The entire situation with uranium has not changed in the last week. Uranium stocks are as likely as anything else to get caught in a general market collapse, but unlike a lot of other equities, they are backed by a material substance that is apparently going to be in great and increasing demand.
Go-go investors, short-term traders, and technicians who have jumped into these stocks hoping for a quick and uninterrupted ride into a heaven of unlimited wealth, especially any carrying the stocks on margin, are likely to be badly hurt.
It's not enjoyable to watch large paper profits evaporate, but the serious uranium investor can only rejoice at the opportunity that may lie ahead to continually add to positions at lower prices.
In particular, the largest-cap stocks offer excellent long-term opportunities. Cameco will get past the Cigar Lake problem, even if they have to abandon that particular mine for a few years. ERA will continually increase production and work its way through its bad hedge positions. Denison will become available directly to U. S. investors with its new Amex listing and will be a natural choice for any institutional managers looking for a uranium stock. Soon-to-be large caps Paladin and SXR seem to be moving steadily ahead with production plans.
As for me, I will maintain my 21-stock portfolio that includes companies right down to the smallest-cap uranium company on the Venture Exchange, but I will at some point move large amounts of capital from bear-market funds into the large-cap uranium stocks (which are already most of my largest positions).
This concentration on the largest, most experienced, and well-capitalized companies worked very well for me in investing in the Athabasca Tar Sands in the period 2001-2005, and I have literally locked away (in a safe deposit box) a very large position in Canadian Oil Sands Trust, the income from which I intend to collect for the rest of my life. |
