Looking for the Curse on the cusp of PDAC

We take a closer look at junior volumes for evidence of the so called PDAC curse.

I don’t see it yet, the so-called PDAC-curse when juniors are sold off by markets around the Prospectors and Developers Association Canada’s annual conference in Toronto gearing up this weekend. The week or so leading into PDAC was, overall, fairly positive for juniors. There was some selling off on Wednesday but otherwise juniors made gains, bringing the S&P/Venture Composite Index up close to recent highs. The price of gold – so critical to the fate of juniors and lately on the up – no doubt helped out juniors’ cause heading into PDAC. So have some notable drilling results in uranium and gold especially.

Given the energy-heavy nature of the Venture Composite I looked a little closer under the hood to gauge junior movements. A couple charts below reflect the inspection, and show the course of juniors relative to the broader Venture. Tracking volumes and total market value of the top 100 juniors (by marketcap, assigned back in January) and also some 1,000-plus juniors reflecting the vast majority of juniors on the TSX-Venture in minerals – respectively labelled J100 and J1000 here – you see fairly steady gains over the past week on fairly flat volume levels.

Indeed, it appears juniors did a mite better than the more widely cited S&P/TSX Venture Composite. On a couple days when the Venture Composite sank, our J100 and J1000 groups rose (see the 24th and the 26th of February). In between, this past Wednesday, the Venture had one of its worst showings in recent weeks dropping near a percent. But that same day J1000 total value was only down 0.16 percent and J100, 0.38 percent. Otherwise the latter two measures made gains over the past six trading days and volumes over the same period showed little mass movements. No major drop offs. No major pick ups. In other words, no pre-PDAC market rout or rally. Some don’t expect one to come this year. In an email Friday, John Kaiser of Kaiser Research noted the bit of selling down this week, but didn’t put much stock in it. He said, “barring some catastrophic big picture event, I think this year, because we have a selective bull market coming off a severe low, with uptrends driven mainly by corporate fundamentals and only a little by relief that gold is no longer down, we will see a violation of the PDAC curse as we saw in 2006 and 2009.”

Back to this matter next week from the conference floor.

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