Tommaso,
My take on the matter is that, if there is a market crash and everything takes a bath, you should still be relatively OK as long as you hold a fair proportion of UR stocks with UR in the ground. As I see it:
1) The world will still need electricity.
2) Global warming is still a threat.
3) There is still a shortage of Uranium for the next several years.
I agree the juniors will take a bad licking, but IMHO that is why you should have only a modest proportion of exposure in these high risk/high return Ur stocks. My strategy is to have a fairly high number of good juniors but with modest investments in each ( Typically, my cost basis is $15k - $20k per junior and I have over a dozen).
One last point, and I know it's obvious but it is worth repeating: Uranium is a terrific inflation and currency hedge ( now for the newer producers and increasingly for the big names -- ERA, BHP, RTP CCJ - who are changing the way they write contracts.) Although the spot is set in US dollars, it is increasingly *world* supply and demand which is running the show! As long as there is tight supply and strong demand, we have to do OK. If the US Dollar takes a beating, we still have to do OK ...IMHO.
It isn't for me to advise you, but one risk you run with your strategy is waiting for the crash to happen and missing the big Uranium boat altogether. I did something similar in the mid 1990s with my 401(k). I became too cautious, played too safe, and missed out on some incredible returns. Fortunately I made up for it with my private equity investments -- but I have vowed never to make that mistake again.
So, my friend, be of good cheer!
Cheers
Energy Investor |
