Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Thursday, July 26, 2007

News You Can Use for Thursday

XX I have to admit this is some pretty bearish stuff ...

Stocks Tumble Worldwide as Credit Concerns Prompt Investors to Avoid Risk Stocks fell around the world and U.S. Treasuries rallied on concern higher borrowing costs will slow takeovers, spur debt defaults and curb earnings, prompting investors to flee riskier assets.

U.S. New-Home Sales Slide; Durable Goods Orders Drop, Signaling Slowdown The U.S. housing recession deepened last month and orders for durable goods unexpectedly fell, suggesting the economy will slow in the second half of the year.

Absolute Capital Suspends Withdrawals from Hedge Funds After CDO Losses Absolute Capital Group Ltd., an Australian hedge fund that invests in collateralized debt obligations, suspended withdrawals from two of its funds after forecasting losses amid a rout in U.S. subprime mortgages.

XX That is, until you get to natural resources ...

Australia Will Consider Selling Uranium to India, Industry Minister Says Australia is considering ending a ban on uranium shipments to India once the South Asian nation negotiates an accord with the U.S. to help prevent proliferation of atomic weapons, a government minister said.

Gold Climbs in London on Speculation Dollar Will Decline; Silver Advances Gold snapped three consecutive days of declines in London on speculation a drop in the value of the dollar will increase demand for the precious metal as an alternative investment. Silver also rose.

Nymex Gas Rises as Traders Seek to Lock in Prices for the Hurricane Season Natural gas futures in New York advanced as traders bought contracts to lock in lower prices before the arrival of the most intense two months of the hurricane season.

So why are natural resources stocks being punished, too? A) Hedge funds are raising cash to meet withdrawls and B) investors are starting to fear a recession, so they're taking money out of stocks and putting it into bonds. Both are short-term. We may see some great stocks on sale very soon.

Meanwhile, the spot price of uranium is dropping, down to $120 per pound, while the long-term contract price stays steady at $95 per pound. We might expect the spot price to pull back to the long-term price before looking for a floor.
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