Monday, February 17, 2014

Major miners versus junior miners

Dammit, Canada and US markets are apparently closed today, and here's me wanting to buy more mining stocks!

It's fun, by the way, to look at my account summary and see very large numbers printed in green. I guess that's why I always want to come back to that filthy foul-mouthed slut known as junior mining - she's a diseased psychopath, sure, and she's got a horrible rep, but the sex is unbelievable when she lets you have some.

Anyway, upon reading my weekly dish of junior mining scene analysis, here's some charts:

Long-term, GDX has outperformed (not sucked as bad as) GDXJ over the past 3 years, maybe because the GDX is made up of companies with actual income, while the GDXJ is saddled with a large population of moose-pasture lies that were worth billions years ago and nothing now.

But if you look at the Bollinger bands, GDX is at the lower level of its valuation continuum.

And this is what that lower level looks like when zoomed in on the daily:

So the ratio has gone from 0.71 to 0.60 in a little over a month.

To some extent, this is because the GDXJ stocks were so hard puked-down that some have snapped back fiercely: OGC's gone from $1.50 to $2.60 is this time, while MUX went from $1.90 to $3.30. Idiot stocks like ATC have gone from under $.60 to over $1.20.

So maybe the outperformance of GDXJ is a function of how much those stocks suck?

Well now, apparently capital is now interested in loading up on gold miners again, and so the question is, can you see an outperformance in GDX versus GDXJ?

I doubt you can see 100% moves in the major miners. Seems unpossibru. But on the other hand, how much upside could possibly be left in the mosse-pasture purveyors? At a bare minimum, someone's gotta be left who'd be happy to unload their shares at a 100% premium over December. Then again, maybe those shareholders left in the juniors are truly stupid enough to think they can make back yet another 100% on where they are now?

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