by Jordan Roy-Byrne, CMT
The Daily Gold
Our research continues to argue that the current, record rebound in gold stocks will continue. Every time we’ve predicted a correction, the weakness in the sector has been only a fraction of what we expected in both price and time. New bull markets that follow epic bear markets typically show exceptional strength in their first year. This bull has been no different. Thus, we expect the strong performance to continue. Today, we share a few reasons why the junior sector is poised to outperform in nominal and real terms.
Juniors typically outperform once the new bull is established and metals prices are trending higher. The large cap miners perform best at the very beginning of the new bull. Later on, their performance in relative terms (against metals and juniors) weakens. Naturally, once the trend is established and sentiment improves, investors take on more risk. That benefits the junior sector. Moreover, that point time is when larger companies have the financial strength and optimism to acquire the smaller or junior companies. That is another positive for juniors.