Risk Money - Rotating back to Mining

Hedley Widdup

Lion Selection Group

Performance of gold equities has been outstanding in 2016. Increasing liquidity supports this trend, the Mining IPO market which was closed for several years has now re-opened. There have already been more mining IPO’s in 2016 than 2015, and several prospective IPO’s have been announced to the market, so there are more to come. Where was risk money hiding ? We have observed an historic inverse relationship between mining and tech sectors, which both contain high proportions of risk money chasing multiple returns. After the East Asian currency crisis that precipitated a deep bust for mining stocks, the tech bubble started to grow. The bubble burst before mining equities began to recover. This relationship between equities isn’t enough to predict the turning of one market or the other, however we observe that whilst the tech space appears well priced and is showing signs of decreasing liquidity, mining equities have passed their bottom and liquidity is clearly increasing. Risk money is flowing from tech, back to mining– which will aid the boom as it gets underway. Read more here: (VIEW LINK)


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Hedley Widdup
Analyst
Lion Selection Group

Geologist, mining investor, watchful commentator, bicycle collector and father of three.

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