Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Sprott Global Resource Investments chairman Rick Rule is in Australia this week to explain investors how he thinks they could take advantage of Down Under’s junior market.
But together with the list of tips he is willing to share about how to find high-quality companies whose shares are currently going for a steal, he also brought a dim view. According to The Australian (subs. required), the U.S. investor said that most of the about 800 junior miners listed on the Australian Securities Exchange were “worthless.”
“Most of the walking dead juniors, the zombies, are a bunch of liabilities disguised as public companies,” he said in August. “Their assets are liabilities; their financials are liabilities; mostly their managements are liabilities. It’s wonderful. Every 5 or 10 years you have this major reset in the junior sector. Although it’s extremely unpleasant to go through, it’s very healthy.”
In his opinion, there is still significant money to be made when goods are on sale in volatile markets. The trick, he has said repeatedly, is not to buy the sector, but individual issues that are “irrationally” priced down.
Rule’s words echo the results of a recent report, commissioned by Canada’s British Columbia Securities Commission, which states that about 50% of junior miners currently operating in BC won’t be around by 2015.
The grim outlook is also shared by senior geologist Brent Cook, who believes that at least one third of junior miners would disappear by the end of the year.
The latest Ernst & Young’s annual Business risks facing mining and metals 2013–14 report, also support these theories, saying that small firms exploring for mineral deposits worldwide, will continue to be cash strapped for at least another year.
The good news is all of them see quite the light at the end of the tunnel. In Mining Speculator newsletter publisher Greg McCoach’s words: “when the market does recover, it is going to be a screamer.”
Image: Screen Grab from YouTube.
8 Comments
Prospector
Keep an eye on Blackham Resources Ltd (ASX:BLK), massive resource, cashed up and a top management team.
http://blackhamresources.com.au/
yogrogan
Well done Mining News. This headline is only 4 years out of date
Olesarge
Tell me this again when Atlas Iron (AGO) goes through $4 next year.
Lewis Stubbs
I agree most of the juniors are the walking dead.
golddigger69
There aren’t even that many exploration geos in the country, so how could they all survive. The more important question is what allowed them to all come about. Makes JORC look cartoonish.
Matt
Yawn, in the last 4 years my dog often mentioned to me, (usually at suppertime) that juniors were the walking dead.
BEST Antivirus Android
gold is the avenue to which the west is repricing the value of western currencies to combat the chinese unwillingness to revalue their currency, gold at $1300 AND gold miners can’t make a profit?….that price level is the new $300 level…the cycle is similar to 1970’s….with the stagnation comes the lower wages workers in manufacturing in the west will accept, has started to happen in europe
Miner in Mauritania
Most of the juniors are walking dead? That could be the case however especially when the industry practices, including listing, are not, sometimes, challenged with a bit more creativity and entrepreneurship.
Looking at the way juniors approach the whole issue is like looking at a thirsty man trying to suck water out of a dry tap; their strategic view is poor, they never present a comprehensive picture of their “plan to mine to market” and of their development concept, they keep asking for pennies and give pennies in terms of forward view.
Maybe should the financial market and investors focus a little less on obvious geological mambo jambo data and a bit more on the whole picture of the development concept/market approach, we would be able to see thriving juniors and happy investors.
Exploration and operation knowledge are only one part of the picture, what is lacking is real management 360 degree vision that translate into a solid project development concept.
Both juniors and investors need to create a common angle from which to look at opportunities; there are many good juniors out there and many opportunities with potential, unfortunately in many instances, both sides of the equations look at the same things and don’t see the same things.