An important signal that PM space could be turning around
Back in 2009, very early stage of coming out of the global financial crisis, I noticed that plenty of precious metals companies were doing bought financing deals with institutions. Once it started, there was a massive avalanche that followed. PM companies needed to cash up. Institutions wanted to rotate money into the space at cheap beaten down prices. A bought financing deal is when the institutional/broker buys the shares from the PM company at a negotiated price. The broker then sells the shares to clients. The broker is on the hook 100%. The broker cannot return any unsubscribed shares back to the company. Anyway, all this to say that people should keep an eye out for a pick up of bought deal financing in the PM space, for large and mid-tier PM companies. That could be a strong signal of the PM turnaround. And, though it is very early, I am starting to see what I saw back in 2009 - plenty of bought deals for PM companies. Previously, institutional investors stayed completely away from even large (solid) PM companies - essentially, for the past 3.5 years. Now, today alone, I see 3 bought financing deals in the PM space: 1) Asanko Gold ($40 million), 2) Primero ($75 million), 3) Richmont Mines ($30 million). Also, Lydian International announced a Cdn$16.5 bought deal on Jan 15/15, while Integra Gold closed an $8.2 bought deal on Dec 30/14, Lake Shore Gold closed a $15.1 million bought deal on Dec 3/14 and Shore Gold (a diamond company) announced a Cdn$3.65 million bought deal on Dec 11/14. There might be others also. I wouldn`t be surprised to see the large PM companies and the bigger mid-tier companies begin announcing bought deals soon. Those types of PM companies will also be raising cash for acquisitions. We`ll have to wait and see how this plays out, if it turns the PM space up again exactly like the pattern I saw in 2009 or if, this time, it goes back down temporarily before turning back up for good later on.