There is no question that silver and junior miners are set to have an explosive 2021!
An Explosive 2021!
January 4 (King World News) – Brett Heath: Bull markets historically have 3 phases. Each phase typically sees similar characteristics regardless of the commodity.
The first phase slowly rises in the face of extreme bearishness and lack of interest. For precious metals the beginning was the latter part of 2015 and early 2016 after a fierce bear market that washed out even the most faithful precious metal advocates. This phase often sees several tests of support and choppy patterns as investors are quick to sell any advance.
As you move closer to phase two, we typically see a major advance of the underlying commodity and major producers. This is usually when the larger contrarian minded capital flows in, sometimes referred to as “smart money.” We saw this in the first half of 2020 as gold pushed to an all-time nominal high just under $2,100.
“Smart Money” Pushed Gold To $2,100
We also witnessed a record breaking blow off top to the gold/silver ratio over 130! This occurred during the market crash in March 2020.
Gold/Silver Ratio Hit All-Time High Of 130 In March!
Consolidations between advancements of relative performance often shows key indicators on what will drive the next leg. We see this being driven by institutional investors and generalists alike moving into the precious metals sector for the second phase of this bull market.
If we look at the performance of gold to silver ratio since the August 2020 highs, we see a clear reversal taking place from the blow-off top at 130. More importantly, the relative outperformance of the silver junior’s vs majors as shown this the chart of the SILJ (ETF representing junior miners with a silver weighting) vs GDX (ETF representing major gold producers) during this consolidation is a clear indicator we are approaching phase two of this bull market and we should see powerful move in silver and juniors in 2021.
SILJ Silver Junior Index vs GDX Major Mining Index
THE SECRET SAUCE
One of the biggest investing trends over the last decade is the transition from active to passive investing. This has made royalty and streaming companies favorites among all kinds of investors from institutional all the way to retail. Royalty companies give investors exposure to a diversified portfolio of non-dilutive interests at the asset level which results into top-line cash flow in perpetuity once the project is in production.
We witnessed the majors like Franco Nevada (NYSE: FNV) and Wheaton Precious Metals (NYSE: WPM) lead the move after the spring 2020 COVID crash quickly to all-time highs.
Franco Nevada (LEFT) & Wheaton Precious
Metals (RIGHT) Led Mining Stocks
Higher After March Low
Junior royalty companies, specifically the ones that have exposure to the ETF’s and major US markets like the NYSE or Nasdaq are uniquely positioned to capitalize on both the shift of capital flows from major gold producers to junior silver (in the second phase) and have the advantage of being a more passive investment given the exposure to a diversified portfolio of assets.
Exposure To World’s Most Exciting Gold & Silver Assets
Metalla Royalty & Streaming Ltd. (NYSE: MTA) (TSXV: MTA) is a junior precious metals royalty company that has been one of the most active players with 20 transaction completed acquiring 62 royalties in the last four years. Its third-party model has enabled it to get exposure to some of the world’s most exciting gold and silver assets being advanced by Kirkland Lake Gold, Agnico Eagle, Newmont Mining, Barrick Gold, Teck Resources, St Barbara, Yamana Gold, and many more.
One Of The World’s Top Performing Mining Stocks
Metalla began trading on the NYSE American in January of 2020 and was recently added to the VanEck Vectors Junior Gold Miners ETF (NYSE Arca: GDXJ), the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE Arca: GOAU) and the ETFMG Prime Junior Silver Miners ETF (NYSE Arca: SILJ).
With silver and the juniors set to lead the way in 2021, Metalla is attractively positioned to be a major beneficiary of new capital flows leading the way into 2021.
More on the third phase later….
Full disclosure: I am the Founder, President, and CEO of Metalla Royalty and also one of its largest shareholders.
***To listen to Danielle DiMartino Booth’s powerful audio interview about gold, silver and what surprises to expect in 2021 CLICK HERE OR ON THE IMAGE BELOW.
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