Mining Stocks

99% of Financing Dollars on the TSX Venture Went to Resource Companies in June 2020

tidal wave of money

According to news release data aggregated by Pinnacle Digest, resource companies raised approximately C$566 million of the total C$569 million raised on the TSX Venture in June 2020. In other words, resource companies — the vast majority of which were Canadian junior gold explorers — received 99% of the TSX Venture’s financing dollars last month.

This is an epic recovery for financing activity on the TSX Venture. The last time the Venture saw financing numbers like this was August 2019, when total financings topped C$582 million. The timing of this flood of investment capital into TSXV-listed resource companies is no coincidence — the price of gold reached an 8-year high in June and recently climbed higher to touch a 9-year high yesterday.

Via Kitco,

“. . .Joe Mazumdar, editor of Exploration Insights said that because of the higher gold price investor interest is growing across the sector with capital now flowing from major producers to mid-tier producers to junior explorers.”

This echoes a similar sentiment from an article we published in May,

“. . .greed is creeping back into the market for gold issuers as bought deals abound and financings oversubscribe. . . Institutional money is clamouring for the next gold deal with upside as the metal continues to be hoarded and bought by central banks and investors around the world.”

As a result of the rising value of gold, the TSX Venture gained approximately 12% in June after recovering roughly 17% in May. It appears the old trading adage “sell in May and go away” isn’t in full-force this year, thanks to border restrictions and reduced discretionary spending caused by COVID-19. What’s more, even if investors do find some time to get away for a vacation, many of them aren’t likely to go far.

Via Marketplace,

“[Michael Sheridan, who studies hotels, attractions, and tourism at Temple University,] is expecting to see vacationers opting to take vacations closer to home.”

Moreover,

“Low gas prices mean taking road trips, renting RVs, and opting for off-the-beaten-path destinations are likely to be popular.”

In effect, this could contribute to more sustained investment activity in gold equities and continued momentum for the price of gold.

Naeem Aslam of Forbes writes,

“Investors are pouring capital into gold Exchange Traded Funds. For instance, the total known gold ETF holdings are at a record level. . . As long as we do not see this trend ease off, I do not see any reason why the gold price cannot continue its upward journey.”

Investment in Junior Gold Explorers Skyrockets in June 2020

Investors are rushing into resource companies, as evidenced by the spike in TSX Ventures financings in June 2020. What’s more, the majority of this investment capital appears to be trickling down to junior gold explorers — a trend that could bode well for speculative gold investors.


Pinnacle Digest

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