As a uranium play this stock is getting a lot of attention, which is driving the stock price up, despite the charts pointing to an overbought situation. Conventional wisdom would tell us to be wary about investing in this stock at the moment but the question is; Are we in a conventional market$%: And does conventional wisdom apply$%:
We have long been of the view that the price of uranium will hit $200.0 per pound before this market peaks so at $72.0 per pound uranium still has a long way to go. The case for uranium has been laid out by many eminent analysts who can quote the number of reactors in the world (442) together with the proposals for future projects, which provides us with a guide to uranium usage.
However why should the Chinese or any other nation for that matter actually disclose their true requirements to us$%: If they did it could well cause a buying panic in the thinly traded uranium market. Surely it would make more sense to secure your future uranium supply before actually admitting that your energy needs dictated a 'tripling' in your uranium needs.
Suffering from both cynicism and suspicion leads us to believe that the demand for uranium is grossly underestimated and will come as a shock to the energy world when the true figures start to appear from the current market haze.
This brings is to the uranium exploration and mining sector which is beginning to experience the effect of increased market activity. Not front page news yet but it will be.
Take for example a small company called Santoy Resources limited, which has interests in a diverse range of resources such as Coalbed Methane, Coal, Oil :%$amp; Gas and Projects Available for Option, which include base metals and gold. A multi-metals explorer! Since October 2005 this stock has risen from $0.10 to $1.00 with a myriad of gyrations taking place along the way.
What does this tell us$%: Well it indicates to us that investors are looking past household names such Mega Uranium, Laramide and Cameco in the hope of unearthing a gem. It is not just Santoy that is now in the sights of the investor there are many similar examples scattered across Toronto's venture exchange.
Back to conventional wisdom which would tell us to beware such a small cap that has so far been thinly traded and if you your investment should do well take some money off the table, all very sound advice. However, what if we are not in conventional waters and some of these stocks are about to become the toast of every after dinner party chat$%: Will we regret taking a short-term profit because of conventional wisdom$%: For once we may need to turn a blind eye!
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