The Moonshot Is On Hold For Now
The trend is still down in small resource stocks… And we’re still on the sidelines.
We track the trend here with the TSX Venture Index, the most widely followed gauge of tiny gold, silver, and energy firms that scour the world for the next big resource deposit. From our late-2008 “moonshot alert” until early this year, the Venture climbed nearly 250%. Many individual names soared 300%, 400%, even 500%.
But as we warned in January, these giant moves are in the past: “While some commodity markets will move higher in 2011, it’s unlikely commodity stocks in general will have such a strong tailwind behind them.” Without that tailwind, the Venture is struggling. And as you can see from the chart below, it has sliced down below its trendline.
We’re still long-term commodity bulls. The world’s addiction to “E-Z-Credit” will fuel further rises in copper, crude oil, natural gas, silver, gold, platinum, and more. But all bull markets take breathers. And as long as the commodity bull market is on a breather, we’re steering clear of small resource stocks.