Thursday, January 18, 2007

More on Strathmore...

There are a few reasons I posted the monthly chart on Strathmore. First, I think it's an interesting chart and while events don't always develop as charts would lead you to suspect, it does at least inform you of a potential near-term outcome. Secondly, since it is a monthly chart, we should be seeing a picture with relatively little short-term noise that enables the dominant trend to clearly emerge. Third, this uranium stock is the first one that I bought in the sector, beginning in June of 2004 and continues to form the core of my uranium portfolio.

I started researching the sector after I read a couple of articles on 321Gold and other sites that really opened my eyes. Ralph Kettell wrote a piece on uranium and looked at Strathmore specifically. I realized that if all these articles were correct, then the timing to get into Strathmore after it had finished a major pullback was optimal and I got positioned accordingly.

Here is an excerpt from a recent interview, by Tom Jeffries of Market Matters Radio with Kevin Bambrough of Sprott Asset Management. Sprott is one of the top natural resources oriented funds in Canada.

KB: Well I think, for a few of the key uranium stocks that are out there that you know, people will be able to read that we’ve recommended many times over the last few years, I think they’re going to have another run. I think that the uranium price is poised to start moving higher again. It hasn’t really paused much, but just over the Christmas break, I’m just seeing that more and more people seem to be committed to the fact that uranium is definitely going to go to a hundred dollars this year. And once people see it start ticking up again I think there’ll be a rush back into these stocks because they’ll be viewed to be quite cheap. And probably the best of the bunch for this year is, I think, is going to be Strathmore Minerals.

TJ: Tell everybody the symbol, refresh our memory, what does that trade under Strathmore?

KB: It’s S…T…M, as in Mary.

TJ: Is that on the Venture or in Toronto:

KB: That’s Venture.

TJ: Okay, Strathmore, what’s it trading at now and what kind of growth are you at Sprott thinking this could do for us in the next couple of quarters?

KB: Well, I’m just putting it down as sort of my top uranium pick. It’s really hard to say where things are going to go but there’s many stocks out there that are trading at, you know, five, ten and producers trading at twenty dollars a pound in resources and most of the analysts out there seem to be showing Strathmore around a buck a pound.

TJ: Wow.

KB: We think they have some very high quality pounds and some great opportunities to do joint ventures and move things forward, we think this is going to be their year, after being in a relative holding pattern for a couple of years. The stock hasn’t really moved much and the other ones have and I think that this is going to be a big year for Strathmore.

Market Matters Radio


Titan_of_Metals said...

You've been on top of the move in Uranium all along while I've basically dropped the ball by being fixated on gold. I'm going to be watching carefully however, for the possibility of a final push to $100. But since I'm not that confident as I have not been following it very carefully, I'll probably only buy on a significant pullback.

Any thoughts about Fronteer Development (FRG)? It seems to have had a pretty large run up, but I wonder if there may be a final spike up as it goes parabolic.

I may look to go in at a little above $9.50, if it drops that low...

Of course FRG is a Uranium AND Gold that's why it comes mind.

Hope all is well,



TheSlowLane said...

Hi Titan,
Thanks for your comments. In regard to waiting for a significant pullback in the uranium price, that strikes me as a highly risky approach. What could cause such a pullback, given the characteristics of the uranium market? It seems to me there are a few things:

1 sudden, miraculous progress at Cigar Lake
2 US Gov't stockpile sales
3 Hedge fund sales
4 major plant accident

Number 1 seems unlikely, particularly in light of the recent update from Cameco. Number 2 is possible, but not until the second half of '07 at the earliest. Number 3 is possible but not likely to have a huge impact, certainly not a lasting one. The only reason funds would "dump" their positions is if something fundamental changes.

The uranium stocks are a whole other story. They tend to trade along with the precious metals and given that the metals are in a run right now, the uranium stocks have been doing well also. Except for those who have disappointed, which I may write about shortly.

I am not all that familiar with FRG, so will refrain from commenting until I have something to say.

Best regards,