The chart below measures the relative performance of the Canadian Venture Exchange Index (CDNX) to the AMEX Gold Bugs Index (HUI). It may be a little difficult to see at first glance, but this ratio looks to be moving higher in November after very nearly matching the all time low in October.
CDNX compared to the HUI, monthly, since 2003.
Our experience is that when the smaller, less liquid and more speculative junior miners and explorers are outperforming their larger cousins, that is a more bullish than bearish signal by itself.
Our view is that the issuers we euphamistically refer to as "The Little Guys" have been pretty beaten up in 2011-2012 in what we are calling "The Second Worst Junior Bear Market From Hell."
It is currently a bargain target rich environment, with smaller miners and explorers overdue for a recovery of both confidence and relative strength. Tax loss selling is a headwind, but The Little Guys have indeed outperformed the HUI so far in November nonetheless.