Friday, April 06, 2007

Uranium Index, Week 12

All systems go

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As you can tell, my uranium index closed at new ATH's to close out this shortened week. The best time to buy was when I mentioned about 2 weeks ago that it was time to buy. That was a low risk entry point, and a run to at least the ATH's was a gimme. At that point, if it could not break above the ATH's, then you could sell and pocket the profits, or let ride if it can break above the ATH's (as it is doing now). I will watch out for more situations like this in the future.

This week's run-up has not been as impressive as in the past. The best week ever for this index was Week5 (around mid Feb), when it gained +10% for the week. I miss those days of easy money. This week was one of those where you had to hold overnight in order to capture most of the gains. However, I shouldn't complain because the index managed to put in a nice performance despite a shortened week.
Anyways, trend is still up, even though U3O8 spot price stayed the same, at $95/lb.

I'm starting to hear talk of a uranium bubble. I'm not sure what these guys are smoking. How do you build up a bear case against uranium? Price is unsustainable, price will crash once more uranium production comes online, companies don't actually sell at spot price, blah, blah, blah, ad nauseum...... I go strictly by the chart, and the index is not showing any signs of a uranium bubble, that is the bottom line for me. Worked for me in the past, it's working for me now, and I will follow it until it is no longer working for me. Actually, when these uranium bears capitulate and finally go bullish, then that is the sign of a top !!

The merger between Urasia Energy and SXR Uranium One has been approved. The transaction will close either the end of next week, or sometime in the following week. After much contemplation, I have decided that I will replace UUU with the following four junior uranium miners (on the day the merger transaction is completed):

1. Energy Fuels (EFR)
2. BaysWater Uranium (BAY)
3. TriEx Minerals (TXM)
4. U3O8 Corp (UWE)

The funds from UUU will be equally distributed to each of the above 4 stocks. UUU currently represents 5.83% of the overall index, so each of the above stocks will each receive a weight of about 1.46% of the overall index. Incidentally, the index is now influenced more by FSY, UMN, and LAM - these 3 companies collectively contribute to almost 20% of the index's performance. So these 3 companies are the ones to watch if you want to get a general, approximate idea of where my index is headed.

Index Value: 27,624.88
Best Performers: KRI, SXR
Worst Performers: STM, JNN

Index Performance:

Week 12:           +6.96%
Since Inception: +38.10%

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