Uranium Update

By: Sol Palha | Wed, Sep 13, 2006
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"Opportunity often comes in disguised in the form of misfortune, or temporary defeat." -- Napoleon Hill 1883-1970, American Speaker, Motivational Writer, "Think and Grow Rich"

A very interesting anomaly is that while uranium stocks have corrected quite severely the same cannot be said for bullion. Let's take a look at two different charts.

The first chart is a roughly a 20 year chart of Uranium and we can clearly see that this market is in a super bullish phase. The current prices are setting new records almost on a daily basis; the second chart quite clearly illustrates this. As we speak more and more nations are embracing nuclear energy and current demand for uranium is 50% higher then the current supply; imagine what could happen in the years to come when all those new nuclear power plants come online.

The Table below clearly illustrates the incredible run in prices and it appears that there is no sign that prices are going and traded as high as 54 in the month of September.

   2002  2003  2004  2005  2006
Jan $9.70 $10.15 $15.55 $21.10 $37.50
Feb $9.93 $10.15 $16.63 $21.75 $38.63
Mar $9.83 $10.10 $17.63 $22.55 $40.75
Apr $9.90 $10.88 $17.68 $25.00 $41.50
May $9.90 $10.95 $17.80 $29.00 $43.00
Jun $9.90 $10.90 $18.50 $29.00 $45.75
Jul $9.85 $11.05 $18.50 $29.50 $47.38
Aug $9.85 $11.30 $19.63 $30.10 $50.25
Sep $9.75 $12.23 $20.00 $31.63  
Oct $9.90 $12.73 $20.23 $33.25  
Nov $9.88 $13.75 $20.50 $34.75  
Dec $10.20 $14.45 $20.60 $36.38  

http://www.cameco.com/investor_relations/ux_history/historical_ux.php

At the Tactical Investor we refer to such anomalies (price of bullion keeps rising but stocks in the sector are correcting) as Intra market positive divergences; such developments are usually a very bullish long term signal. This suggests that the reason for the correction in Uranium stocks is just normal profit taking. The masses are being led astray as usual and will most likely sell exactly when they should be buying. We view Uranium as must long term buy and everyone should have some exposure to this sector. However remember as with any other sector not all stocks are good to buy at the same time. Some have already experienced huge run ups and are ripe for even further consolidation. One must tread carefully and remember the saying "the road to hell is paved with good intentions".

"Four things come not back. The spoken word, the sped arrow, the past life, and the neglected opportunity." -- Arabian Proverb Sayings of Arabian Origin

Related articles:
The potential emerging energy crunch part II
The Potential emerging energy crunch
The Uranium Story

 


 

Sol Palha

Author: Sol Palha

Sol Palha
TacticalInvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

The information contained herein is deemed reliable but no guarantee is made about its completeness or accuracy. The reader accepts this information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Investors are urged to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

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