An Update on the Wild of Resource Stocks
After suffering a brutal 2011, things are turning around for the “junior resource” sector.
Regular readers are familiar with the “boom and bust” junior resource sector. This area of the market contains small energy and mineral exploration firms looking for next big resource find. It is among the most volatile sectors in the world.#-ad_banner-#
Junior resources spent much of last year in “bust” mode. Commodity prices in general fell… and folks fled riskier assets, like juniors. The “Dow Jones of small resource stocks,” the TSX Venture Index, fell 45% in just seven months. It spent the next three months digesting this loss, and “carved out” a bottom.
As you can see from today’s chart, it looks like the bottom is in for juniors. The Venture Index has rebounded from its winter lows… and just broke out to its highest level since September. This incredibly volatile “boom and bust” sector could easily start “booming” again.