This Week’s Commentary – December 23, 2006

The final full week of the trading year is over, the Christmas break has started (so in Canada we don’t resume trading until next Wednesday December 27), and it’s time to review our portfolio.

Two big stories this week. First as we reported earlier this week, the price of uranium was up $6.50 to an all time high of $72. That’s great news for all of us who are heavily invested in uranium stocks (in our Suggested Portfolio we are over 70% invested in uranium, with the balance in gold and silver stocks).

Second, The Dines Letter was published yesterday (December 22) and I am pleased to report that we guessed correctly both SAN.V – Santoy Resources Ltd. and MAW.V – Mawson Resources Ltd. are now on Mr. Dines recommended list. You can read my detailed thoughts, and what I plan to do, in my blog post Sell Santoy – Hold Mawson (although I guess from the article title you can figure out what I’m thinking).

I also think that TUE.V – Titan Uranium Inc. has broken down, so I’m selling it. Here are further details:

Charts Updated This Week

• ASX.V – Alberta Star Development Corp. – upgraded to a Buy
• BTT.V – Bitterroot Resources Ltd. downgraded to a Hold
• FRG.TO – Fronteer Development Group Inc. Peaked at $11.24 on November 24, and dropped to close on Friday at $9.54. This looks like a normal consolidation to me, and it’s probably a good buy point. This is a solid “near blue chip”, and forms a nice chunk of my portfolio.
• JNN.V – JNR Resources Inc. Hold – Big recent run, but I still like it.
• MAW.V – Mawson Resources Ltd. Buy – Mawson is now on the Dines Letter recommended list; see our detailed commentary this week.
• SAN.V – Santoy Resources Ltd. Sell on increase – Santoy is now on the Dines Letter recommended list; see our detailed commentary this week.
• SGC.V – Sunridge Gold Corp. Buy – Still a buy, chart still looks good despite recent consolidation.
• URE.TO – Ur-Energy, Inc. Buy -Consolidation since mid November; see this week’s commentary for more details.
• TUE.V – Titan Uranium Inc. Sell – Appears to have broken down, so I’m selling.

My detailed comments are listed below. As a new feature this week, I have added a suggested portfolio (see table below), with my suggested weightings. My thought process is as follows (feel free to post a comment below if you agree or disagree).

First, the Big Three, Fronteer, Mega, and Pinetree comprise 36% of the portfolio (12% each, indicated in bold in the table below). Next, I have a gold and silver component equal to 26.5% (indicated in gold font in the table below). The balance of the portfolio is in junior uranium shares, based on the assumption that as the price of uranium continues to increase, institutional investors will gravitate towards the junior plays, which have the most potential upside. If you would like to see the table in Excel format, you can get it here: Suggested Portfolio Spreadsheet.

Suggested Portfolio

Note that the chart adds to 97.0%, on the assumption that the portfolio is 3.0% in cash.

Here is the detailed commentary on the individual stocks (all figures in Canadian dollars).

Detailed Stock Commentary

• ABX.TO – Barrick Gold Corp Wait to buy – major downtrend since May 11, minor uptrend since June 13, wait until it decides if it’s going up or down before buying; aggressive investors could start accumulating (I’m not; I think there are better golds to buy)
• AQI.TO – Aquiline Resources, Inc. Hold – Big increase in November, now in a consolidation phase.
• ASX.V – Alberta Star Development Corp. Buy – 1.5% – Time to start buygin.
• AXU.TO – Aurora Energy Resources, Inc. Buy – 1.5% – has corrected from $14.90 down to around $13 in December so far; probably a good buy point; it’s back down to it’s long term uptrend line
• BAY.V – Bayswater Uranium Corp. Sold High of $1.69 on September 6; corrected down to $0.82 on October 19; closed at $1.32; not a particularly compelling chart, but probably no point in selling now either. However, we can’t own every stock in the world, so to free up cash Bayswater gets cut; will monitor for possible repurchase later.
• BTT.V – Bitterroot Resources Ltd. Hold – High of $0.89 on April 19; subsequently corrected to $0.32 on September 15; got back up to $0.78 on November 27, and has since corrected to $0.63; hold, pending a move to the upside..
• CCO.TO – Cameco Corp. Wait – High of $49.95 on May 11; downtrend line appears to have ended around December 6; however, I would wait for a positive upside break-out, preferably over $50 Canadian, before getting back into this one, particularly with the uncertainty surrounding the Cigar Lake mine.
• CHX.V – Cash Minerals Ltd. Wait – Trending downward since peak of $2.24 on September 6; minor top of $1.98 on November 30; appears to have solid support at $1.20, so I would continue to hold if I owned it, which I don’t. Unfortunately the portfolio is full, so since I can’t own every stock that exists, this one gets cut. If it breaks into new ground, I will consider purchasing it again.
• CVV.V – CanAlaska Ventures Ltd. Wait – Similar chart to many other uraniums; I see no compelling reason to buy at this time.
• CXX.V – Crosshair Exploration & Mining Corp. Buy – I sold my shares at $4.00 on December 11; it closed at $3.54 on Friday, so it’s probably time to get back in; (this is a play on the Dines Letter recommending this one at some point in the future, which should cause a nice pop, probably well over $4.
• DML.TO – Denison Mines Corp. Buy – Denison merged with IUC.TO – International Uranium Corp. in early December; it’s now had a pullback, so it looks like a buy to me. Denison was criticized in the past for not acquiring any companies; now that it has, and since presumably further acquisitions are likely, it’s time to get back into Denison.
• FRG.TO – Fronteer Development Group Inc. Buy – Peaked at $11.24 on November 24, and dropped to close on Friday at $9.54. This looks like a normal consolidation to me, and it’s probably a good buy point. This is a solid “near blue chip”, and forms a nice chunk of my portfolio.
• JNN.V – JNR Resources Inc. Hold – Big recent run, but I still like it.
• LAM.TO – Laramide Resources Hold – In a trading range between $7 and $8 since the beginning of November; hold until it decides which way it wants to go.
• MAW.V – Mawson Resources Ltd. Buy – Mawson is now on the Dines Letter recommended list; see our detailed commentary.
• MGA.TO – Mega Uranium Ltd. Hold – In a consolidation, but no need to sell at this time.
• PAA.TO – Pan American Silver Corp. Buy – Solid uptrend since a low of $19.70 on October 4, 2006; closed on Friday at $28.26; high for the year was $32.13 on March 30, so we are closing in on a new high; I would continue to accumulate in anticipation of further streghth, particularly since the first quarter of the year is usually a strong time of year for gold and silver stocks.
• PDL.TO – North American Palladium Ltd. Nope – Nothing compelling here; unless you like buying stocks in downtrends, I see no reason to own this one.
• PDN.TO – Paladin Resources Limited Buy – Absolutely gorgeous chart; Paladin remains a strong buy.
• PNP.TO – Pinetree Capital Corp. Hold – Very interesting movement on Pinetree; read my detailed commentary for more details; currently consolidating, so still a hold.
• PXP.V – Pitchstone Exploration Ltd. Buy – Although we have had a pullback over the last two weeks (like most of our other stocks) I still like Pitchstone.
• SAN.V – Santoy Resources Ltd. Selling – Santoy is now on the Dines Letter recommended list; see our detailed commentary.
• SGC.V – Sunridge Gold Corp. Buy – Still a buy, chart still looks good despite recent consolidation.
• SSO.TO – Silver Standard Resources, Inc. Strong Buy – Still a strong buy.
• SSR.TO – Southern Star Resources Inc. Buy – One of the best performing gold stocks at the moment.
• SXR.TO – SXR Uranium One, Inc. Buy – Making new highs, looks good.
• TVC.V – Tournigan Gold Corp. Buy – Consolidating, but still looks good.
• U.TO – Uranium Participation Corp. Nope – Congestion between $12 and $13; not in my portfolio, so no further comments.
• URE.TO – Ur-Energy, Inc. Hold – Consolidation since mid November; see this week’s commentary for more details.
• UUU.V – Urasia Energy Ltd. Strong Buy – Still a strong buy
• TUE.V – Titan Uranium Inc. Sell – Chart breaking down, time to sell. Check out the Top Picks page for current recommendations, and feel free to leave a comment by clicking on the comment button below (you have to register to leave a comment, but feel free to use whatever name you want).