There has been a flood of money in to the leading exchange-traded fund (ETF) focused on the global junior and mid-tier gold sector, VanEck’s Junior Gold Miners ETF (GDXJ).
And why wouldn’t that be the case? The US dollar gold price is up 12 per cent since the start of the year and the local price is now more than a spectacular $1700 an ounce.
Plus, Geopacific’s offer for Kula shows it sees big prize at Woodlark gold project
Unlike the gold space where floats and spin-offs have come thick and fast, there has been a real dearth of copper floats in response to the metal’s near 20 per cent price improvement in the past six months to around the $US2.60 a pound level.
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Unlocking the value of hidden assets by spinning them off in to a separate and focussed ASX listing is proving fertile ground for the junior mining sector.
More often than not it has been structural shifts in supply/demand scenarios, and the resultant impact on the pricing of commodities, that has given rise to the spin-off opportunity.
Plus, Goldmans on the majors’ falling gold inventories, pennies to flow for Empire and Macquarie talks up Metals X
Last year’s crack down by the regulators on what can be said about the scope of a project based on inferred resources – i.e. pretty much nothing - was frustrating stuff for the industry.
It was always going to lead to the mispricing of stocks, even if that is counter intuitive to what the smarties at ASIC and ASX hoped they were going to achieve.
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Gold’s initial buy-the-fact rally in response to the first of the three expected US interest rate rises this year was welcome stuff for the ASX gold sector, which has been showing signs of buying support fatigue.
Consolidating above the $US1200 an ounce level when the price seemed to have legs eleven written all over it also means that the great crush of new floats and other forms of deal-making can get moving again, for the time being at least.
The rally in a broad sweep of commodity prices has not only benefitted the big end of town, where the likes of BHP Billiton and Rio Tinto have gone a long way in justifying their strong share price recoveries by posting big profit gains for the December half and 2016 calendar year respectively.