Junior prices in a holding pattern
Greetings investors!
We haven’t made much money over the past quarter on the juniors. Stock prices appear to be in a holding pattern.
The chart for the CDNX, Canada’s mineral-weighted junior exchange, shows a downtrend despite last week’s spike. However, the higher lows and lower highs of the 1-year chart represent the beginnings of what could be a triangulation pattern. That means either a breakout or a sell off is coming, and frankly either is preferable to this death by water torture. Drip, drip, drip…
By contrast, the TSX/S&P index, also mineral weighted but with senior companies, remains in a firm uptrend. This tells me investment capital is going into producers and senior firms, and though the juniors aren’t having any trouble with financings, I don’t see the retail market buying their shares.
The optimist in me says the best is yet to come; that the looney ‘buying everything in sight’ phenomenon which occurs during a gold rush when granny finally sells the farm hasn’t yet happened. Of course it may not happen at all, but I think it will.
So the good news is – it’s not too late to get ahead of the world’s next big discovery. If and when it happens, the rising tide will lift all boats.
Where have mom and pop been putting their investment dollars? I dunno … real estate? Oil futures? Maybe they’re paying down debt, or leaving it in the bank. Risk appetite is currently quite low due to the continuing question of whether or not the U.S. economy is in recession. Everyone is hovering around, waiting for something to happen.
There must be a ton of dislocated capital floating around since the banks and financials sold off. Where it end up?
Three guesses….
Kb
The BarkerLetter on June 30th 2008 in Markets
