Chart 01Dec07

Many moons ago whilst involved with oil projects in Alberta I used to fly frequently between Edmonton and London. 'On Golden Pond' was often the in-flight film so I spent some time looking out of the window and marvelling at the solid mass of ice below me. On this trip however the ice was fragmented with huge patches of water scattered liberally across the earth's crust. This is only one persons observations with no scientific backup. Maybe I just didn't notice the water before or maybe I travelled during a different season in the past or maybe I'm paranoid about global warming! This observation will be filed in the box marked anecdotal evidence for now as there is probably a logical explanation for it however it did bother me somewhat.

Moving on we meet up with some friends in LA where we witnessed at first hand the effect of the fires that have ravaged this part of the world recently. The drought in this area has been going on for months leaving the ground susceptible to even more fires. I remember driving from Edmonton to the Tar Sands Projects in Alberta with fires blazing on both sides of the roads and wonder if we now have more fires or more media coverage giving us the impression of more fires? Either way it is an awful experience to be involved with a fire hazard.

And so to uranium which is still holding at $93/lb and is $15/lb up from its low of $78/lb. Many thanks to our readers who send us e-mails and comments about various aspects of the market which is greatly appreciated. One such reader was a little puzzled with the NYMEX reporting the futures price of uranium at around $82/lb for 2008 and wrote and asked them for an explanation. We are not suggesting for one minute that an enquiry can prompt a change but when we last looked it the futures price was $99/lb for most of 2008. It should be remembered that this market is pretty thin at the best of times and that the futures market is in its infancy and therefore subject to more anomalies that other more mature metals markets.

Uranium stocks: we should have updated the portfolio but with being on the move and also indulging in some leisure time it has been side lined for now. However a quick look at the charts tells us that this is not a pretty sight with most uranium stocks taking it on the chin lately. We do not know the reason behind this sell off other than investors pulling the pin in order to lock in profits or minimize losses. However according to TradeTech the price of uranium remains steady at $93/lb so we would have expected uranium stocks to have performed a lot better than they have. The order of the day for us is to hold on to the stocks that we have and monitor a wide range of stocks with the view of finding a real gem at a bargain price.

Finally a word from Zoltan a mechanical fortune teller on Venice beach who uttered these words to a paying customer:

“Hard work will pay off in the long run
but laziness will pay off today, so chill out”

It went down well with an early morning coffee!

Have a good one.

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Friday
Nov232007

USA Putting Price On Carbon: Enter Nuclear Power

Currently there is a bill going through the US Congress that could put a price on carbon emissions. This would mean that companies would have to pay a kind of “green tax” and the magnitude of this charge would be relative to the organisation's CO2 output.

US Putting Price On Carbon:

This issue caught our eye in the recent issue of “The Economist” and it adds yet another argument to the ever growing list for more nuclear power.

The bill is of course aiming to curb carbon emissions but ultimately it is trying to motivate people to use other forms of energy apart from fossil fuels. The most obvious choice in our opinion is nuclear energy.

Now let us consider a hypothetical scenario. This carbon pricing bill is passed in Congress and the US now has to pay its carbon emissions. Businesses that emit more carbon are at a competitive disadvantage to those who emit less. So if you were governor of a state in America and you wanted to give your state an economic boost, then why not build a few nuclear power stations?

This would give the businesses in your state an advantage over others as your businesses are not forced to pay the carbon penalties. Would this create a race across the USA to build nuclear power plants in order to lower emissions? Who knows, but so long as CO2 emissions are reduced, Congress will have achieved there aim.

Of course, nuclear power is not the only form of energy production that doesn't emit CO2, but it is the only viable, economic and reliable solution to lower carbon emissions whilst maintaining a stable energy supply.

However if this policy of carbon pricing spreads to other countries then we could see big businesses and carbon intensive industries concentrating their expansion plans and even relocating to the countries with the lowest “carbon cost”. Could this begin a war of “Green Protectionism”? The writer for The Economist certainly thinks so and we are inclined to agree. However what we may also see is a rush of countries towards building nuclear power plants and other CO2 free energy solutions in order to offer businesses a carbon free supply of energy. What would this do to the value of our uranium stocks? Yes, you guessed it, up, up and away!

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Saturday
Nov172007

Peter Schober Gives His View On Uranium

One of our readers, Peter Schober, has offered his opinion on the uranium market at the moment and the current situation in the global energy market.

The following article, "Connecting the Dots -Basic Reasons for Uranium Investment" was written by Peter Schober who is working as a business consultant in germany and has been researching energy matters for several years.

[Please click on images to view full size verisons]

1.
Over the next 15 years China alone plans on building 30 new reactors. Without those reactors, the country's environment and economy will face brownouts that will start political unrest and upheavals, the one thing the ruling elite will avoide at all costs. Shortage and price buildup of lead (needed for insulation) gives an indicator of building activity.
2.
"We are at the beginning stages of a massive bidding war in Uranium. China is locking in massive deals in Africa and is now working on ever bigger deals in Kazakhstan which holds the worlds second largest reserves of Uranium after Australia. Note to that China signed a multi billion dollar uranium deal with Australia. China is basically locking up Uranium supplies, which means its taking this uranium out of the market place; this effectively means that there will be even less uranium for the rest of the global world players to go after". Sol Paha "Uranium Wars 1/14/2007
3.
China can run for two days on oil, or it can run for an entire year on uranium – all for the same fuel costs, according to top nuclear analysts. And .. They have all the cash needed to buy what they can get.
Some analysts say Uranium is headed fast to $576 per pound – and even that’s a fair price for the energy, and still much cheaper than coal or oil…Do the math yourself, it doesn´t take more than an spreadsheet.

Peter Schober Gives His View On Uranium

4.
Today, most of the Soviet weapons-grade uranium is gone. Currently a bare 30 % of secondary supply (around 8.000 tonnes pa) comes from Russian sources.
5.
Russia has decided to start stock piling on uranium after declaring that Uranium is now regarded a strategic resource. It´s a only a matter of time when they will stop exporting. Now (Nov 07) they are demanding higher prices for their material.
6.
Supplies aren't always growing, but are actually declining 2006, partly due to flooding at two of the world's largest mines. Last October workers at Canada's Cigar Lake mine, half owned by Cameco, mistakenly hit water, flooding the mine. CAMECO said, production at the unfinished mine will now be delayed another 3 years and won't come online until 2011, and even this ain`t sure!
7.
2008 will also show, if the gambling of the utilities (not buying at spot market prices in summer the of 2007 to supress prices) has depleted their uranium reserves enough to generate a massive buying impetus.
8.
The U.S., besides France and Japan the largest producer and user of nuclear energy, is nowhere near meeting its own uranium needs. Uranium production should become a national priority of the US but isn`t.
9.
The uranium mining industry is still struggling with the repercussions of 1989. Soon after that Russia decided to sell its 435-million-pound from military sources. Other stockpiles also came into the market, too. Uranium was quickly hammered down to $10 per pound, exploration was curtailed, people set off and know how lost.
10.
2007: However: This year’s global uranium-mine production is forecast to rise 9% to 51,000 t U3O8, driven largely by expected higher production in Kazakhstan (!?), Namibia and South Africa. In 2008, world uranium production is forecast to increase by a further 18% to 60,300 t U3O8 due to increased production in Kazakhstan as a number of uranium mines continue to lift output towards full capacity and new projects commence production.
11.
Worldwide there are 284 research reactors operating as well. Add to that another 220 nuclear power ship and submarine reactors in operation. Most analysts never consider the fuel necessities of these “other users.”
12.
A typical one-gigawatt nuclear reactor requires around 200 tons of natural uranium per year. As of June, there were 442 nuclear plants in operation worldwide. There are 28 others being built, 38 on order, and 115 proposed. And the U.S. and Britain haven’t even started building new nuke plants yet. Assuming there will be 5 new reactors going online per annum and a growth of 7 % in yearly uranium production, production capabilities and use will not meet in the next 10 years.
Peter Schober Gives His View On Uranium 1

13.
Peter Schober Gives His View On Uranium 2

14.
Not one single ounce of uranium comes from the Middle East. Therefore direct geopolitical risk is not comparable with oil.
15.
The renowned Energy Watch Group estimates that of 300 uranium mines examined, roughly 90% of global uranium resources have ore grades below 1%. With global ore grades at very low levels, the overall supply issue becomes even more of a problem.
One production hurdle is the current shortage of sulphuric acid, used in uranium extraction, which will for example have an effect on Uranium One's 2008 production. The rising costs of the acid will be a specific problem for low grade producers, eventually reducing their earnings or postponing production, waiting for prices that will check these growing costs.
16.
The nuclear reprocessing sites have an annual production capacity of 5500 tonnes. It will take years to enhance the output capacity of these plants. Therefore there will be no short time relief from this side.
17.
It takes seven to 10 years to find and bring an economic uranium discovery into production. Very little supply relief is scheduled to come on line until 2011 or later. Nations who are not building a strategical reserve of Uranium and who are not systematically developing their resources (like the U.S.) will possibly not be able to build enough producing power capacity because they don' t have the fuel for that.
18.
Nuclear energy is one of very few alternatives that has a chance of alleviating the global energy supply crunch. It is safe, clean, and relatively cheap. The injuries and deaths associated with producing and utilizing nuclear power are minuscule in comparison to any other fuel source.
19.
Global warming: Nuclear power is the most obvious solution to this potential catastrophe. Other forms of alternative energy are interesting but are years or decades away from having a significant impact.
20.
As other energy sources are becoming scarce, their prices growing, the role of uranium as a still cheap, affordable and reliant source of energy will be greatly enhanced.
21.
The term “peak oil” means global oil reserves and production are in decline. The planet remains dependent upon oil because we didn’t have the foresight to develop a better energy strategy over the past three decades.
22.
The peak oil theory is going to be put to the test in 2008. Since global oil production has remained flat for the last few years, oil prices could really get out of hand next year as demand continues to rise.
In 2008, we're going to find out which OPEC countries are telling the truth about production capacities and reserves.
23.
Comparing Data of EIA and IEA the best thing to say is that we have a plateau on all liquids and a sinking production of crude oil. But looking only at output amounts is grossly misleading. The reasons of current price spikes is only marginally the popular “speculation activity” but you have to dig deeper finding the real reasons.
24.
Essentially we could say that the energy content of 'a barrel of oil' is less then it was yesterday and it has been going down for decades now. This can easily be seen, when looking at the quality of US imports with a growing part of low quality API crude (Casey: Energy Speculator 11/15/2007 has the graph)
25.
Also, the growing amount of oil consumed directly in the extraction of oil should be stripped out to get actual "net" oil production figure. It appears that this oil production-consumption accounts for an increasing %age of the decline in exports.
The reasons for this are many. As extraction gets more difficult, we use more oil to get less oil from the ground. The oil we get from the ground today is more energy intensive to process.
Overall efficiency of crude oil production should be measured by the "net energy" produced, not the volumes of 'liquids' coming up the well.
26.
The net effect of using Liquids to produce ethanol etc is not accounted for. Regarding the low EROEI of ethanol , the net surplus of these produced liquid is only of marginal significance.
27.
Last but not least. Looking at production numbers only, is misleading, because a growing part of production either stays in producing countries to fulfil their growing demand, or is not made available to the spot market because of bipartisan treaties (eg Angola and PR China).
28.
Regarding disinformation/misinformation on energy reporting: One should skip any article wherein EROEI is not at least mentioned or discussed!


Comments welcome: info@peter-schober-condulting.de

Well all of the above appears to be very bulish for the uranium price and our uranium stocks, stay informed on the market by subscribing FREE of charge to The Uranium Stocks Newsletter, just click here and enter your email address.

If you would like to have an article published on www.uranium-stocks.net please email bob@uranium-stocks.net.
Friday
Nov162007

A Readers View On Uranium: Where To Next?

Uranium is a great investment! Its fundamentals are second to none with supply demand imbalances likely to extend well into next decade. New users continue to roll up with latecomers the US announcing their first application for a nuclear reactor since 1973. The government is expecting 29 more applications for reactors at 20 different sites. The Indian Express ran an article on October 23rd addressing supply issues right now! “Faced with an acute shortage of uranium to run existing power stations, the Nuclear Power Corporation of India Ltd has advanced its maintenance schedule and started shutting down individual power units. Usually, these units are shut down in a staggered manner but this time they have been bunched together so that authorities get time to arrange for uranium supplies.” So why have uranium stocks been punished lately?
The first interesting aspect is that these stocks are currently at the whim of the general market. This was painfully evident last August. I wonder if this is more marked because of hedge funds that have bought into the sector. When the market drops they become forced sellers to cover margins. At some point in this bull, uraniums will diverge from general market behavior and march to their own drum.

The second significant event that took place earlier this year was the US department of energy announcing it may sell some of its stockpile. In the end they were only talking about 520 000lbs but it was probably enough to serve as a reminder that our trusty governments can and do meddle in the markets. Uranium spot price saw its first downside in many years however the important long term price remained fixed at $95.

The current market conditions remain dicey with U.S. and European governments flooding the homeland with paper money. It will be interesting to see if they can avoid a crash in stocks. If they can’t there may be another buying opportunity similar to August but when the dust settles people will realise that hard assets like uranium, golds and silvers will be king.

The last commodities bull market during the seventies into early 1980 had two phases. During the second phase gold went from $101 to $873 on January 21st 1980 for a gain of 764%. Silver rose from $3.80 to $50.36 for a whopping gain of 1225%!!! Recent market events make me suspicious that the first stage of our commodity bull market is either over or very close to it. If stage two is upon us it may be wise to stock up on uranium, gold and silver shares, be patient and hold on to your hats!


The above article was written by a reader of The Uranium Stocks Newsletter, Paul Trevethan. If you have an article that you would like published on the website then please email it to bob@uranium-stocks.net
Sunday
Nov112007

The Team In Travel Mode

Team In Travel Mode

Bob and Sam Kirtley, along with some other members of the team that run www.gold-prices.biz www.silver-prices.net and www.uranium-stocks.net are now heading into travel mode for next few weeks.

The trip is part business, part pleasure and we will be accompanied by a laptop the whole while and so will do our best to answer all enquires and provide commentary on the markets whilst on the move. This may explain if articles are published outside of their usual pattern.
Thursday
Nov082007

Uranium Stocks On The Move Again

After enduring a large correction in the uranium spot price, and an even larger pullback in uranium stocks, things appear to be on the move again in this sector.

Uranium Stocks On The Move Again: U

Uranium Participation is moving upwards now, reflecting the recent rise in the uranium spot prices, which has risen to $93/lb this week.


As those of you who are familiar with the company will know, Uranium Participation is not a uranium mining stock or uranium exploration stock, but a fund of uranium metal. Uranium Participation simply holds physical uranium and so tends to move up and down with the uranium price. This offers investors exposure to the uranium market without the risks of mining or exploration and it has been a BUY in our portfolio for some time.




Uranium Stocks On The Move Again: AXU



One of the quickest recoveries has been made by Aurora Energy Resources, which has enjoyed a sharp rally of over $5 to near $17. This stock is also a BUY in our portfolio and is currently up over 13%. Aurora has a world class project in the Central Mineral Belt in Labrador, Canada and the good fundamentals of this property will carry Aurora higher, especially with higher uranium prices.

Uranium Stocks On The Move Again: Mega

Mega Uranium was severely punished in this correction and the credit crunch, falling over 66% from its highs of around $9.00 in April. But this uranium stock is now on the road to recovery having nearly doubled from its low and its up 22.75% in our uranium stocks portfolio.

Uranium Stocks On The Move Again: LAM


One final example to show the turnaround in the uranium market is Laramide Resources, which has climbed 106% from its low! This stock is a BUY in our portfolio and it is currently showing a paper profit of 56%.

We first thought the turnaround had begun on August 28th and the recent behaviour of the market confirms this view.


This was a correction, a severe correction. We have seen similar corrections in this uranium bull market before, but this was particularly sharp as we had the added affect of the credit crunch where traders and investors were selling literally anything, regardless of fundamentals to generate cash to pay margin calls.


On August 21st in our portfolio update, we signalled BUY on the above stocks and amidst the carnage of the credit crunch and the uranium market correction we said, “we still expect LAM to bounce back from these levels” and described Uranium Participation as “at a discount” and Aurora appeared to us to be “severely oversold”.

We hope that those of you who were brave enough to hold throughout the summer or add to your holdings are now enjoying the recovery. Throughout the summer we were urging our readers to hold through the chaos and to buy at those cheap prices. In hindsight we appear to have made a good call there, and we are still bullish on uranium and uranium stocks, maintaining our target price of $200/lb for yellow cake.

Many uranium stocks will benefit greatly from higher uranium prices, and some projects will still prove to be extremely profitable at current price levels. Stay updated on the uranium market and informed on uranium stocks by subscribing to our FREE Uranium Stocks Newsletter, to subscribe simply click here and enter your email.
Wednesday
Nov072007

Uranium: $110/lb for December delivery


One of our alert readers has just informed us that the price of uranium for December delivery has jumped from $98/lb to $110/lb.

So, first prize goes to Warwick who spotted the change on the NYMEX almost as instantly as it happened.

This web site now has 3590 subscribers and about 13,000 readers who regularly send us interesting snippets of information. Now don’t go too mad on this news as the price for delivery throughout 2008 is still around $81/lb, but it is nice to see the occasional spike in the price especially on a day like this when uranium stocks are taking a bit of a battering.

Hang on in there and sleep tight.
Monday
Nov052007

Uranium now at $93/lb!


We are now of the opinion that the spot price of uranium has moved again and now stands at $93/lb. The uranium market is so small that just getting the data and being able to track the price of uranium is arduous to say the least.


The powers that be publish their data at certain times and we all wait with baited breath to see what it is. This web site has a number of well informed readers that tip us off with numerous bits of information along with the price of uranium as and when the price changes, so we are at times ahead of the general press thanks to them.

The spot price will make the headlines and have an effect on trader sentiment but please bear in mind that it is the long-term price of uranium that we need to watch. However this is still good news and good news should make for great day when the US and Canadian stock markets open.

Once again many thanks for all your input which has helped to put this web site in pole position on Google when we enter uranium stocks.

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Monday
Nov052007

Strateco Resources: Up 40% Since Our BUY Signal 4 Months Ago

On the 9th of July we signalled a BUY on Strateco Resources and in the four months since we signalled that BUY and added Strateco Resources Inc to our uranium stocks portfolio, Strateco has risen 40%.

Strateco Resources: Up 40% Since Our BUY Signal 4 Months Ago



We had been looking at Strateco for some time before we signalled a BUY, but we were waiting for a pullback to purchase shares at a discount. The pullback came in the summer and it was in the middle of the summer doldrums that we chose to buy this stock at $2.32, after it had fallen from $4.00, a drop of 42%.

However we did not pick the exact bottom on this one as Strateco Resources went on to fall down to below $1.50. We are fully aware of the volatility of the uranium market and its stocks so we were not panicked into selling by this further drop as we were confident that Strateco Resources would make a recovery as this is a good company with decent uranium projects which will prove ever more valuable as uranium prices continue to rise.

Our patience appears to have paid off as Strateco Resources closed trading on Friday at $3.23 and this means we are sitting on a paper profit of roughly 40%. It could be a time to take some money off the table, but we are holding all of our uranium stocks. The correction in the uranium spot prices appears to be over as we have seen the uranium price rise to $80/lb, then to $84/lb and it now stands at $93/lb.

Strateco Resources is a uranium exploration company, with some interesting projects in Quebec, Cananda and it is now worth nearly $350 million. If you want to know more about Strateco Resources and why we bought it, please read our write up of the company just click here.


Strateco Resources Inc
. trades as RSC on the Toronto Stock Exchange.

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