Uranium Downfall
Summer is usually bad for mining stocks, since the Canadian mining companies are usually doing their thing while it’s warm. The mergers and discovery reports that drive stock prices higher don’t usually happen until the fall or winter. Typically, the stocks drop around April and don’t come back until after September. I thought that I would hang on until then, but I’m not happy with the results.
The stocks started falling in late April, but I was up almost 50% at the time. I figured that they would probably go down 25%, which would leave me up by 25%. However, I had not anticipated a drop in the Uranium spot price from $140 per pound to $90 per pound. Uranium consumers are conspiring to reduce the spot price, which is causing panic selling. As of now, I’m 20% in the hole.
Historically, the Uranium stocks see new highs by January or February. It would be foolish to sell now when the stocks should recover by September or October. The only option now is to hold tight and wait for the recovery in the next month or so. Next year, I’m going to sell everything in April and buy back low in August.
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