#Uranium Exit Strategy.
More & more people are starting to consider what the perfect exit strategy would look like. Today, a man I truly respect, @trader_ferg, with way more experience in the speculation field than me, gave his views & insights. Here are my counterpoints:
1/18
More & more people are starting to consider what the perfect exit strategy would look like. Today, a man I truly respect, @trader_ferg, with way more experience in the speculation field than me, gave his views & insights. Here are my counterpoints:
1/18
2/18 Comparing a cyclical commodity asset sector which has quite strict supply & demand mechanics with the crypto sector is not a realistic analog. For all these years, 99.9% of crypto projects were based on 100% speculations that each project could become a new "Google"...
3/18 ...But up until now, only a few have shown that they are capable of transcending the speculation phase. The crypto sector was initially occupied by younger retail kids, and later on, VCs entered this unregulated sector knowing they could manipulate the hell out of it...
4/18 ...And when the QE times ran out, the speculation bubble burst, retail & VCs went rekt & the sector is in a huge identity crisis right now. Only one project @chainlink is continuing forward as promised and partnering with the biggest financial institutions on Earth...
5/18 ...The #uranium sector on the other hand is not based on speculation. Sure, individual companies can fail, but the overall bull thesis is not speculation-based, like crypto, it is based on basic maths: based on supply versus demand, something tangible, not based on hopes...
6/18 ...The reality is that a spike in #uranium prices won't cure the supply deficit. This deficit is way more entrenched & structural. Even $CCJ is lacking skilled workers now and has to cut production forecasts. A sudden spike or prices hitting xxx level won't solve it...
7/18 ...It will take years before a real new important supply comes online. Years... The deficit will keep growing coming few years, and the available producers' resources will keep getting cannibalized until replacement is financed and prepared...
8/18 ...This is not the oil or gas sector, this is #uranium. The supply side was forced into a zombie graveyard mode for over a decade. Treason on domestic production by Western governments. The Fukushima demand-destruction event strangled it even further. A starved sector...
9/18 ...A sudden temporary price spike in #uranium, even if it pops to $300lb in a week's time, won't solve the structural supply deficit, it won't magically put 2 billion pounds of yellow cake in a can, which is what is minimally needed by 2035...
10/18 ...If my local barber or Uber driver, my neighbor, or high school friend calls me asking about investing in uranium stocks, I can take that as the typical "local top" sign & sell some, but they won't magically solve the structural supply deficit in the #uranium sector...
11/18 ...If you are a trader, sure, you could trade the "local tops", it's just too much stress for me personally in a sector that is basically structurally broken. I hate chasing green candles. Some are good at it, and I applaud people making money off what they excel at...
12/18 ...So, what are you saying, Praise Kek? I should hold onto my shitco's even when a wild spike happens? Hell no. Selling into a wild spike is probably da wae, and I will likely join the team. But will that price spike solve the structural deficit issues in this sector? NO...
13/18 ...This bloody snail-pase sector has been crushed to a level that nothing but actual new real mine production will be able to solve this issue, and how many of the carnival barking juniors do you believe will actually be coming online any time soon? Seriously...
14/18 ...So, while traders trade the local tops, and LT swingers swing the larger swings, and we might all bail out together if a sudden price spike happens, neither the crypto analogy fits, nor will the Uber driver asking about uranium entries become the blow-off top...
15/18 ...And while this cycle, which is opposite to the last one in ALL possible ways, might see many local tops & bottoms, one thing is sure: we need sustained higher u3o8 prices to solve the structural deficit & the juniors that are still unhedged will make buckets of money...
16/18 ...And at a longer-term, multi-year, sustained higher #uranium prices ($90/lb+), some companies, the real ones that actually end up producing yellow cake, are still undervalued by far. Don't get married to them or their CEOs, don't think the music won't stop playing...
17/18 ...But in my view, this cycle, you should not expect a pop in spot price to $150lb whatever to suddenly & magically fill the utilities strategic reserves, and flood the market with uranium, and then see prices dump back to $30lb and turning most juniors into uneconomical...
18/18 ...Planning an Exit Strategy beforehand is da wae. And if you jump out too soon and take profit it's ok. Nobody ever starved by taking profits. All I am basically saying is do your own due diligence and really know WHY you are bailing out at one point in time. Stay sharp...
PS: Take into account how fast information flows today versus 2008 or 2011. I already have normal day people asking me about uranium. Information flow is exponentially faster now. Does that mean fresh retail will fix the supply deficit & cause a supply flood overnight? No.
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