The TSX Venture plumbs a new bottom, raising the question of where it goes from here. Commentators weigh in.
HALIFAX, NS (MINEWEB) – It’s emblematic of the depth of pessimism hanging over the mineral exploration sector. Today the TSX Venture dug a new bottom for the year (1,129 at presstime, down four percent), dropping below one it had set back in May 2012, and thus broke what had for the past few months looked like more of a sideways crawl.
Now the trend down looks to continue. To find another date the TSX Venture was as low as it was today you have to stretch the chart back to late May 2009. This was not long after the TSX Venture had cratered in the wake of the financial market crisis and a time when the Board was just beginning to regain some strength on its way to highs in 2010-2011. To find another such low before the 2008 crash you have to stretch your chart back nearly a decade to late 2004.
Signs that juniors are out of favour amongst the speculating class, or that the appetites of the speculating class are diminished – for the time being – are myriad and have been well documented in these and other pages. Financings, the lifeblood of explorers, have dried up making it difficult, even impossible, for juniors to fund their exploration programs. In its latest update, Oreninc, which tracks financings, said that “the financing markets are as weak as ever.” It noted that in five out of the last eight weeks there hasn’t been a single brokered private placement.
Initial public offerings of juniors have also gone to the dumps: not many new exploration companies are being born and meantime a slew of juniors faces a cash crunch with potentially epochal proportions. That is, a round of extinction may be coming according to junior market watchers such as John Kaiser, of Kaiser Research.
Over at 321gold.com Bob Moriarty sounded particularly frustrated about the state of the junior market. In an email in answer to questions about where he saw the market going now that a new bottom is nigh (at presstime) he said, “The sentiment is worse than 2008. Every night I get on my knees and pray for another 2009-2010.” (A time when there was a nice run on the TSX-V).
Like Moriarty, in an interview Wednesday, Kaiser also looked to the past, though in his case he recalled 1998 and the aftershocks of the Bre-X scandal – a hoax gold find – that decimated confidence in publicly traded mineral explorers. “I fear this is only 1999 and that three more years of this misery are still to come,” Kaiser said, referring to the early 2000s when the market turned. If so, he then questioned whether the exploration industry, in mass, could survive, given a widespread inability to finance.
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