uranium

Uranium Heating Up Again, Says Wizard
FN Arena News - November 05 2007

Just like many other market watchers, the Tech Wizard had been underestimating the technical correction that commenced in June this year and nearly halved the spot price of uranium oxide (U3O8) in a time span of 16 weeks only.


However, weekly spot prices set by industry consultants TradeTech and Ux Consulting have risen again over the past few weeks and the Wizard’s own investigation in the industry has provided him with enough confidence to predict that spot U3O8 will soon surpass the price of a barrel of crude oil again.


Moreover, the Tech Wizard believes we could be talking a spot price of US$100+/lb before the end of this month -under a best case scenario- but most certainly before the end of December. His personal contacts inside the global professional investment community have ensured him hot money is looking at re-entering the sector again, with confidence currently riding high that uranium will regain its hot spot status in the market soon.


To his personal observation confidence amongst professional speculators in the industry hasn’t been this high for months. This strengthens his conviction in retaining a positive bias towards Australian uranium stocks.


Adding to what he believes is the best looking prospect for uranium prices and share prices of uranium stocks since the technical correction commenced in late June is the fact that Canadian market leader Cameco has again further delayed the opening of its flagship Cigar Lake mine. This mine should be supplying the global market with some 10% extra product, but Cameco management last week pushed the projected ramp up date into 2011. Originally, the mine was scheduled to commence production this calendar year already.


This suggests the market is likely to remain undersupplied for longer than currently penciled in by most securities analysts, he says.


The Tech Wizard notes how industry experts have doubted Cameco management’s earlier statements that production would only be delayed by twelve months only. Later that statement had been revised into a projected start up date sometime in 2010-2011. Since last week the market has become aware that Cigar Lake won’t be supplying any yellow cake into the market until at least 2011.


Looking at Australia’s two leading producers from a technical perspective, the Tech Wizard observes that both share prices of Energy Resources of Australia (ERA) and Paladin Resources ((PDN)) have found support at their 20 moving averages (M/A) since the correction began in June.


This is a good sign, he says.


ERA’s share price has bounced back since sinking below $15 and subsequently finding support at the 20 moving average (M/A), the Tech Wizard says.


He says the MACD indicator is bullish and this supports his positive view.





For Paladin the prospects look even better, he says. After topping out above $10 the shares have fallen 50% to bottom out below $5. As said above, after this the share price found solid support at the 20 moving average (M/A), the Wizard says, and this month his chart shows a bullish breakaway gap.


If by the end of November this gap is still in place this would be a very bullish sign for Paladin shares, says the Wizard, as this would indicate there is strong support for the stock at this price level.


Again, the MACD indicator is bullish and this adds to his positive view.





The Tech Wizard currently owns no shares in any of the companies mentioned in this story.