Is Junior Gold the Way to Go?

Jim Goddard welcomes Frank Holmes to “This Week in Money” to discuss gold and junior miners. Here’s an excerpt of the discussion where Frank talks about how oversold some junior miners are.

The Vancouver Stock Index (S&P/TSX Venture Composite Index) is correlated with the HUI Index, and that’s the big-cap gold index, and those two fell for almost three years; you’ve had a drought.

And what we like to write about is when you see those long declines, those multi-year declines, go over several years of data and they’ve never happened for 4 or 5 years. It’s usually 2 years and then you get a bounce, 3 years is very rare, and so that’s why I wrote a piece on January 27, called Why the Recent Lift in Junior Miners Will Likely Continue.

Will it take off dramatically up? No, but I think a lot of the negative selling and emotional dumping has taken place… We think some of these factors will change this year, because they [the markets] are just so severely oversold.

Listen to the entire interview now.

Want more on gold?

• For a detailed overview of the junior gold miners discussion, read the most recent Frank Talk post.
• Gold is one commodity that has seen great change over the last 10 years, but how have the others performed? See our graphic here.
• Can gold stocks break their losing streak? Read the data that that shows the odds look pretty good.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the links above, you will be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index. The NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years.