I draw your attention to the benchmark for junior resource stocks — the TSX Venture Exchange — which hit a yearly low on October 5, ironically the same day that gold bottomed under US$1,825.
The 52-week low was 524.42, yet despite Friday's massive uptick in gold bullion, the TSXV went out for the week at a paltry 529.13. As you have all read (ad nauseam) in this column for literally decades, there is a direct correlation between gold bullion and the TSXV.
Therefore, if gold sees new all-time highs by New Year's Day, there is enormous upside in the exchange, but more importantly, in some of the beaten-down juniors that have fallen 95% since August 2020.
Since we all "pump up our books," I point to TSXV junior , which has crashed from CA$0.76 in early 2021 to the current price of CA$0.045. The company started out in 2020 with a silver focus as it was decided that silver had the greatest upside given the profligate spending of the global central banks and sovereigns.
With a secondary bullish bent on copper, the company did limited exploration work on a number of sub-par properties in the B.C. interior with zero success and then shifted to a grass-roots exploration probe into the Patagonia region of Argentina along the same Gastre Fault system that produced on the world's largest undeveloped silver deposits, the mighty Navidad deposit bought for over US$600 million by Pan American in 2009.
In severe bear markets in the resource sector, junior explorers get pitched under the bus faster than one can mutter "hole in the ground with a liar at the top." I recall the COVID Crash period when one of my favored juniors traded down to CA$0.08 during the meltdown only to find its footing later in the year and rising to over CA$1.70 later that year.
I recall another one that got killed in the GFC Crash in 2008 (CA$0.75 to CA$0.06 in three months), only to hit CA$1.50 by January 2010. These juniors get crushed because they are a) speculations, b) illiquid, and c) unloved by the regulators.
While there have been scams littered across the junior resource landscape over the years (BRE-X, Cartaway, etc.,), the dollar value of similar scams in the U.S. (and overseas) markets (Enron, Tyco, FTX) dwarfs the dollar value in junior resource stocks.
Norseman is one of those rare jewels with seasoned management teams and a strong Board of Directors that has a highly-prospective property called "Taquetren" located in Rio Negro Province in Argentina located proximitous to the Calcatreu Gold mine and the Navidad Silver project in the Gastre Fault region of Patagonia.
That project, in bull markets, would attract huge exploration dollars either from majors looking to partner up or from investors with an appetite for speculating on a discovery. I spoke with management last week and learned that they are also actively pursuing opportunities in advanced exploration and early development projects related to metals critical to the Electrification Movement, which covers the electrification trilogy of uranium, copper, and lithium.
At CA$0.045, they have been absorbing a large block of stock offered by one of the 2021 property vendors and appear to have finally taken them out.
This is the kind of company that carries the leverage that historically propels trashed juniors to 10-bagger returns once the TSXV stabilizes.
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- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Norseman Silver Ltd.
- Michael Ballanger: I, or members of my immediate household or family, own securities of: All. I determined which companies would be included in this article based on my research and understanding of the sector.
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Michael Ballanger Disclosures
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.