Uranium Auction

There are two small uranium auctions coming up this Tuesdays (Feb. 20). There will be 100,000 lbs of U3O8 going up for sale. Like I said it's not big deal, but I strongly believe that this auction will push uranium to new record highs to at least $80 /lb.

This past week uranium stocks had a big week. Much of this is due to the hype surrounding this small auction, and the other reason is that the Sprott annual conference for institutions will be held this Tuesday in New York, and Wednesday in Toronto. I assume it will be another big week for uranium stocks.

On this news, I would like to make an announcement. If you haven't noticed on the right side of the website, I have liquidated my holdings of Oilsands Quest Inc. (BQI) and purchased into Denison Mining Corp. (DMLCF). The situation regarding BQI is dead money. I still like this company in the long run, but with the tax mess going on in Canada regarding the oil sands and their environmental impact is ridiculous and causing me to lose hair (see previous post on BQI reagarding the tax situation). So screw em. This is the first of probably a couple of moves I will be making to increase my holdings of uranium related companies. Let me tell you why:

1) I can't say that there is zero risk (just look at the flooded Cameco mine situation), but this is the most blatant situation of limited supply and huge demand in the market today.

2) It takes time to explore, drill, start mining, and process U3O8. This supply shortage will be steady for the next 5-10 years.

3) The geopolitical situation regarding oil has created huge demands for uranium.

4) China will drive this market if nothing else. (see my previous post on China's future operations regarding nuclear fuel)

5) I strongly expect to see large amounts of consolidation in the uranium market in the near future, and I expect companies like SXR Uranium One, Denison, and Cameco, to be right in the middle of it.

6) I feel that my prediction of uranium hitting $100 /lb this year is ridiculous. I hold to that, but it's starting to look like it will get closer to $150 /lb.

7) I love these uranium investments more as each day passes.