Make Kitco Your Homepage

Junior Market Can't Shake Investor Apathy: Haywood Securities

Kitco News

The TSX Venture Composite remains in a fragile state of recovery following a tumultuous 2018, said Haywood Securities in its second quarter junior exploration report released today.

Haywood notes that precious metal has been a headwind and there is "...continued apathy towards the junior exploration sector in Canada as the TSX Venture Composite remains in a fragile state of recovery."

Gold had a strong start in 2019 but fizzled.

"[Gold formed] a head and shoulders top pattern that failed to breakdown and now remains rangebound between ~US$1,280 and ~US$1,300," Haywood wrote in its Q2 report.

Base metals are not doing well. Haywood writes that the S&P/TSX Global Base Metals Index had a ~14% drawdown from its April peak, following a ~28% upswing from December 2018. Precious metal companies have been sinking, too. Haywood notes that the VanEck Vectors Junior Gold Miners ETF (GDXJ) has had a ~20% drawdown from its February peak.

While the U.S. dollar is strong, which has been a headwind for commodities, China-America trade tensions could help gold.

"We are looking for a potential reversal in the U.S. dollar and continued relative strength in the gold price as catalysts for a rebound in the junior exploration sector," the report said.

Base metals, however, may not fare as well.

"A spike in equity and fixed-income volatility, along with widening credit spreads, are catalysts that would likely drive a safe-haven bid in precious metals but could also be bearish for base and industrial metals," according to the report.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Precious Metal Charts

Follow Kitco News