Last week, the TSX Venture had one of its biggest rallies of the year, soaring ~9.5% from approximately 678 to roughly 742. While gold played a significant role in the TSX Venture’s recent recovery (the price of gold rose ~4.2% from US$1,866.40 US$1,944.94 in the same timeframe), increased demand for global equities certainly didn’t hurt.
“More than $4 trillion has been added to global equity markets since Monday, putting it on track for the third-biggest week of 2020.”
“It didn’t seem to matter if the asset was a haven or a risk bet, global or U.S., liquid or illiquid — investors poured cash into global markets with a force that hasn’t been seen in months.”
This heightened appetite for equities appears to be offsetting the impact that volatility in the price of gold has on the Venture. Although gold is trading lower again around US$1,877 per ounce, the Venture has only fallen ~1.50% to 731. For context, the Venture lost 3% to just shy of 8% when gold experienced similar pullbacks this year.
It’s important to note that the increased demand for global equities could be fuelling TSX Venture technology stocks. The TSX Venture Information Technology Sector Index closed at 48.07 today — a level not seen since August 2018. With Covid-19 destroying hundreds of thousands of jobs across the country, growth in Canada’s technology sector is needed now more than ever before.
“The pandemic has damaged the potential for Canada, and other countries worldwide, to generate sustainable economic activity,” Wilkins said via webcast to the Munk School of Global Affairs and Public Policy. “We need to set our sights higher to help businesses create good jobs. . .”
The TSX Venture Shows Resilience in November
While the TSX Venture’s performance will be inextricably tied to the value of gold for the foreseeable future, it’s encouraging to see the exchange show signs of diversification (however small) from the yellow metal. It reminds investors that the TSX Venture isn’t just home to early-stage mining companies, but early-stage companies of every kind.