"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
