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Inequality in Gold Juniors Means Opportunity

A year ago, there were many predictions that the majority of mediocre junior exploration companies would de-list or die off. Observers at the time noted that companies simply did not have enough cash left to create much shareholder value.

It was also apparent that very few of these same companies would be able to raise money in the future in any meaningful way, even to just keep the lights on.

Looking at the data we have today, it’s clear we’ve reached a new level of separation between the wheat and the chaff. While it took longer than expected, this “Great Divide” makes it obvious as to which companies should be avoided by retail investors. In addition, it also helps shed light on the real companies that have a chance at locating the next monster deposit.

We see this as separation as a good thing as it can help create a rallying point for money going into the sector. Instead of trying to score a home run with battered companies, investors trying to play the bottom can start by getting behind some of the companies that have survived the downturn and have continued to perform.

At the very least, this inequality is a sign that we are getting closer to a recovery as all of the waste gets cleansed from the system. In the best case, it means the wheels are greased to start spinning for the whole industry again.

Source Gold Seek

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