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Strategies & Market Trends : The Swamp
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To: SwampDogg who wrote (121)3/12/2008 11:00:10 PM
From: SwampDogg  Read Replies (1) of 491
 
Just a few more thoughts on the U market.

The crash over the last year in the U stocks was the equivalent of their 1929. It was a classic case of a young bull market that was massively overcapitalized. Crashes like this take many years to recover as the participants have been devastated. IMO this event is the #1 cause of the malaise in the gold and silver juniors today. A lot of money that was in gold and silver stocks moved into the hot U market at the top in early 2007 and it was nuked.
Institutions, funds, and individual investors that hold U stocks will have to wait for a recovery in the price of the commodity and this may take time as the commodity does not trade as others do. As other resource bulls move higher money will probably move out of the U stocks and into the hotter areas resulting in even lower prices. There will be some great opportunities as some companies are trading near cash value but they may be dead money for a while. This has happened very quickly but the U sector right now reminds me of the PMs in the late 1990s. Things can get worse before they get better.
The U sector has also been hit with every risk in the book including commodity risk, permitting problems, political risk, mine operating risk, management risk etc etc
Not ideal...
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