As I commented on January 11, it appears that the consolidation is ending. For those in Canada, the year started off great on January 2. However, by the time the U.S. markets opened on January 3 it was all downhill until Thursday January 11 when the bounce began. My Portfolio Performance was down about 10.5% in 2007 as of the end of the day on January 10 (as compared to being up 94% in 2006). As of today I am only down 6%, so obviously we had a 4.5% bounce back on Thursday and Friday.
I have reviewed all of my charts, and if I am correct that the consolidation has ended, than it’s likely the lows of Wednesday are a new support level for virtually all of the stocks I follow (particularly the uraniums). Of course I could also be wrong, and the upticks of Thursday and Friday could merely be a pause before the downward slide resumes next week.
I believe the downtick of the last two weeks is merely a pause in this long term bull market because nothing has changed. The price of uranium remains at an all time high of $72. If the price is at an all time high, does it not therefore follow that uranium shares will also remain near all time highs? We all realize that people who drive up the price of uranium (nuclear reactor operators, hedge funds and speculators) are different than investors in shares of uranium companies. Nuclear power operators must worry about supply. Investors simply worry about which stock will go up the most, so we each have different perspectives, which means uranium prices and uranium share prices will not move exactly together. However, over time, they will both trend in the same direction.
I remain virtually fully invested, and since the pause of the last two weeks has not come close to any medium or long term uptrend lines, I will continue to hold. I am not posting any new charts this week, since they all look very similar to the charts of last week (with little uptrends at the end). As always, feel free to post your comments below, or on our Buy High Sell Higher Forum. Now that we have the first two weeks behind us, I am also interested in everyone’s 2007 Predictions. For my part, I believe the uptrend will continue, at least for the next few months.
{ 3 comments… read them below or add one }
This all sounds good. There are two possible flies in the ointment, as far as the uranium price goes.
First, there is talk of government sales, either the US’s strategic stockpile, or a deal with Russia for their ex-weapons enriched uranium.
Second, it appears that speculators have become a significant force in the markets – this surprises me, given that I’m only aware of one current significant vehicle for investors, namely Uranium Participation. According to an article available at stockinterview.com, investors currently hold 20% of annual global production. With speculative interest in the picture, you can get a sell-off without any change in the fundamentals.
I believe there already is a deal with Russia and the US for Russia’s ex-weapons stockpile. The price is ridiculously low considering the present price of U and any move by Russia to adjust that price can only push the uranium price higher. I do not have an official source of this info. Please correct if I am mistaken.
Russia sells uranium through USEC with a contract I believe through 2012. They want to change their agreement with the US government to cut out USEC and go direct to utilities. This may lower prices a little but not much.
The US does sell uranium from decommissioned war heads each year. They did last year. This accounts for maybe 5% of the market. The only concern is if the US greatly increases how much then intend to sell this year.
We won’t know unitl probably the summer.
As for uranium hedge funds, there are two I know of, U.TO and another company on the London exchange. Neither available as US pink sheets.
May I suggest you all read:
http://www.stockinterview.com/News/01102007/Future-Uranium-Price-Swings.html
(this is a great site for uranium)
I say uranium flies into April and like the past 3 years in a row, has a serious correction sometime in April or early May. The time to take considerable profits will probably be late March or early April.
BTW: Love the site.
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