RE: RE: RE: BondHere's something encouraging from an article on stockhouse from page.
Finally, the one sector that looked
completely dead when we looked at it back in December is junior resource stocks.
You may know the ones I’m talking about. Those penny stocks that own some abandoned gold mine in Zimbabwe that trade for about 11 cents each. Most of them trade on the TSX Venture Exchange.
Normally, these stocks are the easiest way to lose money. They’re incredibly volatile. They’re very thinly traded. They’re the last to move up in a bull market and first to nosedive in a bear market. Worst of all, though, most of them end up pretty much back where they started from, at around five or 10 cents per share over the long run.
They can create massive fortunes overnight. Every few years there’s a massive discovery of a new gold or oil discovery that makes its founders multi-millionaires overnight.
But here’s the thing. Despite all those risks, these “junior stocks” can be exceptionally profitable at the right times. Right now is looking like one of those times.
I’ve always looked at it like this. The TSX Venture market is a market fueled by greed or hope.
Hope sets in when all the fundamentals are in place for commodities. Right now, with copper up 50% this year, gold knocking on the door of $1,000 an ounce, silver catching up to gold fast, and oil well above $60 a barrel, it seems like the commodity boom is rolling on.
The combination of an economic recovery and inflationary fears has made hard assets “cool” again. And junior resource stocks are the most leveraged way to make money on these rises.
Hopes, to say the least, are high.
Then there’s greed. Greed sets in when these penny stocks start doubling and tripling over night. That is starting to happen too.
In a market fueled by hope and greed, there is a lot of money to be made or lost. And right now, the trend is up, hope is strong, and greed is growing. Those of us looking in this speculative area can see how a lot of money can be made in junior resource stocks in the next few months.