Every now and then a well meaning person comes up with a really stupid idea. The latest well meaning but stupid idea is Earth Hour.
Apparently we are supposed to “Join people all around the world in showing that you care about our planet and want to play a part in helping to fight climate change. On March 29, 2008 at 8 p.m., join millions of people around the world in making a statement about climate change by turning off your lights for Earth Hour, an event created by the World Wildlife Fund.”
Hmm, sounds like a publicity stunt to me, and a pretty good one at that given all of the companies and organizations jumping on board for a piece of the action.
Let us assume for a moment that “climate change” is a real thing. (They used to call it “global warming”, but here in Southern Ontario, and in most parts of Canada and the North Eastern U.S. we have had the coldest and snowiest winters on record, so obviously it’s not getting warmer; hence the new term “climate change”, but I digress).
Let us further assume that reducing our usage of electricity will help with climate change. Again, a stupid assumption. If nuclear power created our electricity, there would be no “climate change” impact to having my lights on, so I wouldn’t need to get used to living in the dark, which apparently is the point of Earth Hour.
But that’s the point: if we really want to help the planet, we should move as quickly as possible to nuclear energy, which produces no greenhouse gases. Instead, we are all encouraged to turn off our lights tonight for an hour, presumably to conserve energy so that tomorrow we will have more coal to burn! In other words, Earth Hour will make matters worse, not better!
Instead of tackling the real problem, which is burning fossil fuels, we will attack the symptom, which is turning on the lights.
What will I learn by turning out my lights for an hour? I guess I will learn that the solution to our problems is to go back to the way we lived two hundred years ago: we rose at daybreak, and went to sleep at sunset. Apparently that’s what the organizers of Earth Hour are trying to accomplish: a return to pre-industrial civilization. Let’s all get used to living in the dark!
Well meaning, but stupid.
Here’s a better idea: why not have a Reality Hour. Instead of sitting shivering in the dark, why not encourage everyone to spend an hour lobbying our leaders for environmentally safe forms of energy, like nuclear, solar, geo-thermal, etc. That would actually accomplish something.
Now, on to more pressing matters.
Gold
The action in gold is unfolding in a not-unexpected manner.
On March 1 I showed a chart of gold and said that it was looking overbought, and then I wrote “I would therefore not be at all surprised to see significant resistance at the $1,000 level, and it would not surprise me to see gold pull back to the 50 day moving average around $900, like it did around Christmas 2007.”
As this gold chart shows, gold did pull back below $925, and now sits at $931.20, slightly below it’s 50 day moving average of $938.52. I still believe that gold will be volatile, but the trend is up, so I’m sticking with it.
For another perspective, check out this article from Zeal Speculation and Investment that gives a good picture of the precious metals world as it stands now.
Uranium
The uranium stocks continue to flounder, apparently attempting to prove that they have found a bottom.
Back on March 8 I mentioned DML.TO – Denison Mines Corp., and I bragged that “a week ago I sold DML.TO – Denison Mines Corp. at $9.17; since I paid $6.93 a short time before, I was quite satisfied. It closed on Friday at $8.61, so I’m placing my stink bids at $8 this week, just slightly above the 50 day moving average.” That $8 stink bid expired, but I did get back in at at average cost of $7.56, so it looks like a good trade; selling at $9.17, and getting back in at $7.56.
Denison closed at $6.67 this week, so I’m under water at the moment, obviously having bought back in way too soon.
We are now in the “retest the lows” phase of the market. Denison bottomed at $6.19 on February 7 and 8 of this year. $6.67 is still higher than $6.19, but not by much. I see no reason to sell here, but my stop loss is placed at $6.18; if Denison falls to that level, I’m out.
We have talked a lot about UUU.TO – Uranium One, Inc. recently (I started buying when Mr. Dines said to sell). I bought in at an average price of $4.67; it closed this week at $3.93, so obviously that was the wrong move, as it is now at a multi-year low. Probably time to admit defeat and bail on this one, although at these levels it is now a prime takeover target, so since my investment is small, I’ll probably just ride it out.
I guess that’s really the play over the next two or three months. At these depressed levels, senior gold, silver and uranium companies can buy up juniors at bargain basement prices. We have not yet witnessed a waive of merger activity, but at these levels it’s inevitable, so I plan to ride it out for a few more weeks.
Dines Letter
Incidentally, our friend Mr. Dines came out with his latest Dines Letter yesterday. As always, it was compelling reading, as he spent most of the newsletter explaining why he was “flabbergasted” that his recommendations have sucked so much over the last year. Here are some quotes:
“Specifically predicting market turns is so difficult – perhaps virtually impossible….” and “It is probably impossible to predict the extent of the move.” I agree, but it would be nice if he could at least get the general direction of the move.
He then talks about the stable long-term uranium price while uranium stocks have crashed, and then says “It never dawned on us that the Mass Fear in the stock market could drive uranium stocks this low for the biggest disconnect, the widest “Disparity”, we have ever witnessed.” Yeah, I think we were all surprised that the sub prime crash caused a liquidity crisis that killed resource stocks. However, Mr. Dines, take a look at the uranium chart on the right hand side of this page. The spot price of uranium is way down, so it’s not as big a “Disparity” as you may think.
He once again repeats the call for a rally that he has been making for a few weeks now, saying “Now we are looking for a rally in May”. Okay, I guess that means we will not have a rally in April, so I should sell everything now, and buy back in at the end of April? Apparently not, since most of his stocks are marked “Buy”.
He then goes on to quote himself from his TDL of January 13, 1996 where he says “This is no time to give up on gold……as a blind guess, the next one should rise toward the $2,626 to $4,375 area in the coming decade.” Well, at least he has the guts to print his predictions, even when they prove to be completely wrong. He then talks about uraniums, saying:
“Our first “Back up the truck” IWB the previous November (2006), which successfully called for a “Buy” within minutes of the uranium Bottom, was actually used again on 9 Apr 07, unfortunately, because the subsequent drop has been deeper than we expected. It shouldn’t have happened, but it did. What bothers us, looking back, is we still don’t know what went wrong.”
Yikes. He still doesn’t know what went wrong? Let me explain: the hedge funds piled in and drove the price up. We all made tons of money in 2006. Then they started taking profits, and then sold everything to cover their margin calls in the sub prime mess, so the prices crashed. It’s not that hard to figure out, really.
Then he caps it off with the classic “talk out of both sides of your mouth” strategy that makes us love all newsletter writers:
“Looking back, we are dismayed that we are left with
bullish long-term charts for gold and uranium, even while
gold and uranium stocks are in Downtrends, and we must
therefore assume that there will be lower stock prices
ahead until those Downtrendlines are actually penetrated.
The big question remains, how low can uraniums go? It is
not realistic to expect them to go to zero, which must
mean that they are nearing a Bottom Formation and
another great buying opportunity.”
In other words, prices will go lower, until they get to the bottom, and then they will go up.
Yup, that’s pretty much how it works. What would be more helpful would be to know how much lower they will go, so that we could start buying. Since he has most of his stocks rated as a “Buy”, I’m confused why he would tell us to buy stocks that are in downtrends and probably have more downside.
Oh well, I guess we will all have to do our own thinking, which is probably just as well.
It was an up week, but I am still down 7.7% on the year, so this may be the week where some stock losses are executed to stem future losses, and to preserve some cash for the next leg up.
Happy Earth Day (if you can read this in the dark), and I feel free to post your comments on the Buy High Sell Higher Forum.
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