Since January 4, 2011, the performance of junior gold stocks has been dismal compared to the price of gold.
- Gold has risen from $1,389/oz to $1642/oz for an 18% gain:
- The Toronto Venture index has a 39% decline from 2275 to 1398:
- The abyssmal performance of junior resource gold stocks is best illustrated by a ratio of the Toronto Venture Index to gold, which has dropped from 1.64 to 0.84 for a 49% loss:
The junior gold sector boomed post-global financial crisis from Q2 2009 thru Q1 2011 because commodity prices rebounded to new highs and venture capital was readily available for all comers. Many gold stocks lacking the necessary criteria of a tight share structure, an experienced and successful management, and a robust flagship project were financed with “itchy money” during this period.