Uranium stocks are going sideways despite uranium’s fabulous progress, why?

This is certainly a puzzle for us and until we have resolved it we are reluctant to make further investments into uranium stocks. The stocks could be indicating that the metal is about to change direction and head south, as the Hui did when gold was trekking up to $720 per ounce. This is a possibility that we tend to discard as the fundamentals for uranium are solid.

We keep asking the question; when will the market realise that uranium stocks have the potential to outperform those of gold and silver? Does it need more air play? Are the green issues still creeping around in ghostly form? Does the investment market believe that oil will last forever?

This is similar to a hippopotamus who stays in his water hole even though it is drying up. When the water finally runs out he makes a move, but he is now too weak to reach the next water hole and dies.

Nuclear energy will play a big part in the energy needs of all nations in the future,of this we are extremely confident.

Recently we saw uranium rise from $48 to $52 per pound, a rise of almost 10%. If gold were to move up by 10%, say $60, then where would the Hui go? Damn right it would.

Only a few of the analysts that we read are bullish on uranium and some of the more respected ones are piling in to uranium stocks. This gives us some comfort that we are not alone (although sometimes we prefer to be alone) and just maybe it is a matter of being patient. We are happy with our selected stocks at the moment and will continue to hold them. Our watch is increasing by the day with a number of stocks now almost ready for investment. The current doldrums may last a few months or so, we can only observe for the moment.

If you don’t have any uranium stocks in your portfolio then do buy a few as insurance against a sudden rise. We will be watching for any opportunity to increase our exposure on the current stocks that we hold and we also intend to add some new faces when the time is right.

Don’t go to too crazy but if you have a favourite uranium stock, buy it and forget about it for a while.

21 September 2006