Money Flows and Miners

Written by Gerardo Del Real
Posted October 15, 2018 at 3:43PM

It’s October, which means more news flow, the conference circuit picks up, kids are back in school, and, with a little bit of luck, some temporary relief from what has the feel of a brutal bear market across the commodity sector.

The base metals continue to find a solid base and have bottomed well, despite the back and forth between the U.S. and China, which has led to demand concerns.

Trade wars are not sustainable and will not last.

Assets in low-risk jurisdictions with scale will continue to demand a premium, even in this market, and the bottom line is that there simply aren’t enough great assets to go around.

October also brings a front running of tax-loss selling season, which I believe will be notable this year as speculators offset the tax liability on capital gains by selling losers in the portfolio.

Each one of you should be looking at your individual portfolios and figuring out which positions you can hold through the next couple of months and which ones you plan to sell.

There are some important trends developing that merit your attention if you speculate in this junior resource space.

I mentioned last month that Australian producers are on the hunt as clean balance sheets give them the option to buy accretive assets — unlike many of their U.S. counterparts.

Recently, the Financial Review cited accounting firm BDO, which published numbers further validating that viewpoint.

Data shows that $2.14 billion flowed into ASX-listed exploration companies in the June quarter, which was 58% higher than in the previous quarter. 

BDO said the inflows were the highest in more than two years, and that means inflows had more than doubled since the first three months of 2017 when less than $1 billion flowed into the sector. 

The $421 million spent on exploration in the June quarter was higher than the previous eight quarters with the lone exception being the last three months of 2017.

There are also some notable discoveries recently that could turn out to be catalysts for new speculation in the space.

Great Bear Resources (TSX-V: GBR) (OTC: GTBDF) has been on a tear and could be on to a company maker with its flagship Dixie project in the Red Lake district of Ontario.

The project is 100%-owned by Great Bear and royalty free (pending payments totaling $110,000).

Commodity-wise, gold and silver are playing out exactly as anticipated. I expect this rally to fizzle soon and then I expect a stronger dollar. Not what I’m hoping for, just what I see in the cards.

That will put further pressure on countries with significant dollar debt exposure and you know the rest.

The record short position in gold will serve as the bottom and those shorts will help set off the next bull market in gold.

Everybody who wrote off the dollar earlier this year was not paying attention to the whole picture and is in for a rude awakening.

A few of you have written in seeing the money that has been made in weed stocks, and crypto stocks before them, and fear you’re missing out.

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He also believes there’s lots of runway, albeit not without volatility.

What I do is simple: Find trends, get ahead of them, look for the best management teams, and buy early.

The trend can be clear, the management vetted, and you can still lose money in the junior resource space.

Commodity wise, the right uranium, copper, lithium, and zinc plays are no brainers.

The junior resource market will turn. When? No one really knows, but the turnaround is always worth the wait.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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