by Tony Locantro, Managing Director, Locantro’s Capital.
XSR (Small Resources Index) 10 year chart: Source less
The chart above not only provides a harrowing look back in history, but more importantly could show just how far a sustained recovery could take us in the junior resource stocks. Sentiment since early 2011 has been most negative (the XSR lot 72.5% to June 25 2013) and the gold sector in particular has come in for some extreme selling pressure with even producers replicating or even exceeding the falls suffered in the XSR.
Regardless of the negativity and paranoia surrounding the junior resource sector, there will still be companies graduating through the ranks to the mid-caps, and even though they are as rare as a “Three Star” Adam Sandler movie we are still going to see the spectacular discoveries similar to those made by Sandfire (SFR), Sirius (SIR), and the old Minotaur Gold with Prominent Hill.
From my experience in speculation and 12 years as an advisor, it is those that are able to build positions in quality juniors during bear markets that are more likely to not only “survive” but thrive once fundamentals are finally recognised. Chasing the daytrading frenzy now engulfing the bio/tech sector, would not be dissimilar to being one of those hyperventilating teenage girls at a One Direction concert, or turning up to a party well after the police had removed the IPod deck.
As much as it hurts to watch others make money and boast about it all over social media, you should never mistake a bull market for brains and think that yesterday’s price action is a decent guide to what could happen tomorrow.
The “Eight Elephants” in this report are all about backing the right people and projects at the right price.
To read more, and to find out Tony Locantro’s ‘Eight Elephants’ – Click here
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