The TSX Venture exchange is rising nominally, and in relation to the senior TSX, a distinct positive for the world of exploration and junior mining
In NFTRH we use have since the spring been using the TSX-V/TSX ratio and the Silver/Gold ratio to gauge the coming of a commodity/resources trade. It came, but it has been rather particular about what areas it would drive upward, because of the global trade dynamics in play.
For example, Rare Earths, Uranium, Platinum/Palladium and other specialty commodities have gotten double goosed, behind the tail-wind combo of the TSX-V/TSX ratio and the Silver/Gold ratio. As long as these two are on their 9 and 4 month (and counting) rallies, respectively, that positive wind for the commodity/resources space in blowing.
Junior mining speculation is also revving up. Notice I used the word “speculation”. In most cases this would not be investment. It’s more like the wild west. Choose the wrong hole drillers and you can end up like Ike Clanton’s crew, the McLaury brothers and his own brother Billy Clanton, after the gunfight at the O.K. Corral. It’s not the basket case you’re seeking.
As a side note, back then and in the Tombstone, AZ region, it was silver that was the predominant “get”. And it got got plenty of times, often by train robbery. But I digress.
I started noted a case for starting junior mining basket, per NFTRH, a couple or few months ago. Actually, if including Nickel hole driller TLO.TO and Au/Cu hole driller AE.V, the basket was started last year (with long holds of futility before any action). Both of those were presented to me by a geologist in the subscriber base, who’d previously guided well on Great Bear Resources. He will be a guest on the upcoming Podcast, when I get it off the ground, most likely in Q4.
More items were added and it is futility no more. TLO has gone off like a bottle rock as it drills to expand its Ni resource. AE was bought right and is up significantly, despite really not getting going to the upside. When the basket was formed, other items were added in accordance with the implied tailwind of the two indications noted above.
PGE.V/PGEZF is a multi-metallic prospector. I have learned from another geologist/NFTRH subscriber (who has discovered and developed mines that you’ve heard of, and will be a guest on the Podcast as well) that it is important for a “major” to have interest in a property. It legitimizes the little feller.
For example, PGE has Glencore on board as an investor.
There are others in my basket. But I want to keep it tight and not gamble on anything that does not have either positive drilling momentum (TLO) or interest by major mining companies. For example, AE, PGE and another I am not identifying here because that will be for the future, as the second geo #2 noted above is its CEO and I’ll intro he and his company whenever I get the Pod going (subscribers please feel free to inquire which stock that is; it’s shown weekly in the portfolio). Same goes for geo #1 above, and his company.
Aside from sponsorship of a major mining company, the next important aspects are management and manageable political risk. DC, which I’ve had fun with contemplating its Diamond pattern, has Bob Quartermain at the helm as CEO (he of Silver Standard and Pretium). It also has a favorable geo/political location in South Dakota. I don’t know about you, but I hate political interference in my holdings.
Anyway, as a chart guy, Diamonds can sometimes be your best friend (unless they break the wrong way). DC’s broke the right way yesterday.
With the TSX-V still bulling nominally and trending up vs. its daddy, the senior TSX index, it’s a white knuckle ride still in progress. It’s the wild west where speculative mining and other resource stocks can explode out of nowhere. Much of that is pure speculation that dried cow turds can be turned into gold through promotional alchemy.
But generally, a carefully selected basket of these little fellers can provide great returns as long as the backdrop, the tailwinds (like the 1st chart above), are in place.
Here is the long-term weekly view. This chart, much like long-term charts of Silver/Gold ratio, shows that TSX-V/TSX has really gone nowhere yet. Hence, when the ratio halts and the Silver/Gold ratio halts, there’s your caution point. Meanwhile, it’s “ye-ha! git along little dogies”
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