MyDotMoney.Com

When it comes to the stock market, I would probably consider myself an beginner to intermediate investor at best. With that said, I will admit that everything I invest in, I do as much research as possible and try my best to learn about not only the companies that I am interested in, but the whole sector.

For the past 8 or 9 months, I have been invested in a few Uranium stocks. I could go on for pages and pages about what I think of the uranium sector, and how I personally believe that I am going to make a killing off of it within the next 5-10 years, but thats not exactly what I want this post to be about. ( I will save supply and demand for another day) I personally own interests in three uranium companies. CCO (Cameco Corporation), DML (Denison Mines Corp.) and JNN (JNR Resources Inc.), and I did my research before buying into each one.

Unlike commodities such as gold or oil, there is no formal exchange for Uranium. This means that you can’t buy a few pounds of uranium, and hold onto it for a while, and then resell it when it has appreciated in value. The spot price of uranium is developed by a small number of private business organizations that independently monitor uranium market activities, such as contract prices, lengths, offers, bids and transactions. Because of this, the changes in the spot price of uranium will not have an immediate effect on a companies revenue. Uranium is almost always sold in long-term contracts. I will use DML for an example here. Today (May 11) they released their 1st quarter 2007 financial statements. For the three months ending in March 31, 2007 DML’s sale price of U308 averaged $62.27/lb despite the fact that on Jan 1 the spot price of U308 was Just over $70.00/lb and at the end of March it was about $95.00/lb.

So how does one make money on a commodity that they can’t purchase? In my opinion there are three ways.

1)Invest in a tried-and true uranium producer that is actually pulling the yellow-stuff from the ground and has a record of selling it. Do some research - for a safe bet invest in one of the larger companies such as CCO or DML. This is the road that I have taken, and since November 2006, my uranium portfolio is up 49.89% (as of today)

2)Take a chance. Invest in a small uranium exploration company that has yet to hit it big. There are literally hundreds of these companies out there that trade for under $1.00/share. A great example of this is JNN. For a long time through 2003, it was trading at 10-15 cents/share. They experienced some favorable results, putting their price Just over a week ago at $4.00/share. Thats a 2,567% increase in only a few short years. With a stock like this there is a great potential to turn a few hundred dollars into thousands. *Just remember that the greater the earning potential, the greater the risk!

3)Invest in U. No, I dont mean invest in YOU, but rather Uranium Participation Corp. (tsx:U) What the Uranium Participation Corporation does, is actually purchase uranium and hold onto it. Theoretically the price of the stock is supposed to reflect the changes in the Uranium spot price. This is basically the only way that an individual investor can actually hold uranium in their portfolio.

I plan on writing quite a bit about the Uranium market, as it is where I am most heavily invested at the moment, and that is where I spend most of my time researching.

If you think that Ive made mistakes in my post, or disagree with me, or even agree with me - please leave a comment! Let me know.