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There is one area of the markets that is acting all on its own

May 13, 2015

Chris continues to watch long term interest rates and thinks that sector could have an impact on the overall markets.

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Discussion
26 Comments
    May 13, 2015 13:48 AM

    STAGFLATION!

      May 13, 2015 13:51 AM

      Chirs T. – mentioned in detail on your blog yesterday about the surge in Uranium, good stocks, and thoughts on Russian, Chinese, Indian, and Middle Eastern interest in nuclear power.

      Also, I got out of my position in TLT (went in at $118.54, got out out at $120.60) because I agree the bond markets are nuts right now.

      Good luck to all in your investing!

        May 13, 2015 13:01 AM

        Silver stocks on a tear today:

        PureFunds ISE Junior Silver ETF (SILJ) -NYSEArca
        8.10 Up 0.35(4.48%) 12:39PM EDT

        Check the weekend show for thoughts on Silver and all the stocks and their weighting in this fund.

          May 13, 2015 13:39 AM

          Like I said on Monday:

          On May 11, 2015 at 11:00 am,
          wocsom morf knarF says:

          I say buy the junior gold and silver miners. Conservative types can hedge that with a short GDX position.
          Juniors priced in seniors are clearly a buy in my book.
          ————
          …and:

          On May 11, 2015 at 11:48 am,
          wocsom morf knarF says:

          I like the action of silver priced in gold (SLV:GLD):
          http://stockcharts.com/h-sc/ui?s=SLV%3AGLD&p=D&yr=1&mn=11&dy=22&id=p60042511929&a=407706196

            May 13, 2015 13:20 AM

            I’ve been beating on the Silver miner and Jr miner drum since the weekend.

            On May 10, 2015 at 9:56 am,
            Shad says:

            I really believe some of these smaller silver producers will outperform most of the other mining sector. Silver will likely outperform Gold on a percentage basis, and silver miners will be a multiplier on that affect.

            On May 10, 2015 at 3:28 pm,
            Shad says:

            Yes, but I believe Silver stocks will outperform Gold stocks when the commodity markets do put in their major bottom, and a number of the silver miners out-performed the gold stocks in Jan/Feb, but sold off harder in March/April. This is natural for Silver to outperform on the upside and downside.

            On May 11, 2015 at 11:48 am,
            wocsom morf knarF says:

            I like the action of silver priced in gold (SLV:GLD):

            http://stockcharts.com/h-sc/ui?s=SLV%3AGLD&p=D&yr=1&mn=11&dy=22&id=p60042511929&a=407706196

            On May 12, 2015 at 4:08 am,
            Shad says:

            Agreed. This is why I was focused on Silver in about 4 different conversations on the weekend show. It is Silver’s time to shine next.

            On May 12, 2015 at 12:08 pm,
            Shad says:

            If we do see further dollar weakness down to 92 that may give a little life to a further rise in commodities for a short bit. If the dollar gets down there, then I’ll start taking profits in a number of commodity-related plays.

            On May 12, 2015 at 12:01 pm,
            Shad says:
            I completely agree Gary, and think when the dollar does start its climb up higher that it will start to pressure the precious metals at that time.

            My expectation is still for the washout in PMs over the next few few months along with the commodities, but think we need a little more bullishness before that will start. I am just looking at the short term to see if Gold and in particular the miners have a little more steam left. Also, if/when we get that sentiment washout later this year, I’ll be getting the most bullish when I see people throwing in the towel, and when sentiment gets its most bearish towards PMs.

            I am keeping a position in PMs that I started building positions in basket of miners & explorers last year and overall the the basket of stocks and ETFS is profitable or at an break-even presently. Also, I’ve had a great time playing GDXJ to upside and the downside using (JNUG) and (JDST) irregardless of the spot price.

            May 13, 2015 13:25 AM

            GOOD CALL SHAD…………… 🙂

            May 13, 2015 13:08 PM

            Thanks …….The Boot!

            May 13, 2015 13:12 PM

            We are in agreement on the miners guys. If you dive into their operational results and can find the ones that are making money they will continue to outperform anything else in the sector.

            May 13, 2015 13:23 PM

            Agreed Cory. People get so attached to the commodity, that they sometimes forget that miners are actual businesses, and buying their stock is buying shares of their business, management, balance sheet, money on hand, debt, assets, decisions, and future potential.

            Many times miners do move as heard if macro situations and excessive moves in the pricing of the underlying commodities. However, as an independent company, the ones managed well, making money, growing opportunity, making discoveries, teaming up strategically, and maximizing timing will continue to outperform in any market. (just more so in a bull market).

          May 13, 2015 13:26 AM

          YOU TOO …wmk……….. good calls…. Boot

        May 13, 2015 13:51 PM

        Thanks, Shad — I did read all that.

          May 13, 2015 13:54 PM

          Just thought you may interested in the Uranium and Long Term Treasure chatter 🙂

            May 13, 2015 13:55 PM

            that should have said long term treasuries…….I’m not sure they’re a treasure.

    May 13, 2015 13:29 AM

    Fair enough Chris. Those warnings are worthy of being reminded about. Anytime there are too many people on one side of a trade though we should stop for a moment and appreciate the market is correcting to take the pressure off an imbalance.

    Is it not the distortions we are really worried about? So then we won’t fear that bonds are selling off as rates rise of that the dollar has fallen hard despite those who say it just can’t happen. This is a pretty necessary part of the markets rebalancing and in general…..its a good thing to prevent very bad outcomes later.

    May 13, 2015 13:17 PM

    BTW – Great thoughts from Chris Temple today on interest rates and how the speed and severity of the bond market is pushing the other markets around at present.

    Interesting times!

      May 13, 2015 13:25 PM

      Man, am I glad I got out of TLT this morning, as bond yields went up again and it got crushed back down to support. Hey, I called the $119 bounce, was able to squeeze out a small gain, and had a blast, but the bonds are just too nutty right now.

    May 13, 2015 13:02 PM

    As for Uranium miners…..they’ve just been soaring since last week, some stocks up 10-12%.

    Today was another bang-up day!

    Uranerz Energy Corp. (URZ) -NYSE MKT
    1.23 Up 0.08(6.96%) 4:02PM EDT

    UR-Energy Inc. (URG) -NYSE MKT
    1.03 Up 0.06(6.19%) 4:02PM EDT

    Energy Fuels Inc. (UUUU) -NYSE MKT
    5.00 Up 0.17(3.41%) 4:00PM EDT

    Uranium Energy Corp. (UEC) -NYSE MKT
    2.70 Up 0.24(9.76%) 4:01PM EDT – ** Up 9.76% today (wow)

    Denison Mines Corp. (DNN) -NYSE MKT
    0.94 Up 0.06(6.35%) 4:00PM EDT

    Paladin Energy Ltd (PALAF) -Other OTC  Watchlist
    0.2890 Up 0.0059(2.07%) 3:59PM EDT

    Uranium Resources, Inc. (URRE) -NasdaqCM
    1.30 Up 0.09(7.44%) 3:59PM EDT

    Fission Uranium Corp. (FCUUF) -Other OTC
    0.96 Up 0.02(1.80%) 3:59PM EDT

    Uranium Participation Corp. (URPTF) -Other OTC
    4.58 Up 0.10(2.23%) 1:29PM EDT

    Global X Uranium ETF (URA) -NYSEArca
    11.89 Up 0.40(3.48%) 4:00PM EDT

      May 13, 2015 13:07 PM

      I include Fission in this list, only because it is the most followed explorer, and you can also see it has not done nearly as well the last few days as the small producers… or companies like Denison or Uranium Resources that have tolling agreements and mine cleanup and reclamation divisions, with permitted mines ready to restart.

        May 13, 2015 13:20 PM

        On May 6, 2015 at 7:53 am,
        Shad says:

        Chris Temple – I couldn’t take it any more and did just take a good position in Mosaic (MOS).
        In my mind, the Fertilizer and Potash companies will start to shine in the near future.
        Next up FMC corp (FMC), Potash Corp of Saskatchewan (POT), ICL Fertilizer (ICL), Intreid Potash (IPI)

        Also……Uranium stocks surged 2 weeks ago and I trimmed positions or sold positions into that strength. However, today they look beaten back down so I took out new positions in Uranerz Energy (URZ), Ur-Energy (URG), Paladin (PALAF), and Cameco (CCJ) this morning. Some of them are already turning back up.

        On May 6, 2015 at 10:36 am,
        bb says:

        You have more money in the market than I do Shad, if I were to get back into uranium Fission would be my first choice, risk/reward.
        Everyone could have different reasons and goals.
        ___________________________

        BB – this is exactly why Fission was not my first choice. Look at yesterdays Chris T. blog at the Uranium numbers and Fission under-performed the producers as well.

        Don’t get me wrong, I really like Fission and I did respond back to you, but it got moved down the blog a ways from your comment. I’ll repost as it is relevant to the Uranium stocks that did perform well last week and this week.
        _______________________________

        On May 6, 2015 at 11:56 pm,
        Shad says:

        BB – also to respond to your comment about different investment objectives, to me the companies that will benefit the most from the Japanese reactor restarts in June are the Uranium producers before the explorers and there aren’t many.

        Cameco, Areva, Rio Tinto, and Uranium One are the bigger producers.
        Energy fuels (UUUU) is the largest US producer, and is acquiring Uranerz (URZ) in June in a merger, since their insitu mining is more profitable than the traditional mining.

        Ur-Energy (URG) is also an insitu miner in Wyoming (like Uranerz) and Uranium Energy Corp (UEC) is another insitu miner in the US and Paraguay, that has had a nice pop as well lately. Then you have Paladin (PALAF), still a big producer in Australia and Africa, and they just went through a whole balance sheet repair and partnered with Singapore.

        Then there are companies like Denison and Uranium Resources , who are exploring on some great properties, and have produced in the past, but are not currently producing. They both have enough cashflow and previously operating mines that can be restarted when prices rise again. Denison also has an environment and mine restoration division that brings in some revenue, and lastly they have a tolling agreement at Cigar Lake where they have a 1/5th interest, and this generates some revenue. URRE also has a mine reclamation division that generates cashflow.

        After all the producers, and explorers with permitted mines waiting for higher prices then you have all the other explorers. Fission is at the top of that list, but I also like UEX, Kivalliq, Toro Energy, Pele Mountain, Bayswater, Strateco, Canalaska, Forum Uranium, and Plateau Uranium (previously called Macusani Yellowcake).

        My interest is in building my positions in the small to mid-tier producers first (like Gold/Silver), then the quality explorers, and I have a position in Cameco as well.

          May 13, 2015 13:16 PM

          Just out of curiosity, how do all of you feel about the Russians buying Uranium One?

            May 13, 2015 13:04 PM

            Hey Big Al – yes I did reply back to you on that question because Marin Katusa brought up some great points in his article. I’ll repost from Chris T’s editorial yesterday.
            _____________________

            On May 12, 2015 at 11:05 am,
            Big Al says:

            Thanks Shad!
            What is you opinion, Shad, on the situation with Uranium One?

            On May 12, 2015 at 11:26 am,
            Shad says:

            I think it is a key asset that was taken out by the Russian government and was a very strategic play by them. It’s funny, because the only one I remember in main stream media, that really even mentioned the Russian takeover of Uranium One, was Glen Beck. He mentioning it on his radio show when the transaction with ARMZ was going through, but everyone thinks he’s either an idiot or crazy.

            If someone just looks at the sheer number of nuclear reactors that China has planned, interest in Nuclear power from India, and the fact that Russia is helping a number of Middle-Eastern, Asian, and Australian companies with technology, reactors, supply contracts, etc….. then it shows where the East thinks Nuclear is going.

            The point Marin brought up is that Russia is able to produce uranium profitably at these low prices. By utilizing the huge stockpiles of high enough grade ore tailings (although incredibily low in our normal mining standards) then this allows Russia to produce Uranium supplies while most of the hard rock processors will be underwater at the low prices. This low pricing is only hurting the US, Canda and Austalia, but helping them get an edge.

            This passage below is pasted from Marin’s article and is very telling:

            “In addition to its large reserves and production, Russia has a stockpile of highly enriched weapons grade uranium and plutonium—enough that the country is estimated to hold over 5 times the world’s annual uranium production of just under 134 million pounds.

            The misunderstood Fact of Underfeeding

            The linchpin of Russia’s nuclear energy dominance lies in its enrichment capacity. Russian enrichment facilities can take low grade uranium tails with grades between 0.2% and 0.3% and turn them into the 3%-5% grade uranium required for fission in nuclear reactors for energy. By 2016 Russia will be capable of producing over 15 million pounds of uranium per year or 40% of the US’s uranium demand.

            Fukushima resulted in a fire sale of uranium into the spot market. Because of the rapid shutdown of the Japanese nuclear reactors, separative work units (SWUs) trade at historic low prices, and have caused what is called an Underfeeding market. SWUs measure the amount of separation work necessary to enrich uranium. Most reactors require ~3-5% U-235 in uranium’s enriched form, from a natural concentration of about 0.7%.

            After enrichment from ~0.7% U-235 to ~3-5%, the material left behind is what the industry calls tails. Tails still contain up to 0.3% U-235. This is where the price of SWU’s are important, and why the Russians are benefiting from underfeeding while the US uranium companies are suffering.

            The price of SWUs is currently very low (in the wake of Fukushima), therefore the Russians can process tails with lower concentrations of U-235. As a result, fissionable uranium production will be many times higher for the same price. In fact, the Russians have been able to produce 500% more uranium from tails post-Fukushima then just a year before the disaster for the same price. This is called an underfeeding market. We are currently in an underfeeding market.” – Marin Katusa

            On May 12, 2015 at 11:28 am,
            Shad says:

            A reminder that India is serious about the future of Nuclear Power:

            Cameco’s first deal with India gives it access to the world’s second-fastest-growing consumer of uranium

            http://business.financialpost.com/investing/cameco-strikes-deal-to-provide-india-with-7-1-million-pounds-of-uranium

      May 13, 2015 13:18 PM

      Thanks for the breakdown as I currently don’t follow any Uranium companies.

        May 13, 2015 13:11 PM

        I would say it is part of the mix with Commodities and Energy that is very misunderstood.

        People have strong opinions about it even though it is one of the “greenest” forms of energy with an extremely low carbon footprint, great efficiency, and the East is moving forward aggressively with Nuclear power because it is a need not a want.

        People are so hung up on Japan’s situation, or that Germany is moving away from nuclear energy, that they forget it is the US, France, Russia, S. Korea, China, India, the Middle East, and the developing world that will be the ones that move the market. Germany is a fly on the windshield as far as the Uranium market, and Japan is a little less than 10% and shrinking as each new reactor in China, India, or Russia is planned.

        The space can also get quite political at times, (just look at all the hype with Iran lately), which does tie into your interest in how global politics influences the markets.

          May 13, 2015 13:14 PM

          More importantly for investors, there is a ton of money to be made in the uranium space and it sold off 90-95% in many cases by the end of 2014. It is now starting to finally get a bid, some interest, more coverage, and that is why a number of stocks have been skyrocketing up lately. Some stocks I purchased just last week are already up 12% and I am expecting 400-600% increases over the next 2-3 years.

            May 13, 2015 13:15 PM

            Not investment advice……just common sense advice……

    May 14, 2015 14:46 AM

    OK – there doesn’t seem to be much interest in Uranium on the blog like there was a few months back so I’ll give it up.

    My last point here is that (URG) Ur-Energy (discussed a bunch for the last few months), just broke above the $1.05 resistance level [from March 5th peak] and is at $1.04. If it can close above $1.05 today, then we are off to the races……

    (URZ) Uranerz needs a close above $1.29 and then it will be breaking out, but remember it is tied to the hip with (UUUU) Energy fuels as the are merging in under a month.

    (UEC) Uranium Energy Corp has clearly been the favorite as of late, and the Marin Katusa Article that was posted on the weekend show and on Tuesday on Chris’s editorial does a good job explaining why.

    Good luck to all in their investing if anyone does ever want to discuss the Uranium miners, or has any suggestions, or stock picks, or insights……..they’d be much appreciated.