Uranium: No Direction Home!
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Topic: Uranium — April 2nd, 2008
Like a naughty boy sent to stand outside of the classroom uranium is once again being ignored by most of the investment community. Uranium stocks have put in an occasional flurry but still remain a long way off their previous highs.
Thanks to u308.biz for the chart
As the above chart shows the current spot price has slipped once again to now stand at $71/lb. Although we view this as secondary to the longer term uranium price of around $95/lb, it is the spot price that is watched by investors and gets considerable coverage from the media.
As we write we can see that MGA is up 9.9%, URE is up 6.7% and PNP is up 10%. However CCO and CXX have not moved. We get the impression that the current action is more to do with investors trimming and re-arranging their portfolios rather than new money coming into this sector. Some of our readers recently wrote and told us that they have sold their uranium’s in order to participate in the bull market that is unfolding in the precious metals arena. When we look at the battering that this sector has taken we have some sympathy with them, however we would question the timing of the move. To move from a sector that is on the floor to one which is on the ceiling just does not fit with our way of thinking, although we do believe that both gold and silver, after this short term pull back, still have a long way to go.
The uranium sector appears to be a victim of fashion, yesterdays wonder horse, however we still need to solve the energy problem before your computer is reduced to a three day week due to rotational blackouts which are not that far away. When the energy companies start talking rotas the penny will drop and the cavalry charge will begin. Until then, rightly or wrongly, we will stay invested in this sector and look to identify possible bargains along the way.
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Hi.
Uranium stocks are a new investment avenue for me…. Interesting!
“To move from a sector that is on the floor to one which is on the ceiling just does not fit with our way of thinking” - excellent thinking there! Can’t agree more
Comment by Raag Vamdatt — April 3, 2008 @ 4:09 am
RPT Uranium Corp is definitely one of those stocks on the floor right now.
It’s (again) near it’s all time low (15 CAD)
Comment by MyKel — April 3, 2008 @ 11:26 am
I agree with your comment about spot vs long term price. Too much attention is paid to the spot price.
Comment by Rich — April 3, 2008 @ 10:28 pm
Undervalued!how about C.Z.Q.TSX.500m u308+,43-101
hopefully soon to double u308lbs.Treasury aprox 35m$,now that is a UNDERVALUED stock,47m shrs,not much of a premium
here for the u308 PLUS the enormous amount of moly,ni,van,
many tns of kerigan shale oil.No not a typo,500 million lbs
uranium.
Comment by jeff east — April 4, 2008 @ 7:59 pm
With the credit crisis, only pick quality stocks with a strong balance sheet, proven reserves, and management. Assets means nothing without any of those attributes.
Most juniors are going to take a huge hit (actually they already have) since they no longer can get the finance from the institutions as they are reluctant to make over-extended loans.
Investing a stock is back to its risky business now! invest with caution.
Bullish in the long term. Short term, I am still very bearish until more nuclear plants go online.
Comment by pho — April 5, 2008 @ 11:38 pm
My experience:
When most people are complaining about the performance and that it is still a long way to go before higher prices, the bottom is nearby.
I think we are close to that point now.
Comment by MyKel — April 7, 2008 @ 3:59 pm
MyKel, Hope that you are right, this sector could do with something to smile about.
Comment by Uranium Stocks — April 8, 2008 @ 7:40 am
I’ve noticed May 6 in my agenda. It could be a boost to many U stocks when Uranium futures trading starts, (you earlier mentioned this) and also stated on http://www.uxc.com/
Good luck to all
Comment by MyKel — April 8, 2008 @ 7:52 am