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A Monday Morning Musing from
Mickey the Mercenary Geologist
Contact@MercenaryGeologist.com
December 22, 2014
We are in the dog days of December. This is a phenomenon that occurs per
annum in the junior resource markets. To wit: there is a significant decline
in stock valuations during the middle of the final month of the year. These
annual downticks are driven mainly by tax-loss selling, but a contributing
factor is an otherwise disinterested investor base as folks ready for the
gifting and party season.
In the series of Toronto Venture Exchange Index charts that follow, I
document these mid-December declines since a rising gold price resurrected
the junior resource market in 2003. Note that each chart covers a period from
November 20 to January 10, equaling 33 to 35 trading days:
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
The conclusion from these charts is that a short-term low for the Toronto
Venture Exchange almost always occurs in mid-December. This is particularly
so in bear market years, when tax-loss selling is at its strongest and
investor interest is at its lowest. Only one of the past 11 years has bucked
this trend and that happened during the raging bull market of 2005-2006.
Finally, hereÂs the chart from November 20 to Thursday December 18, 2014:
2014
Though the current chart is incomplete, I will make some short-term
predictions based on previous bear market years:
·The Toronto Venture Exchange Index low for 2014 was likely hit on
Tuesday, December 16.
·The market will probably recover a bit or flat line thru the end of this
year.
·There should be a significant rally in junior resource stocks in the
early days of 2015.
While hitting the late afternoon holiday party scene in VancouverÂs
financial district this week, I have noticed markedly smaller crowds filled
with many long faces and listened to too many woeful tales regarding the
state of the junior stock market.
Personally however, I dig the dog days of December. We are now in the
middle of a very short window of five to ten trading days that presents the
yearÂs best opportunity to bottom fish for undervalued companies.
If chosen carefully using strong due diligence and thorough research,
these will be the stocks that lead a typical rally into the New Year. If past
is prologue, I can confidently forecast that the fortunes in a fortnight will
appear rosier for a number of the best junior resource companies.
Whether the predicted rally in early 2015 will have any sort of staying
power in the current bear market is equivocal. That may simply be a function
of future commodities prices and in particular, for gold, oil, and copper.
Ciao for now,
Mickey Fulp
Mercenary Geologist
Acknowledgment: Gwen Preston is the editor of MercenaryGeologist.com.
The Mercenary
Geologist Michael S. ÂMickey Fulp is a Certified Professional Geologist with a
B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc.
Geology from the University of New Mexico. Mickey has 35 years experience as
an exploration geologist and analyst searching for economic deposits of base
and precious metals, industrial minerals, uranium, coal, oil and gas, and
water in North and South America, Europe, and Asia.
Mickey worked for junior explorers, major mining companies, private
companies, and investors as a consulting economic geologist for over 20
years, specializing in geological mapping, property evaluation, and business
development.In addition to MickeyÂs professional credentials and experience,
he is high-altitude proficient, and is bilingual in English and Spanish. From
2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile,
and British Columbia.
Mickey is well-known and highly respected throughout the mining and
exploration community due to his ongoing work as an analyst, writer, and
speaker.
Contact: Contact@MercenaryGeologist.com
Disclaimer and Notice: I am not a certified financial analyst,
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should be considered an opinion and my opinions may be based upon information
obtained from research of public documents and content available on the
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based upon information believed to be accurate and reliable, but my opinions
are not guaranteed or implied to be so. The opinions presented may not be
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