By: Jeb Handwerger
The TSX Venture is making a bullish move above the 200 day moving average. This is the first weekly move above this key technical level in more than three years. Now a bullish golden cross of the 50 and 200 day on the Venture Index may forecast a lot of capital to enter our small junior miners in North America. This bullish technical development may signal that the vicious downtrend in the resource sector may be ending.
Watch uranium as a bellwether for the revival of the sector. The Fukushima Disaster really was the major event to cause panic at the top in 2011. A bullish golden crossover of the 50 and 200 day moving average in the uranium price may be signaling a bullish turnaround in the entire commodity complex. This is the uranium prices third attempt at a breakout. The third time is usually a charm in the financial markets. Look for a breakout on Uranium Participation Corp at $5.77.
Japan is expected to turn more reactors on in 2014. Some are expecting at least one in five reactors to be turned on this year in Japan and a resumption of the bull market in uranium which was put on hold by Fukushima. The uranium price should move above $40 per pound in the near term. The recent breakout in natural gas, heating oil and Brent Crude is accelerating the need for uranium as a cleaner and economic alternative. Japan can not survive economically only on imported fossil fuels. This weekend there is an election that I will closely follow as it is the anti-Nuke’s last chance to delay the reactors from being turned back on. The anti-nuke regime has forced the Japanese economy to rely on liquefied natural gas (LNG) driving up electricity costs and inflation. Despite record fuel imports the prices for fossil fuels and coal are spiking there. If the nuclear reactors are not turned on soon then we can say sayanora to the Japanese economy. There may be a hidden agenda here. The Japanese nuclear shutdown has made the oil and gas producers very rich at the expense of the environment and economy.
Right now, uranium could be on the verge of an upside breakout and we may see something similar to 2007 when the priced soared to $135 per pound.
Many of the planned mines have been mothballed and existing production has been suspended on projects from Australia to Canada to Africa to Kazakhstan. Rio Tinto is having problems at its Rossing and Ranger mines. Areva has just shut down their Niger Mines…Cigar Lake has been delayed…and the list goes on and on.
One mine shutting down in the uranium market can put significant upward pressure on the uranium price which is very thinly traded. Now we have numerous massive uranium mines being mothballed. New capital seeking uranium combined with a lack of supply could cause a massive price spike possibly more volatile than the 2007 uranium price spike to $135 per pound. Very few analysts can find the companies that can actually make it into production.
Sometimes especially after a three year decline in the junior resource sector market caps don’t make any rational sense. Keep a close eye on Pele Mountain Resources (GEM.V or GOLDF) who controls the Eco Ridge Uranium and Rare Earth Mine in Elliot Lake, Ontario and has a market cap of below $10 million. They were just featured in a documentary on Ontario’s French Language Public Television Station. The episode highlights what I have been saying for years that rare earths will be the oil of the 21st Century and the importance of a secure supply of rare earths.
Elliot Lake is the only place in Canada which commercially produced rare earths as a byproduct of uranium. The revenue from the uranium could cover the operating costs. A rising uranium price combined with the increasing demand for a secure supply of rare earths could make the chances of a revival of mining at Elliot Lake highly probable.
The recent addition of a former Cabinet Minister of Ontario John Wilkinson to the Board of Directors may signal that Pele Mountain may be Canada’s most strategic uranium and rare earth asset despite trading for pennies on the dollar. In a recent Press Release CEO Al Shefsky said, “We are seeing increased interest from the Canadian government, the Ontario government, and major end users of rare earths in the development of secure, local, rare earth supply chains to support value added manufacturing in clean energy and high technology applications. John’s leadership, vision, and experience in the advancement of important large-scale projects will add immense value as we progress toward the licensing and feasibility phases at Eco Ridge.”
Disclosure: Author owns Pele Mountain and the company is a sponsor on website. Please do your own due diligence. I am not a financial advisor.
-- Posted Friday, February 7 2014 | Digg This Article |
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