Be Overweight Uranium Stocks
Source: Mineweb, Lawrence Williams (4/2/09)
". . .RBC Capital Markets believes the supply side of the equation remains at risk, while demand appears to remain in line with expectations."
Mineweb is not convinced on the latest apparent thinking. We see base metals as remaining vulnerable, particularly if the recent Chinese boost of stockpile purchases is not sustained, while gold - and silver - seem to show the potential of at least retaining their value, even if the big rises predicted by some now seem to be distant memories. That is not to say there won't be big rises, but there seems in the current market to be a stabilization in the low $900s for gold which currently shows little signs of breaking out of the range.
To an extent the Royal Bank of Canada Capital Markets team seems to be taking similar views to Mineweb in its latest recommendations for its Global Mining Best Ideas portfolio, but is also suggesting opportunities among other mining sectors which it feels show promise for capital appreciation in the short to medium term.
So where does RBCCM feel investors should put their money? Uranium stocks and fertilizer stocks are the top picks here. On uranium, RBCCM says "After record spot prices in 2007 and a subsequent hard correction, RBC Capital Markets believes the uranium spot price will rebound in H2/09. Significant production cuts were announced in late 2008 and RBC Capital Markets believes the supply side of the equation remains at risk, while demand appears to remain in line with expectations."