MINING FINANCE / INVESTMENT
Canada's Venture nears decade low
The TSX Venture Exchange closes in on lows it hasn't seen since 2008.
Author: Kip KeenPosted: Friday , 05 Dec 2014
HALIFAX, NS (Mineweb) -
Until very recently it looked as if the Canada's Venture exchange had steadied. The exchange, which is dominated by non-producing resource companies, held close to 1,000 points for much of the past year.
Indeed, earlier this year, I sang the praises of that boring steadiness. If not exciting, at least the Venture's decline since 2011 (up to ~2,400) had been arrested. It gave some companies - especially explorers - a little breathing room to scrape financings together. The more resourceful did just that.
Dilute or die. That's generally been the motto this year. The less serious explorers have otherwise gone to pot (literally) or into complete hibernation.
But now, as year-end approaches, the slide continues. In the past two months the Venture has dropped about 29%. It's over 70% down from its peak in 2011. Today, it was trading around 710 and on a trajectory to all-time Venture lows in the 680s.
It hit that in the relatively brief 2008 crash. This decline continues to be a grind down.
The price of gold and oil surely get some blame in sparking the latest decline. Oil is having a miserable quarter, falling from over $90/barrel in September to under $70 in late November.
Gold, while recently putting in some gains, is well off from mid-year prices. In August it was over $1,300/oz, but began a decline that in October saw it sink beneath $1,150/oz. It's since climbed back to $1,200.
Gold explorers and oil companies are the bread and butter (or rancid margarine now) of the Venture and their sinking fortunes in terms of commodity pricing is pushing the Venture down. So is the year end.
On top of this, tax-loss selling is now bearing down on juniors. As the year comes to an end, losing Venture companies come under pressure, and with trading thin, it results in some ugly share price bashing. Stink bids come out in force.
So in the end 2014, as far as the Venture goes, is starting to look a lot like 2013. That is, a year not worth remembering.