Uranium trading

Discussion in 'Energy Futures' started by roncer, Apr 11, 2006.

  1. roncer

    roncer

    Well decided to jump in today and went ahead and bought a number of smaller uranium stocks that are traded on the Toronto Exchange.

    So of course most of my positions closed down. What I am wanting to understand more is how these mining stocks relate to the gold and silver market...........if at all. Also would love to hear any comments regarding the relationship of these uranium miners to the CAD. Do they tend to go up if the CAD has a weak day??

    Any and all comments appreciated.
     
  2. Sam123

    Sam123 Guest

    The CAD, like the Australian dollar, is often described as a “commodity currency” because their economy is dependent on the export of raw materials like oil, precious metals, uranium, etc. Also, people like you are selling dollars and euros to buy CAD in order to buy Canadian stocks listed on the Toronto Exchange. But it’s more complicated than that. Since Canadian stocks are priced in Canadian dollars, if the CAD falls, there is an incentive for people abroad to buy Canadian stocks because they can buy more shares with their dollars and euros. It’s like when the dollar falls, the S&P often rises because it’s priced in dollars. Likewise, if the CAD goes up, shareholders may realize some profits and sell, even if the stock doesn’t move. It’s like an arbitrage between perceived value of a currency, and the perceived value of a company priced in that currency.

    As for gold and silver, there seems to be an indirect link due to the general flight to commodities because of geopolitical uncertainties. Beyond that, I don’t see any other relationship. But since Uranium is becoming a hot commodity, I expect the trend of a lot of loser gold mining companies changing their identities to Uranium prospectors and dilute the stock market with their listings. So you need to separate those rushing into the Athabasca basin, for example, who stake claims but lack any experience or resources, from those who actually have claims, and from those who actually produce uranium.
     
  3. roncer

    roncer

    Thanks...............Very good understandable portrayal. I suspected the currency relationship might be similar to USD strength and weakness as it does influence our general market behavior here.

    Can you comment any on the behavior of canadian uranium stocks. When do you expect rallys or pullbacks? Are there some things I should be particularly watchful for? I guess I am asking a lot............how to trade em?

    Any comments you can spare are appreciated........Thanks for the reply.
     
  4. roncer

    roncer

    Have you found any newsletter people helpful. Dines, etc.
     
  5. Sam123

    Sam123 Guest

    I’m not the one to ask about short-term trading strategies since I’m in for the long haul. Some other Uranium threads have comments from traders better at answering your question.

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=62149
    http://www.elitetrader.com/vb/showthread.php?s=&threadid=55902
    http://www.elitetrader.com/vb/showthread.php?s=&threadid=55926
    http://www.elitetrader.com/vb/showthread.php?s=&threadid=44163

    This site provides a good backgrounder in Uranium exploration, mining, production in Canada, as well as the companies involved:

    http://www.investcom.com/moneyshow/uranium.htm

    and the industry in general:

    http://www.uxc.com
     
  6. roncer

    roncer

    Sam123...............Many Thanks. I will explore the sites.