Saturday, December 01, 2007

Query: Opportunities Amidst Disinterest

As alluded to in my last post, much speculative interest and short-term momentum has gone out of the uranium sector. Share prices that went parabolic just months ago have come back down just as or even quicker than they ascended. And still, if one believes in the fundamental story (and really, you only have to consider the logic in governments just suddenly abandoning their billions of dollars budgeted for new reactors overnight) of increasing uranium demand, even the pain endured over the last several months can be tolerated.

However, words can and should only sway so much. What follows are chart examples to illustrate my point.
3 months

2 years

3 months


Yes, the last few months have not been kind to uranium equities. Fluctuations in the spot price and an overdue correction took its tool on most uranium stocks, from seniors like Denison Mines and Paladin Resources all the way to the hundreds of small uranium juniors, including many of the more risque types; many of their 3 month charts look a lot worse than the two I have shown.

Regardless, the point of showing a 3 month and a 2 year chart is to point out that the long term trend has not been broken, mostly in part, I belive, to the fact that the uranium story itself is a good one, a valid one, and one that has not changed materially in the last several years. Corrections will come and go, this one lasted a good several months, but they also present as buying opportunities to the patient investor with an eye for short-term bottoms.

Both of these stocks seem to be oversold at this point and I would be shocked to see either of these be lower than their current price in several months.



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