Buy, Sell, or Hold...

One of the toughest parts when it comes to TRADING, I say this because trading and investing are two separate actions, is when to buy, hold, or sell. Another tough part is deciding what is a TRADE and not an INVESTMENT. Well we have been watching as the speculative bubble in the small resource stocks seems to have erupted, leaving many of our positions underwater for the moment (some further beneath than others). Throughout this time we have tried to develop a strategy for once the tide turns by following many of the small resource stocks including those which we have no opinion on. We have also added (in our personal portfolio, which happens to be real money for those wondering) to what we view as investments at this time, including probably the hardest hit of them all CanWest Petroleum (CWPC). We increased our holdings by 5% at a recent price of $4.26 believing that this was one of those opportunites to take advantage of a sale on Wall Street.

Trading is part strategy, part timing, and part art. Luck can be involved in it, but we do not recommend trying your LUCK at trading. This is a strategy that will turn out costing you money in an overwhelming majority of the time. With that out of our way let us state the Trading opportunity that we currently see within the small cap uranium sector. The stock is Alberta Star, ticker symbol ASXSF, which lays down our target. We believe that as the stock is anywhere around $1.20 it is a buy, especially anytime after the 20th of each month. We say this because each time we try to get back into this stock at an attractive price, it shoots out of a logic buying area due to The Dines Letter and its readers buying on his recommendations. We attribute this to the nearly 50% gain experienced over the past week in its stock, and regret that we did not pull the trigger on this trade as we had done on previous occasions.

We believe that owning and holding positions in these promising energy companies of the future allows for us to reap huge rewards in the future, but at the same time we realize that there is money to be made today when the opportunity arises. These are the type of opportunities we all need to open our eyes to in order to take advantage of the lemmings who undoubtedly will come back into the market once they have had ample time to lick their wounds and see the upward movement.

-theinvestar's Portfolio:

add ASXSF at or below $1.20 for trading purposes.

G-8 Endorsement

The news out of the G-8 Summit taking place in Russia is that the majority of the countries (all those not named Germany) endorse the implementation of Nuclear Energy as a means to reach energy self-sufficiency. This would also act as a means of lessening these Nations' dependence on imports to meet their energy needs (excluding Russia of course) as Europe and the US see their own personal energy supplies dwindling. This news is viewed by us as extremely positive as it shows that the leaders of the free (and we use this word sparingly knowing that Russia is included) world are tuned in to the need to diversify their sources for energy. Although it will take years to see a dramatic increase in consumption of uranium due to the time to build the infrastructure needed, this should be bullish for uranium stocks Monday morning here in the US and Canada as well as in Australia which will be opening in 4 hours.

This statement should lend some credibility to the Bush Administration's bid to get a new generation of nuclear power complexes underway within the next few years and hopefully pave the way for a new nuclear building boom for the country. This appears to be one small battle won in an uphill struggle for the nuclear industry, but we think that it will be a very significant triumph when we look back years from now. This simply adds to our belief that for the next 5 years we want to focus on, and be significantly invested in nearly all things Uranium. We have said it before and will restate it, look for many of these stocks to double at least every two years for the next 5 and then the party will start shortly after that.

The leaders of this world are urging this switch to uranium from oil due to oil reaching nearly $80 recently and we continue to believe that it will increase. Will we see $100 oil, YES! Will we see $100 uranium, ABSOLUTELY! Our bet is that oil will force the price of uranium up, so we must say that oil will hit the $100 threshold first, followed by uranium thereafter. When oil hits $100 it will be a wake-up call to the world and they will then realize that oil is rather expensive and inefficient in respect to uranium. Whether leaders of the world or leaders of the corporations/markets of the world realize this first is anyones guess, but one of these two will be the driving force behind uranium passing oil in terms of price. Uranium could truely trade at double oil's market price and still be more economical than oil as an energy source! Also, should our market thesis be off-base or simply wrong (which we highly doubt) in 2014 the market will have a rude awakening when the Russians are freed from their obligation to sell their uranium on the market at market prices or contract prices previously arranged. This will leave a large gap to fill in the marketplace and we suspect that prices will continue to rise due to our doubt that the world will have enough new mines brought online within the next 8 years to replace current stockpiles.

The market has not been kind to those of us who have been risk takers over the past 3 months as other risk takers were squeezed out. However, stick to your guns and trust your head in these situations and work up the courage to buy the market leaders like Cameco, Paladin and SXRuraniumone when they become 'cheap' (we use this in relativity terms- relative to what they have been trading at). We view this as a winning trading strategy in rough times which will be very rewarding, especially as the leaders of the world are coming around to the notion that nuclear power is going to be the only true way to free themselves of the troubles with oil (socially, economically, environmentally, and geopolitically).


This will take place as uranium is much more efficient than oil right now and current reactors use only 5% of the fuel fed to them. This means that 95% of the fuel is then stored today as "waste", but once the reactors become more efficient will become a "treasure".

The Beginning of a New Run

It finally appears that the bottom has been hit in the microcap resource stocks as we have risen above the previous highs set from the old lows. It also seems that the companies themselves believe that their stocks are becoming fairly valued because in the last week one of our favorites, SXRuraniumone, has been out purchasing properties for cash and STOCK! Although we would hope that they would use cash to purchase these properties it appears that the uranium patch has caught fire and equity will now be a required element in any transaction involving physical assets as it was during the last boom in Internet Stocks. We feel that the SXR is issuing stock because first it must and second they feel that the dilution to current shareholders will be offset with future events that will be coming up. Remember that this company will be opening a mine in Africa and is the next mine in Australia that will receive approval. In previous posts we stated that we believed that the next wave of producers would join Cameco (CCJ) as the elite companies in this field through their production and then aquisitions and it appears that this is exactly what is happening. Take note that Paladin (PDN.TO) recently made a purchase of an Australian Junior and these recent moves by SXR seem verify this previous notion.

Keeping with that idea it seems that Ur Energy (UREGF in the US and URE.TO in Canada) is running on all cylinders right now. They have the stock price up from US$1.73 where we recommended it to a recent US$2.23 which is up 29%. These guys will become a dominant player as they will be pumping uranium out of the ground in 2008 through their in-situ leaching process. They keep expanding their holdings and resources in Wyoming and this asset in the US will undoubtedly become worth more than foreign holdings as it will be viewed as a safe investment.

On really no news we have also seen Pitchstone Exploration take off from its lows at C$1.30 to a recent C$1.74 a 31% increase from the bottom. If SXR is serious about locking up realestate for uranium exploration we truly believe that this would be a very good target to take out. They would lower future expenses related to their Joint Venture and also take control of the SXR shares and options they have already paid Pitchstone (PXP.V). Regardless of a takeover from SXR though, we still believe that Pitchstone is in a very sweet spot in the Athabascan Basin which can only be matched by a few other companies.

The past week I have been confused as to why Canwest (CWPC) is down. Logically one understands that they apparently disappointed the market with Management's Reserve Estimate, but we must point out that 250 million barrels of oil is no joke. When one also considers the fact that they drilled 19 holes and were only able to use 13 holes for the Reserve Estimate, then we must check the market's logic because that is roughly 19 million barrels per successful drill hole. The fact that this drill information is on 1/2 of 1% of the total land they possess is of no significance in our opinion, but we do believe that the company will find over a billion barrels IN THE WORST CASE SCENARIO on their land.

On a more positive note Cameco has rebounded strongly as the Uranium stocks have gotten a second wind, precisely as we thought would happen as we recommended a look at the December '06 Calls then at $5.60. We now see that they closed today at $9 for a gain of 61% on paper. We will hold onto this contract as we believe it becomes worth more as the confidence in the sector increases thus increasing the premium for the contract itself...at least until November when the premium begins to evaporate as the option nears expiration.

CanAlaska resumed drilling at West McArthur and will need to play catch-up in order to complete the holes they did not get to last year due to inclement weather...or lack thereof to be honest. Also keep an eye on the NorthEast Project. They will begin drilling on this vast track situated just outside the Basin and this is the project we believe that the Chinese were interested in only a few months ago...if they have good news on this project it could bring in a ton of the Chinese money that they seem so willing to throw at energy companies these days.

In other news it seems that the Canadian Dollar has fallen below the US$.90 level and is now hovering around the US$.88 level. The Australian Dollar seems to be recovering to the all important US$.75 level and as it rises we expect that it will be fueled in part by the resource stocks rising in conjuction as you can see by the following links:

http://www.asx.com.au/asx/research/ChartsSearchAndResults.jsp?postback=true&asxCode=bhp&compare=index&indices
=XMJ&compareCode=&TimeFrame=D6&chart.x=56&chart.y=14

http://finance.yahoo.com/currency/convert?amt=1&from=AUD&to=USD&submit=Convert

Take note that after the steady fall they begin to act similiar in their rise. We also believe that as Australia's resources become more in demand so will their currency (same case with Canada) so we view these currencies as crucial to our foreign investments because each percent that they rise they will add significantly to our positions and form a second trade for us.

Currently we still feel as though we should be adding to our "Future Blue Chips" so we like CWPC and SXR at these levels as we expect them to begin acting well after the market figures out in which way it wishes to move. Much of this depends on the US Federal Reserve, but we feel that resource stocks are the place to be as the US$ has steadily declined in response to the Fed hiking rates...this is not usual, so we expect that the US$ will decline thus forcing up our stocks and the prices paid for their resources, not to mention the currency exchange rate.