Last week I said that, judging by the panic on the Buy High Sell Higher Forum, and the fact that we had the more new Forum members sign up in March than we had in any month in the last year, it appeared that we have reached the bottom. Last week I was down 8.3% on the year, and today I’m down 7.6% on the year, so at least the trend appears to be going in the correct direction.
The chart of gold appears to show a bottom during the “crash” in March, and although it’s not quite back up to it’s 50 day moving average, the RSI and MACD have turned upward, and I continue to believe that it’s onward and upward from here, albeit with a few bumps along the way.
What are the other reasons for optimism?
Well, out old friend Mr. Dines of The Dines Letter fame issued an IWB yesterday confirming his buy signal of January 23, 2008. (Or, as he likes to put it, just to be different, 23 Jan 08). My portfolio has increased by half of one percent since January 23, so that tells me the “buy” signal was somewhat premature. However, I agree with his general premise that the time to buy is when everyone is pessimistic, and I agree that’s where we are now.
A more reliable source of perspective is our not quite as old friend Merv, proprietor of Technically Uranium with Merv, who is finally seeing some bullish signs in the uranium sector.
On April 9, 2008 Bloomberg reported that “the China National Nuclear Corp. said it is looking for Canadian acquisitions or partnerships” in the uranium sector. This is not an unexpected development, and it makes sense. If I was running China, and I needed to secure energy supplies for over a billion people, there is only one option: nuclear power. And the best way to secure that supply would be to actually buy the companies that produce the uranium. With uranium shares beaten down, now is the time to start acquiring.
This may be the start of the acquisition frenzy that we are all expecting, which is why I’m bullish over the medium and longer term with uranium shares. For that reason I plan to continue to liquidate my big losers, and put my money into junior and intermediate producers that have the possibility to be acquired in the future.
There were some good up moves this week, including my best uranium stock of the week, JNN.V – JNR Resources Inc. which was up 13% this week:
Obviously this stock is still in an obvious down trend, but the $1.00 level appears to be very strong support level going back to the summer of 2006, and the RSI and MACD are at favorable levels. This is a solid company with solid management, so buying at these levels looks like a low risk way to play the coming upside. I plan to add to my position this week on any weakness.
Another good winner this week was DML.TO – Denison Mines Corp. which was up 9% on the week:
The good news here is that the low from June of 2006 (around $5.05) has not been broken, and we are making a series of higher lows ($6.19 on February 8, $6.48 on March 31, the $6.72 on April 8). Denison is back over it’s 50 day moving average, and the RSI at 50 is often the perfect buy point. I plan to increase my Denison holdings this week as well.
Gold stocks were somewhat flat this week, but that’s not a bad thing; we need to keep building the base for a strong move upwards.
To summarize, I expect continued strength in April and into May, at which point I will begin to raise cash for the typically slow summer season, and to lock in gains. I also plan to keep a short trigger; if I start losing, I’m selling; I’m not letting losers run. I’m at 17% cash now, and I expect to be around 10% by the end of next week as I thin some losers and increase my holdings in JNN.V – JNR Resources Inc., DML.TO – Denison Mines Corp. and perhaps a few others.
As always, thanks for reading, and keep on posting your comments on the Buy High Sell Higher Forum.
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