Ladies and gentlemen, I am sad to inform you that I will no longer be posting this summer. I am just going to be too busy between working two jobs, researching my own stocks and following the economy. I wouldn't be able to put 100% into it, and if I can't give it my all, I won't sell you, or myself, short. I will not have the time to share these thoughts on this website until Fall rolls around again.
I will be opening up the option of an informal financial newsletter of sorts. The newsletter will cover all the buys, sells, and holds of my personal portfolio. It will also contain the occasional tid bits of economic current events and my personal analysis on them. The more demand there is for the newsletter, the more work and time I will be putting into it, and who knows, I might give it a fancy name or something. So email and let me know if you wish to be put on the list that will be receiving the letter. The email addresses will be held confidential, and will not be rented out to anyone.
Thanks to all of you loyal readers and otherwise. Feel free to contact me via email if you have any questions or comments about anything. My email address is jones973@tc.umn.edu. Happy investing, and I will be picking the website up again at the end of August or beginning of September.
Sunday, May 13, 2007
Friday, May 11, 2007
Denison Earnings
Denison came out with its earnings report yesterday. Let's dig into the numbers because they are rather interesting and assuring as an investor. They had a consolidated net loss of $5.06 million or $.03 per share.
Here's the good stuff, net cash used in operation was $5.44 million compared with $4.5 million a year ago. From that less than a million increase, revenue jumped from $660k to $11.72m. The gain can be attributed to increased production as well as increases in the price of uranium.
From that revenue, they more than doubled their exploration expenditures from $2.5m to $5.05m. This is exactly what you like to hear from a mining company. Increased production and increased commodity prices leading to an increase in revenue which they are funneling back into their exploration projects. We are up over 25% on this one in the last 2 months and I will continue to hold.
Here's the good stuff, net cash used in operation was $5.44 million compared with $4.5 million a year ago. From that less than a million increase, revenue jumped from $660k to $11.72m. The gain can be attributed to increased production as well as increases in the price of uranium.
From that revenue, they more than doubled their exploration expenditures from $2.5m to $5.05m. This is exactly what you like to hear from a mining company. Increased production and increased commodity prices leading to an increase in revenue which they are funneling back into their exploration projects. We are up over 25% on this one in the last 2 months and I will continue to hold.
Thursday, May 10, 2007
Gold Update
As you can see, gold is once again approaching the $660 support level. I don't necessarily think the correction was due to gold being enormously over bought because it wasn't. I think it was more the fact that the USD was over sold. In my last update I said that a correction to the $660 level was a possibility. You can also see the support at the 50 day MA. I don't expect this consolidation period to last much longer. I will be adding to my gold stock positions here and will continue to do so when the price bumps up against the 50 day MA.Economic Data
Lot's of data, so lets just dig in...
In March, the trade deficit increased by 10.4% from the April numbers. The numbers came in at $63.9 billion. That's an annual rate of $766.8 billion dollars. Bloomberg reports that the majority of this increase came from oil imports. So what happens to the trade deficit when oil jumps to $80 /barrel this summer? I don't think I need to answer that question. Another quick note on the topic, import prices in general rose 1.3%. Again this is do large in part to oil prices. The issue on a larger scale is that all of these pools of liquidity are trying to find a home, and I expect some of that liquidity to get real cozy in consumer prices.
Bloomberg reports:
U.S. retailers posted the biggest sales decline on record, trailing already-reduced estimates.
Bloomberg blames the cold. I don't buy that for a second. We are starting to see signs that the American consumer is maxed out. Consumers are no longer able to use their declining home equity to buy big ticket items. That hasn't necessarily stopped them, but it has just slowed them down. This is prevalent in the rising amount of credit card debt. Don't forget about the ARMs that are planned to recent in the coming months and years. Look for this to effect GDP for the 2Q, and I promise you that the consumer hasn't come close to bottoming out yet.
The Bank of England raised their overnight lending rates to 5.5% which is a 6 year high. The ECB is likely to follow suit in June. Even as the FOMC holds rates steady, foreign central banks continue to raise rates putting more downward pressure on the USD. I don't like to forecast or predict to much but I am going to do just that for you now:
I think that the rhetoric that Bernanke and company has been using is just that. They are trying to 'battle' inflation with words, but it doesn't really work like that. As long as they can use core CPI measures and manipulate the manufacturing data before the FOMC meetings, they will not be faced with pressure from the general public on inflation. The crazy thing is that the majority of Americans want a rate cut. I think that Bernanke will continue his 'tough' stance on inflation for a good part of this year. He and his cronies at the Federal Reserve will cut rates as GDP growth, or lack there of, continues to fall. Look for a rate cut at the end of this year or the beginning of next year.
In March, the trade deficit increased by 10.4% from the April numbers. The numbers came in at $63.9 billion. That's an annual rate of $766.8 billion dollars. Bloomberg reports that the majority of this increase came from oil imports. So what happens to the trade deficit when oil jumps to $80 /barrel this summer? I don't think I need to answer that question. Another quick note on the topic, import prices in general rose 1.3%. Again this is do large in part to oil prices. The issue on a larger scale is that all of these pools of liquidity are trying to find a home, and I expect some of that liquidity to get real cozy in consumer prices.
Bloomberg reports:
U.S. retailers posted the biggest sales decline on record, trailing already-reduced estimates.
Bloomberg blames the cold. I don't buy that for a second. We are starting to see signs that the American consumer is maxed out. Consumers are no longer able to use their declining home equity to buy big ticket items. That hasn't necessarily stopped them, but it has just slowed them down. This is prevalent in the rising amount of credit card debt. Don't forget about the ARMs that are planned to recent in the coming months and years. Look for this to effect GDP for the 2Q, and I promise you that the consumer hasn't come close to bottoming out yet.
The Bank of England raised their overnight lending rates to 5.5% which is a 6 year high. The ECB is likely to follow suit in June. Even as the FOMC holds rates steady, foreign central banks continue to raise rates putting more downward pressure on the USD. I don't like to forecast or predict to much but I am going to do just that for you now:
I think that the rhetoric that Bernanke and company has been using is just that. They are trying to 'battle' inflation with words, but it doesn't really work like that. As long as they can use core CPI measures and manipulate the manufacturing data before the FOMC meetings, they will not be faced with pressure from the general public on inflation. The crazy thing is that the majority of Americans want a rate cut. I think that Bernanke will continue his 'tough' stance on inflation for a good part of this year. He and his cronies at the Federal Reserve will cut rates as GDP growth, or lack there of, continues to fall. Look for a rate cut at the end of this year or the beginning of next year.
Wednesday, May 9, 2007
New Addition to the Portfolio
Well it's not necessarily a new addition, but more of a reinstatement of one of my favorite companies. I have added Oilsands Quest (BQI) to my portfolio.
If you recall, I unloaded this company on news of the 'green' movement hitting Canadian oilsands. I think that that has been correctly priced into the stock, and at this price, this stock looks very appealing.
Why do I like BQI? They have the largest land holdings of any Canadian oilsands company. The have had great success in the exploratory drilling, and the interest in these oilsands has been accumulating both globally and domestically. Statoil has recently purchased a Canadian oilsands company, and now there's rumors that Canada might be building a nuclear power plant for the oilsands.
Oil also looks poised to explode. It looks technically strong, but what about the geopolitical wild card? There have been a flurry of recent oil related terrorism in the news. Don't forget about the mess in Nigeria. Also, Doug Casey reports that our oil imports from Algeria, Nigeria, and Angola now account for 26% of our total oil imports. These places are hot beds for violence and the oil flow out of these countries is very vulnerable to interruptions. And what about a hurricane? Don't forget we are amidst La Nina, El Nino's less extreme sister. Anyone one of these items would spike the price of oil, but a combination of the above mentioned events could be cataclysmic.
If you recall, I unloaded this company on news of the 'green' movement hitting Canadian oilsands. I think that that has been correctly priced into the stock, and at this price, this stock looks very appealing.
Why do I like BQI? They have the largest land holdings of any Canadian oilsands company. The have had great success in the exploratory drilling, and the interest in these oilsands has been accumulating both globally and domestically. Statoil has recently purchased a Canadian oilsands company, and now there's rumors that Canada might be building a nuclear power plant for the oilsands.
Oil also looks poised to explode. It looks technically strong, but what about the geopolitical wild card? There have been a flurry of recent oil related terrorism in the news. Don't forget about the mess in Nigeria. Also, Doug Casey reports that our oil imports from Algeria, Nigeria, and Angola now account for 26% of our total oil imports. These places are hot beds for violence and the oil flow out of these countries is very vulnerable to interruptions. And what about a hurricane? Don't forget we are amidst La Nina, El Nino's less extreme sister. Anyone one of these items would spike the price of oil, but a combination of the above mentioned events could be cataclysmic.
Tuesday, May 8, 2007
Uranium Futures
I just wanted to let you know that the June futures contract for one lb of uranium already has a bid of $148. There isn't a contract beyond June available yet.
Monday, May 7, 2007
Uranium Update
I've recently heard through the grape vine that uranium has jumped to $120 /lb. My thoughts on this are like a broken record. Demand continues to outstrip supply and there are no signs of that letting up.
I have some great numbers brought to you by Mike Berry. There are currently 448 nuclear power plants in operation. They consume U3O8 at an annual rate of 188 /lb per year. Current production of U3O8 is approximately 100 million pounds of U3O8 per year.
Berry reports that there are currently as far as future plants go, there are 34 new nuclear power plants for the U.S., 40+ for China, 42 for Russia, and 11 for S. Korea to mention a few. It would take a 41,000 tons of uranium mine production globally to catch up with demand.
I guess what I'm getting at is that I still expect prices push higher. How high do I see them going? Well, as you know, I think this question is ludicrous. It will be very easy to tell when supply catches up with demand in this market. If you forced me to make a guess, I would throw something out there like $200-225 /lb.
I feel that there is an important, but often over looked, item to note. As in most commodities, these prices will be unsustainable. There isn't a shortage of uranium in the earth, there's just a shortage of mines and refineries to extract that uranium. In the long run, I see a price of $40-50 /lb. This is how commodity super cycles work.
One final not before I finish this post. I'm sure you've noticed that I have failed to mention anything about the uranium futures market that opened up today. I feel that this is a nice vehicle for both sides of the market to have a more accurate price than a weekly spot price. I wasn't positive how this would effect uranium stocks. Honestly, I thought we might see an initial sell off in these stocks followed by some good strength. Obviously that's not the case. Denison is trading up approximately 9% today and SXR is up around 4%. I look forward to following this futures market and seeing its effect on the price of U3O8.
I have some great numbers brought to you by Mike Berry. There are currently 448 nuclear power plants in operation. They consume U3O8 at an annual rate of 188 /lb per year. Current production of U3O8 is approximately 100 million pounds of U3O8 per year.
Berry reports that there are currently as far as future plants go, there are 34 new nuclear power plants for the U.S., 40+ for China, 42 for Russia, and 11 for S. Korea to mention a few. It would take a 41,000 tons of uranium mine production globally to catch up with demand.
I guess what I'm getting at is that I still expect prices push higher. How high do I see them going? Well, as you know, I think this question is ludicrous. It will be very easy to tell when supply catches up with demand in this market. If you forced me to make a guess, I would throw something out there like $200-225 /lb.
I feel that there is an important, but often over looked, item to note. As in most commodities, these prices will be unsustainable. There isn't a shortage of uranium in the earth, there's just a shortage of mines and refineries to extract that uranium. In the long run, I see a price of $40-50 /lb. This is how commodity super cycles work.
One final not before I finish this post. I'm sure you've noticed that I have failed to mention anything about the uranium futures market that opened up today. I feel that this is a nice vehicle for both sides of the market to have a more accurate price than a weekly spot price. I wasn't positive how this would effect uranium stocks. Honestly, I thought we might see an initial sell off in these stocks followed by some good strength. Obviously that's not the case. Denison is trading up approximately 9% today and SXR is up around 4%. I look forward to following this futures market and seeing its effect on the price of U3O8.
Friday, May 4, 2007
Less Than...Unemployment
Bloomberg Reports:
The 88,000 increase in employment followed a 177,000 gain in March that was smaller than expected, the labor department reported today in Washington.
The estimated increase was supposed to be 100,000. The unemployment level increased to 4.5%, that's if you take those numbers at face value. Recall my previous post on unemployment for a more detailed explanation of the manipulation of this statistic. Anyways, the reasonable amount of unemployment is been the item that has kept this economy from busting. Although I don't think that we have 4.5% unemployment, we still have a reasonable unemployment level. I guess it is what it is, but this is just another forward looking indicator for the economy.
The 88,000 increase in employment followed a 177,000 gain in March that was smaller than expected, the labor department reported today in Washington.
The estimated increase was supposed to be 100,000. The unemployment level increased to 4.5%, that's if you take those numbers at face value. Recall my previous post on unemployment for a more detailed explanation of the manipulation of this statistic. Anyways, the reasonable amount of unemployment is been the item that has kept this economy from busting. Although I don't think that we have 4.5% unemployment, we still have a reasonable unemployment level. I guess it is what it is, but this is just another forward looking indicator for the economy.
Thursday, May 3, 2007
Crisis Prevention
Bloomberg Reports:
Asian finance ministers will this week probably agree to pool part of the region's $2.7 trillion in foreign-exchange holdings to prevent a repeat of the crisis that depleted reserves ten years ago.
This is an interesting story. The first item that jumps out at you is the $2.7 trillion dollars of reserves that are held in Asia, and the majority of those are U.S. dollars.
The other item of importance is that I believe it's different this time. There's the argument that China and India and some of these other countries are overheating economically. This is fine. Here's where I stand. China is growing at this pace for good reasons. There problem lies in their stock market. I believe that they are in for a major correction, and a lot of folks will lose a lot of money. How that plays out in the rest of the economy will be interesting. China will eventually have to let the yuan float. They will need to stop importing U.S. inflation in order to have a sustainable economy.
That's not the biggest threat in my opinion. I believe that the largest threat to Asian growth is a collapsing USD. Here's the deal: China's economy may or may not be overheating. I've read great arguments on both sides, but it is indisputable that it is very hot and very fragile. A collapsing USD will have ripple effects world wide, but it will effect these 'hot' economies more then Europe per say.
I guarantee that when these Asian finance ministers meet in Kyoto this week, they will be discussing their vulnerability to a weak USD.
Asian finance ministers will this week probably agree to pool part of the region's $2.7 trillion in foreign-exchange holdings to prevent a repeat of the crisis that depleted reserves ten years ago.
This is an interesting story. The first item that jumps out at you is the $2.7 trillion dollars of reserves that are held in Asia, and the majority of those are U.S. dollars.
The other item of importance is that I believe it's different this time. There's the argument that China and India and some of these other countries are overheating economically. This is fine. Here's where I stand. China is growing at this pace for good reasons. There problem lies in their stock market. I believe that they are in for a major correction, and a lot of folks will lose a lot of money. How that plays out in the rest of the economy will be interesting. China will eventually have to let the yuan float. They will need to stop importing U.S. inflation in order to have a sustainable economy.
That's not the biggest threat in my opinion. I believe that the largest threat to Asian growth is a collapsing USD. Here's the deal: China's economy may or may not be overheating. I've read great arguments on both sides, but it is indisputable that it is very hot and very fragile. A collapsing USD will have ripple effects world wide, but it will effect these 'hot' economies more then Europe per say.
I guarantee that when these Asian finance ministers meet in Kyoto this week, they will be discussing their vulnerability to a weak USD.
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