Profit Taking… When and Where?

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Those who have been reading this blog for some time, may remember I have posted some commentary on Precious Metals miners, and energy suppliers over the last 12 months.
Oil prices - where will they stop?

In one of my missives, “Transition Vamp? Or “How the Crash will be won!”” I suggested that you might like to explore one or two companies in these markets.  In the one linked to above, I suggested that a junior miner on the London AIM market [JLP] with a major platinum resource in South-Africa, could be worth a punt.   If you had decided to do your due diligence, and bought some within a few days of this, you could have bought shares in this particular junior at the miserly price of 1.3p per share.

Today you would be glad to know, the price is a more realistic price of 3.78p. If you have bought, then I now suggest taking some profits, and leaving the rest to run – essentially for free. It is possible that the price has run up a little too far, too fast, and a pull back may ensue, which may support topping up or using your profits to buy back more than you originally held (Top-up at below 2.5p).

At 3.78p, your investment will have returned a nice 190% profit. The other company mentioned back then “Lightbridge” is unsurprisingly not doing so well, though as I recently said in my last post, this company is moving its business forward, but its price has languished, falling in line with the general market for commodities. The price if you had bought in October last year would have been $1.85 (give or take 5 cents), and today’s price is now a very lowly $0.80.

The fall in Uranium prices coupled with a fall in oil, due in part to Saudi-Arabia not cutting back production in late 2014, has meant the price differential between various energy sources is not as stark as expected. This situation is likely to turn around as the glut in oil due to fracking, and the end of the START treaty uranium glut disappears, meaning the fall in prices of these materials begins to turn around. This differential in energy costs will lead Nuclear facility operators to look for ways to be more cost effective as materials, and wages begin to eat into profits, and Lightbridge’s recent revenue falls should rebound.

It might be prudent to add to this position if/when oil breaches the psychological $60/bbl mark, and Uranium prices begin their rise again – as I expect within the next 6-12 months.

W.

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3 thoughts on “Profit Taking… When and Where?

    MidcapAdvisor said:
    July 26, 2015 at 8:35 PM

    I agree with your comments, punts. I steer clear commodities for just that reason. Although I would be very interested to hear your thoughts on Sirius Minerals, the potash project in the north of the UK.

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      wa1marktng responded:
      July 27, 2015 at 6:12 AM

      I think they have huge potential, but it will be like any junior miner with a new mine to build. And their model of long underground shafts could potentially lead to cost overruns.

      A medium term punt or one to keep a close eye on for key moments that have rapid upside. I suppose it will be very news driven with long periods of nothing. You pays yer money and takes your choice.

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        MidcapAdvisor said:
        July 27, 2015 at 6:16 AM

        To me it’s a much more exciting prospect than other mining investments (my personal slant on it) as it’s completely new in the UK, likely to boost the north of the UK immensely and hence is bound to get govt backing unless something very problematic comes up. I agree it’s going to be news driven and it’s also a punt until something concrete starts happening, which will be far down the line. Worthy of a small allocation of portfolio I feel, following plenty of research.

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