"I have made some good investments in Uranium stocks and am tracking them regularly.

"The various reports I read, indicate a price target for Uranium of $60 (most conservative) to $90.

"My queries are as follows:

"Do you have a view on the price target, and if so, how have you arrived at it?

"How much would the prices of Uranium stocks be governed by the price of Uranium and how much by other factors?

"How long do you expect this Uranium move to last? I see from the charts that the last bull run lasted for about four years but then the prices also went up to $140; whereas the current prices at $57.5 are not that far off from the above targets of $60-90?"

David Fuller's view Well done for seizing your opportunities and thanks for some questions likely to be of interest to some other subscribers.

Targets discussed in the market place generally start low and are increased in line with the trend, so they do not mean a great deal analytically. However they may be revealing behaviourally i.e. low forecasts suggest modest positions, while high forecasts would imply significant long positions.

Fullermoney de-emphasises targets because they are intuitive guesswork at best and some people stop thinking when they hear a target. However, my hunch is that the 2006-2007 advance in uranium was no more than the prelude. The uranium industry was not in a state of change then, so most of the prior advance was due to speculation, as we also saw in crude oil during the height of the 'peak oil' fashion.

This time the nuclear power industry is in a period of increasing development, led by China which will bring a number of new reactors on line in 2011 and more in 2012. Simultaneously, there are fewer excess US and former USSR Cold War nuclear warheads to decommission. Lastly, mining costs are rising.

Consequently, I think today's base formation will eventually support prices well above the $138 reached in June 2007. However it may take several years, subject to how quickly the price of crude oil rises. Also, there is shale gas which Eoin and I have often referred to as a game changer. As a new and significant source of supply, barely tapped outside of the USA, it has kept energy prices lower than would have otherwise been the case.

So uranium prices are unlikely to take off on their own. Instead, they were the laggard until a recovery commenced in July and a partial catch-up move relative to crude oil and coal has occurred recently.

At the beginning of a cycle I expect mining shares to outperform as base completion occurs because they are generally higher beta than the metal. We saw this not long ago in their peak to trough declines. The move eventually evens out, on average, and the shares may even lag when the metal is in an accelerated advance because long-term investors will not expect the commodity to sustain an accelerated run beyond the medium term.

The recent strong gains in uranium mining shares have spilled over into consolidations which are likely to persist for a while. Looking at this weekly chart of Uranium One, which is a representative example, it has probably paused to form the first step above the base evident below C$4.00. If so, it may range mostly between this level and the recent high of C$5.50 for a few weeks or months, before resuming its recovery.

If I am interpreting this correctly, pullbacks towards the base offer additional opportunities for investors to accumulate stock. First steps above bases are reliable bull market continuation patterns, just as first steps beneath tops are reliable bear market continuation patterns.