According to the TMX Group, total financings raised on the TSX Venture increased from $143,978,370 in April 2020 to $339,521,302 in May 2020 – representing an increase of 135.9%. For the TSX Venture, there is no bull market, like a gold bull market. The reason behind the robust financing numbers is due to renewed positive sentiment in the junior gold sector. More than half the issuers on the Venture call the mining sector home. With gold stable above $1,700 per ounce and governments continuing to print money, investors are rushing into gold, silver, and their related-equities.
What’s more, having just returned from Toronto, brokers and money managers are as bullish on gold equities as I’ve seen in a decade. 2016 sentiment was positive, but everyone was unsure of how long it would last. Today, some of the smartest guys I know believe we are in store for a multi-year run in the precious metals.
I expect June’s total financing numbers to crush May’s and will do a follow-up article in early July.
Junior Gold Sector Consolidates After Spring Move
In Miningstockeducation.com’s latest podcast, rising interest in the junior gold sector is discussed.
In the interview, professional mining investor David Erfle provides his current commentary on the junior gold sector and how he is managing his portfolio. Erfle’s optimism is hard to contain, stating,
“It’s time to take your bear market hat and put it in the closet and take out your bull market hat from mothballs, that’s been in there for quite a while and put it on your head.”
He continues,
“And once, you get a full position, to not trade in and out of them.”
And that,
“Now, it’s a buy and hold market for the first time since 2009-2011.”
With respect to gold stocks, Erfle notes,
“Your risk is to the upside, not the downside.”
Robust Financials Behind Optimism and Rise in Financings
I continue to believe that as robust quarterlies begin to come out and institutional investors realize just how profitable many of the big names are at $1,700 gold, it will create another rush of buying into the space.
It is important to remember that gold is up almost $400 year over year ($383 to be exact), with the majority of that gain coming in the past six months. These gains have yet to be reflected in many earnings reports, but when they are, majors may be going higher.
David believes new money is coming into the junior gold sector and is right given the dramatic increase of TSX Venture financings in May. His interview was posted on May 28th, a full week before the financing data was released, confirming his hypothesis. One only has to follow a handful of well-positioned gold deals to see the money flowing. Companies that couldn’t raise $5 million bucks a few months ago are now raising $10 or $20 million.
Investing in the junior gold sector is not for the faint of heart; it will surely be a volatile ride, but, for those who believe in higher gold prices, its hard to imagine a better place for risk capital.
