About half the current population of TSXV junior miners don’t have enough cash to keep the lights on for another year, investment guru John Kaiser said at PDAC 2019. While junior resource company funding recovered from 2016 to mid-2018, it had since been weak, putting many in the sector on a “path to extinction”.
Kaiser said the cannabis-crypto bubble that had in the past few years sucked the oxygen out of the juniors’ room had now passed and was no longer an excuse. But what exactly would bring investors with risk capital back to resource juniors remained a very complex issue, he said.
Kaiser believes institutional money will not come back to the sector until a distinct multi-year uptrend has become visible, something which in his view is unlikely to happen for metals other than gold in a current macro environment of trade protectionism. This was potentially bad news for “optionality plays” in the short term, he said.
The junior sector had been so badly beaten down even the ‘PDAC curse’ failed to materialise over the past two years. Kaiser coined the term to refer to buoyant stock prices in the first two months of the year leading up to the PDAC event, that crashed soon after. This occurred in 2003, 2006, 2009 and 2016.
He expected gold to develop a sustained real-price uptrend linked to the current uncertainty about where the world was headed, even if and when US president Donald Trump disappeared from the global stage.
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