Silex - An Update: More Bullish.

Please Note: Discount the effects of enrichment on the demand for uranium at your peril.

Disclosure - I currently own a position in Silex, purchased on the ASX exchange $SLX:AU. Available in the USA with the OTC tickers $SILXF (= to 1 Silex ASX Share) & $SILXY (= to 5 Silex ASX Shares).

The major news for the month of June so far was the leak via Bloomberg of the DOE’s intention to ask congress for an appropriation of 4.3 billion dollars to secure a supply of domestically produced enriched uranium. While the details of this were frankly scant, a lot of investors interpreted this as a plan for 4.3 billion dollars for the purchase of U308, which sent uranium equities on a rally, especially if they had a deposit/mine on US soil.

Broader market realities soon set back in, and the rally was short lived. Taking a moment to address a potential tangential question: why have I not recommended anything to buy? Well, frankly the trends of the market is not something to be ignored, and with that in mind, there effectively has been nothing to buy.

The exception to this of course has been Silex, which since I published my initial article, investors have rallied the stock to new 52 week highs, with gains in value of over 50%. The rally on the ASX however seems to have reached it’s zenith, with investors now taking profits and the share price subsequently reducing in value. As for buy-in points: I would advise caution, evaluation, and patience.

While we never know what tomorrow will bring, I feel it worth noting the following:

1 - To the best of my knowledge, the twitter user @ShovelStocks (website Shovel-Stocks.com) and myself were the only people who wrote articles about this call within the last 3 months, backed by extensive research on the matter. Other twitter uses of note who have been talking about Silex for some time are @ClayDMontgomery, @OfKimbriki, and @DakineJeb. These people are all worth following!

2 - Furthermore, I wish to reiterate my point on the effects that enrichment can have on total uranium demand. It was not Fukushima that decimated U308 demand, but enrichment methods that were not only cheaper, but more abundant. The decrease in demand was just icing on the cake. It is vital that any investor in uranium understand all the aspects of the nuclear fuel cycle: knowing this is critically important to informing where and when you allocate your investment capital.

Here is an example to show you just how broadly enrichment can effect demand.